Operation Management - Essay Example

?Executive Summary: The operations management of the five star hotel plays the most important role in the success of the hotel. The various areas of operations management that are of relevance in the case of the hotel are design, planning, supply, shop-floor control, quality management, benchmarking, business process re-engineering etc. It is recommended that the quality of service at the hotel needs to be improved further. This recommendation is based on the analysis of the primary and secondary research. 35% of the customers who formed the sample population were delighted with the service of the hotel. 55% were satisfied and 10% were dissatisfied. Operations management of the hotel should focus on improving the quality of service so that the proportion of dissatisfied customers is reduced. The objective of operations management is to create 99.99996% customer satisfaction. This objective is not being currently achieved by the operations management. If service quality is improved, then it will increase the room occupancy (currently at 75%) and profitability further. Table of contents: 1. Introduction………………..3 2. Research Methodology…….4 3. Brief description of the specific features of the hotel which had a bearing on my analysis and were not included in the description provided………4 4. General Analysis of the hotel………..5 4.1 Design………………………5 4.2 Planning in operations management of the hotel……6 4.3 Supply chain management…………………..6 4.4 Shop-floor control…………………………….6 4.5 Environmental best practices in the hotel…….7 4.6 Technological issues in operations management………8 4.7 Quality management as part of operations management……….8 4.8 Benchmarking…………..9 4.9 The use of the philosophy of ‘ lean’…………….9 4.10 Business process Re-engineering in the operations management…….11\ 5. Analysis of one area of special focus……….13 6. Outline of the possible difficulties and an explanation of how they might be overcome………….15 7. Summary of the findings….16 8. References…………17 1. Introduction: The following report studies the operations management at a five star hotel. The research methodology relies on both primary and secondary research. This is followed by qualitative and quantitative analysis. There is a general analysis of the operations management of the hotel. This is followed by the analysis of the quality of service of the hotel. The aim of this study is to understand in-depth the operations management of the five star hotel and to make appropriate recommendations. 2. Research Methodology: The research methodology includes both primary and secondary research. The primary research was conducted by visiting the premises of the hotel and directly observing the operations management at the hotel. It also included a survey of about 20 guests of the hotel. The secondary research was done by delving into books, academic sources and other reports concerning the hospitality sector and operations management. The data and information collected were analyzed qualitatively and quantitatively. 3. Brief description of specific features of the hotel which have a bearing on my analysis and were not included in the description given: The areas of service quality, costs and room occupancy were not mentioned in the description provided. There was also no mention of the supplies used by the hotel. These areas have a special bearing on my analysis. A customer survey was also undertaken. The recommendations are based on this survey. 4. General Analysis of the hotel: 4.1 Design (product and facility): Product design is one of the critical issues of operations management. It is product design that determines the characteristics and features of a product and how well the product functions (Dyson, Robert G, 2000). Facility design determines the capacity, location and layout of the production or service facility (Krajewski, L.J., and L.P. Ritzman, 1993). The five star hotel is located in the center of an international society.The hotel has about 250 rooms with en suite facilities. It has two dining rooms with capacities of 100 and 300 respectively. The hotel has two and three kitchens. Two of these kitchens serve the two dining rooms while the third kitchen serves the three ‘function rooms’. The hotel also has a swimming pool, gym and sauna facilities. It has a parking facility which can accommodated 150 cars. The three issues in designing a hotel are: product quality, costs and the optimum utilization of the available space. The design of a five star hotel should be such that it is able to provide all the facilities that are required for fulfilling the needs of its customers. There is also the question of costs. Even in the luxury category, costs play an important role. The design of the hotel should be such so that it achieves its objectives at the lowest possible costs. Then there is the issue of designing the facility of the hotel in such a way so that there is optimum utilization of the available real estate. Real estate is one of the most expensive factors of production for a five star hotel like this one (Weiss, Howard J. et al. 1989). MANAGEMENT STRUCTURE OF THE HOTEL: There is the General Manager of the hotel. Beneath the General Manager are the three managers. There is one manager for food & beverages, one for service operations and one manager for maintenance of the hotel. Fig 1:Management structure of the hotel Organizational structure of the hotel: The organizational structure of the hotel has three hierarchal levels: 1) General Management or senior level of the management. 2) Middle management (the three managers who are responsible for food & beverages, service and maintenance respectively) 3) The line staff composed of the executives from the three departments. Fig 2: Organizational structure of the five star hotel: 4.2 Planning in operations management of the hotel: The operations management of the hotel is concerned with the planning and controlling of all the activities necessary for the provision of the hotels’ product and services. The planning defines the objectives of the operations management, the strategies that are to be used for achieving those objectives and the allocation of resources for the implementation of the strategies (Bateman, Thomas S., and Carl P. Zeithaml,1990) . The planning of the hotel addresses the following aspects: i) Sales planning. ii) Operations Management planning. iii) Material Resources planning (planning for the different resources required like food, beverages etc.) iv ) capacity planning ( planning according to the different room occupancies expected in different seasons). 