Operation Management - Essay Example

?Operation Management Task: The utilization of capa management ideology in running a restaurant enables managersto make accurate decisions regarding staffing and procedures to enhance profit gaining and improve the guest experience in the restaurant or hotel. For instance, the example of Hotel du Vin Birmingham UK succinctly depicts a perfect example of a capacity management ideology application. The paper aims to espouse on the overall concept of operation management and describes the operational management activities utilized to realize success, in terms of capacity management in hospitality in this particular hotel. The paper extensively tackles the general aspect of the operation management in conjunction with the tactics and application requirements needed in the establishment of an affiliation on the grounds of adept hospitality and capacity management. Operation Management Operation Management is a tremendously important facet in the business world today (Greasley 2008). All organizations in the world, regardless of their types produce an assortment of products and services. All corporations depend on operation management, as it is an important asset in improving the efficacy of the affiliation and delivery of quality customer service. An influential business skill determines business changes like in customer preferences, internet technology-based supply networks and details of work. In order for all the other branches of a company to work hand in hand, operation managers should unite and toil together. Probably, it is bewildering what operation management is. A more accurate definition of operation management perhaps is that, it is part of businesses and companies, which deals with organizing and controlling the company’s assets to guarantee victorious delivery of the products and services. Every company, large or small, profit making or not, have an operation management office. In the absence of operations management, there are no products for marketing and vending and, therefore, no affluence in the corporation or organization. Every department of an organization has a responsibility; however, operation managers do all the rest; plans and coordinates all the resources required in designing, producing, and delivering the goods to all the different points of selling the company has (Lewis and Slack 2003). In this case study, we look into the strategies and tactics used to manage capacity in a hospitality operation of Hotel du Vin Birmingham UK. The main purpose of operations management is to alter the inputs of a corporation into the services or products that are saleable. Inputs are such things as employees or workforce of the company, the amenities and practices, including the information, technology and materials. At a manufacturing plant, the conversion process is the process of physically converting unprocessed materials into ready to use merchandise, for instance, changing skin and rubber into sneakers, or plastic into toys. With airlines, the procedure is utterly different. It is, in this case, the successful relocation of people from a certain position to another. At a hotel, it is the housekeeping and offering of specialized service in rooms, with new linen, excellent cuisine and the output is happy customers who then pay up (Bettley, Mayle and Tantoush 2005). At a hospital, the efforts and outputs are also different. The input could be doctors getting organized, medical attention, and offering of drugs to convert the patients into strong individuals. Hotels select a dissimilar approach in their pursuit for affluence. They use a control tool known as, yield management (Karlsson 2008). Organizations majorly employ this technique to effectively exploit the utilization of the accessible capacity and seek monetary affluence. Yield management is not a new conception. Other corporations like airlines employed this notion before its implementation by hotels (Wild 2002). Most hotels carry out different forms of yield management, for instance, they could alter the room rates to deal with the variations between high and low peak seasons, mid-week, and weekend rates. In this paper, my point of study will be how hotels use yield management and other modes of operation management to increase financial gains. Effectively, I will discuss how these organizations generate earnings in an industry where competition is so aggressive (Young 2009). In service industries, the ability to merge demand and capacity is quite challenging. Sometimes the demand is too much to handle alongside the pressing capacity, straining on the resources. On other occasions, the demand is so small that unused capacity rises leading to decline in revenue. This is perishing ability factor. Perish ability factor confers that the organization loses the revenue that a unit of capacity can produce (Leseure 2010). This is not like other products that if not sold at a given time can be set to storage, perhaps, in a warehouse due to auctioning later. For this reason, thus, services have to balance with the demand behavior. On given occasions, demand for services might fail to be within the management of the business. Nonetheless, there are strategies that exist and the managerial force can employ to establish demand and capacity, with the intention of balancing them with each other. One such method is yield management as succinctly outlined above. Organizations referred to it as revenue management, depending on the situation in which it is applied. Organizations aim to increase the yield or income by pricing the service differently for different periods (Lowson 2002). It is an exceptional notion to have an augmented demand for a given article of trade or service. However, when demand is so high, it brings with it fair division of problems. One such a trade off in the service industry is culminating. Reservations and booking in advance may alleviate this, but in some circumstances, it still happens and remains that way with customers growing, increasingly, frustrated (Foss and Stone 2001). Perishability This is the key set back. Product industries like furniture makers or automobile assemblers and dealers