4.3 Supply chain management as part of operations management in the hotel: Supply chain management of the hotel has the following objectives: 1) To ensure that all the supplies are available always so that the operations of the hotel are not disrupted in any way. 2) Being a five star hotel, it is imperative that all the supplies are of the highest quality. Management of the quality of the supplies is the onus of the supply chain management. 3) The supply chain management should be efficient. The main supplies of the hotels are supplies of food products that are raw materials for the kitchen; the beverages; the supply of other miscellaneous items like soaps etc. 4.4 Shop-floor control: Shop-floor control usually applies to production facilities but is equally relevant in the case of operations management of a hotel. Shop floor control is the control of the work-in-progress (Angell, Linda C., and Robert D. Klassen , 1999). Shop-floor control ensures that the bottlenecks are removed and productivity of the shop-floor is maximized (Ruffini, Frans A.J., Harry Boer et al., 2000). In the case of this hotel, shop-floor control ensures that the operations of the hotel are running smoothly. The best possible service is being delivered to the customers. It is the onus of the shop-floor control to coordinate the various departments like kitchen-staff, room service, housekeeping etc. so that the customer satisfaction is maximized. The hotel has maximum capacity of 250 double-bed rooms. However during different seasons there are different levels of room occupancy. It is the onus of the shop-floor control to ensure that the operations of the hotel are run smoothly during the different seasons and bottlenecks during peak periods are completely eliminated. 4.5 Environmental best practices in the hotel: Over the last decade the operations management of the hotel has intensified its focus on sticking to the environmental best practices in the industry. The objective is to ensure that the negative impact to the environment because of the operations management of the hotel is minimized. The ultimate goal of operations management in this regard is to minimize the ‘carbon footprint’ of the hotel. The target segment of the hotel is composed luxury tourists who come from across the globe. Members of this segment are very conscious about environmental issues. As a result the hotel has also started marketing itself as an eco-friendly five-star hotel. Some of the environmental initiatives that the operations management of the hotel has taken over the years are: 1) Increased use of recycled material. 2) Ban on use of polyethylene packaging from every stage of the supply chain and operations management. 3) Water conservation measures. 4) Energy conservation initiative like increased reliance on renewable energy sources. Last year all the street-lamps in the premises of the hotel were linked to solar energy through installation of solar panels. 4.6 Technological issues in operations management: The operations management of the hotel relies on the use of the state-of-art technology. There is extensive use of information technology in all the departments of the hotel. Every department has at least one employee who is adept in information technology so that the hotel can exploit the latest technological advances Information technology is used for managing the supply chain efficiently and effectively. The website of the hotel offers various facilities like online booking and online feedback for the customers. The whole area of the hotel is a wi-fi connected zone. The operations management relies on the use of technology for the management of various facilities and scheduling for the staff. 4.7 Quality management as part of operations management: The operations management of the hotel practices total quality management. This total quality management is based on the philosophy that if the processes are right then the end product or service will automatically be right. Every employee involved in the operations management of the hotel is responsible for maintaining the highest quality standards in his job tasks. In the kitchen the highest quality ingredients are used for preparing the meals. Customers too are involved in this quality management through their feedbacks. Every guest of the hotel is given the opportunity to give his or her feedback at the time of leaving the hotel. The operations management places a special importance to the feedbacks of the customers. This helps it in understanding the level of customer satisfaction and gives an insight into the areas of operations management which require improvement. The objective of the total quality management in the operations management of the hotel is to achieve results similar to ‘six sigma’. This means that the operations management aims to satisfy 99.99996% of the guests visiting the hotel. 4.8 Benchmarking: The performance of the hotel is measured by comparing the performance of the hotel with the competitors in the industry. The three parameters that are used in the benchmarking are: 1) Quality. 2) Costs. 3) Room occupancy. The quality of the hotel is compared with the best in the industry. The operations management of the hotel continuously strives to provide levels of quality that are better than the best in the industry. Quality is a measure of the effectiveness of operations management of the hotel. The costs of operations management are measured against the competitor that has cost leadership in the industry. This enables the operations management to measure its efficiency. The efficiency of the operations management has a direct bearing on the bottom-line of the hotel. The room occupancy rates of the hotel every quarter are measured against the industry average room occupancy. The higher room occupancy is an indicator of the effectiveness of the operations management in creating satisfied customers. Room occupancy is calculated by dividing the number of rooms occupied with the total number of rooms available. Average yearly room occupancy of this hotel is 75%. There is scope for improving the room occupancy rates. 4.9 The use of the philosophy of “lean” in the operations management: Lean manufacturing as a philosophy of operations management considers the expenditure of resources for any goal other than that of creating value for the customers as wasteful and unnecessary (Andrew Greasley, 2007) . It targets the elimination of these wasteful expenditures (William J. Stevenson, 2008). The operations management of the hotel uses the concept of “lean service”. The customers are given the highest standards of quality but at the same it is ensured that wasteful expenditures are eliminated at every step of the operations management. The concept that drives the “lean service” is that ‘luxury doesn’t mean wastefulness’. Wasteful expenditures that do not add to customer value are identified on a continuous basis and steps are taken for their elimination. The hotel’s objective is to achieve cost leadership in its segment. Operations management relies on the principles of “lean service and lean operations” for achieving this objective. The goal is to have an operations management that is efficient in terms of lowest costs (through lean services and operations) and at the same time effective in providing every kind of luxury required by the guests. 4.10 Business Process Reengineering in the operations management of the hotel: All the processes of operations management of the hotel have been identified and mapped. These business processes are continuously re-engineered according to the dynamic changes of the external and internal environment. A year ago it was identified that the customers were not happy about the service time taken by the room service. The main complaint was that the service time of the room service was too much. As a result, the whole room service process was re-engineered. The room service staff was increased both for the day shifts and night shifts. They were also given a crash course of 15 days on ways in which they can decrease the service time and serve the customers more promptly. Over the last decade many of the business processes of the hotel have been re-engineered through the introduction and extensive implementation of information technology. The business processes of the hotel are continuously improved so as to achieve dramatic improvements in critical measures of performance like cost, quality, service and speed. 5. Analysis of one area of special focus: the quality of service in the hotel I have chosen quality of service as one area of operations management that requires special focus because of two reasons. Firstly, quality of service plays a critical role in customer satisfaction in the hospitality industry. Quality of service has emerged as one of the important points of differentiation in the luxury hotel segment. The second reason for choosing this area was that it gave the opportunity to conduct primary research. About twenty customers of the hotel were interviewed as part of the primary research. The guests were interviewed at the gate of the hotel when they were checking out after their stay. The guests were asked one question: Q) How will you rate your satisfaction from the quality of service during your stay in the hotel? i) Delighted ii) satisfied iii) dissatisfied. The customers had to choose one of the above three options. The meaning of the three terms was explicitly explained to the customers at the time of the survey: Delighted meant that the perceived quality of service of the customers exceeded their expectations. Satisfied meant that the perceived quality of service matched the expectations of the customer. Dissatisfied meant that the perceived quality of service was below the expectations of the customer. The response of the 20 guests who were surveyed was: Delighted: 35% Satisfied: 55% Dissatisfied: 10%. 6. Outline of the possible difficulties and an explanation of how they might be overcome: The goal of the operations management of the hotel is to create 99.9996 % satisfied customers. This effectively means that the target of the operations management is to create 100% customer satisfaction. The results of the survey, however, show that only 90% (55% satisfied and 35% delighted) of the customers were satisfied with the quality of service. 10% of the customers were dissatisfied with the quality of service at the hotel. The figure of 10% dissatisfied customers is very high for a five star hotel. It is one area of immediate priority for the operations management of hotel. The quality of service can be improved by identifying those areas where the service needs to be improved. One reason for customer dissatisfaction may be in the excessive use of contract part-time customers. These part-time customers might not have been fully trained in servicing the customers of a five star hotel of this caliber. Therefore the staff may need to be better trained. Other areas of improvement can be identified by the management of the hotel through conducting appropriate primary research. Improving the service quality will increase the room occupancy rates and profitability of the hotel further. 7. Summary of the findings: The various aspects of operations management, like product design, process design, facility design and layout, shop-floor management, lean manufacturing, quality management etc. are relevant in the case of the operations management of the five star hotel. The management of the quality of service is a critical area for the operations management of the hotel. The customer survey shows that about 90% of the customers are delighted or satisfied (35% delighted and 55% satisfied) with the quality of service. The remaining 10% are dissatisfied with the quality of service at the hotel. The goal of the operations management of the hotel is to create 99.9996 % customer satisfaction. Currently this objective is not being achieved so this is one area of operations management which needs improvement. The operations management of the hotel plays the most important role in determining the output of the hotel. The operations management of the hotel manages the processes that convert the inputs into high quality output that result in customer satisfaction. Inputs > Process (Operations Management) > Outputs References: Angell, Linda C., and Robert D. Klassen, 1999, "Integrating Environmental Issues into the Mainstream: An Agenda for Research in Operations Management." Journal of Operations Management. Bateman, Thomas S., and Carl P. Zeithaml, 1990, Management: Function and Strategy. Richard D. Irwin. Dyson, Robert G, 2000, "Strategy, Performance and Operational Research." Journal of the Operational Research Society. Krajewski, L.J., and L.P. Ritzman, 1993, Operations Management: Strategy and Analysis. Addison-Wesley Publishing. Ruffini, Frans A.J., Harry Boer, and Maarten J. Van Riemsdij, 2000, . "Organization Design in Operations Management." International Journal of Operations and Production Management. Weiss, Howard J., and Mark E. Gershon, 1989,Production and Operations Management. Allyn and Bacon. William J. Stevenson, 2008, Operations Management, Mc-Graw Hill, Irvin. Andrew Greasley, 2007, Operations Management, Sage Publications. Mitch Schneider, 2007, Operations Management, Thomson. Steve Brown et al, 2008, Operations Management: Policy, practice and performance improvement, Butterworth- Heinemann. Robert Johnston et al, 2009, Service Operations Management, Pearson. Lee Krajewski et al, 2009, Operations Management: Process and value chains, Pearson. Read More