do not have this predicament. If a dealer fails to vend off a piece of furniture on a given day, or over a given period, they keep their products for sale on another day in the future when the demand for them rises (Mahadevan 2010). This does not relate to organizations that offer services, for example, hotels. Their ‘products’ is in the structure of rooms that cannot be ‘stored’. If the hotel room stays unoccupied for a day, it does not generate the expected amount of money, and is unperceivable. In this situation, the ‘product’ has putrefied (Burton-Gunn 2010). This is similar for services like counseling where time is the gauge of aptitude. Perish ability; therefore, is important in the services industry. Generally, if demand is greater, it is unquenchable just like in manufacturing where the wares kept in the warehouse get into direct sale. If capacity is more than demand, the potential cash proceeds from the given service turn out to be unrecoverable. However, in cases where service function does not change, is fixed, and only demand changes, organizations experience some situations like excessive demand where demand levels exceed the maximum available capacity. Additionally, if demand possibly exceeds the optimal capacity the service cannot possibly meet its efficacy. However, Demand and capacity balance exceptionally well, it becomes the optimal level capacity. When the capacity augments, demand is way below the most favorable capacity level. Evidently, the capacity exploitation level will affect the service worth. The optimal measure is the best possible level in the majority of cases for all the concerned parties inclusive of the customers, the organization, and employees (McCrie 2006). In some service situations, operating at the optimum capacity, or even exceedingly beyond as with certain transportation services is required e.g. with inns and clubs. Presently, ‘vertical bars’ is the trend; only standing room, where most of the chairs and tables are removed to allow more and more customers to get in. Otherwise, the services rendered must aim to occupy the maximum zone of capacity. There have been tremendously little remarks as to where this optimum capacity zone lies. For airlines, it purportedly ranges between 65% and 75%. For other services, the maximum capacity seems to be from 70% and 90% of the optimum capacity (Klassen and Menor 2006). Normally, customers are happier when fewer seats in a restaurant or a train are vacant. Similarly, from the point of view of an organization, to operate at the optimum capacity level automatically translates to no slack to allow problems that come up to go unsolved. For instance, customers who extremely demand and scrutinize errors by employees and diagnostic difficulties can be a source of quandaries to the name of the company (Langabeer 2008). Assets and resources relied on by organizations in the service industry include the ingeniously modeled physical amenities that accommodate more and more customers and assets. Every facility stands out in terms of the number of assets it contains. Material facilities are the equipment that are meant to process clientele and all their property, e.g. The washing machines used by launderettes, x-ray equipment used in hospitals, turnstiles used in football stadiums and, computer technology used in banks (MacLennan 2008). The human resource, the people who do the work, are extremely significant – the labor-force is an important element in service provision, for instance, the cabin crew of an aero plane, the cashiers in a bank and the waiters in a restaurant. Very many services profoundly rely on labor. Such services, where the service goes to the customer, include cleaning, breakdown services, gardening, postal services, and roof repair (Loader 2002). Time is the basic resource upon which majorly many services depend on: for example, a counselor, a lawyer, a consultant, and a plumber. Often, capacity is under-exploited. In contrast, the capacity of the services declines if demand augments. On such occasions, the imminence of that capacity to be elastic enough to meet up demands remains at stake. Anticipating and lessening the stress put on capacity requires services to understand demand patterns remarkably clearly. Consequently, two questions crop up. To begin with, by how much should demand fluctuate or vary? Lastly, is it possible to forecast the variability? If a predictable pattern or cycle appears, its duration may vary in diverse ways. These cyclical variations result from unusually many things that depend on the service type. For a bus service, the factors that cause the cyclical variations are more likely to be school hours/employment, entertainment and shopping behavior. This is because there is a measure of stability to these factors (Halevi 2001). The Operational Management Activities Every manager in operations has the mandate of ensuring that the activities in the organization that contribute effectively to the production of services and products are preserved. The nature of an operation’s function responsibilities depends to some extent, on the manner in which the organization chooses to define the function’s boundaries. In general, there are activities that work in all operation types. They include understanding the strategic performance objectives of operation – any management team has a responsibility of understanding what it is aiming to achieve. This means, it is imperative to comprehend how to judge the performance at different levels of the operation, from strategic and broad to the operational performance objectives. It also entails making an operational strategy for the organization where many decisions made by the minute in operations management. It is, therefore, necessary to specify some general principles that be used to guide the processes of making decisions towards the long-standing goals of the organization. Products and services design the processes of the operation. To plan and manage the operation well, it is necessary to increase the operation output where managers progress the performance of their department operation. Managers ought to consider operation management social prerogatives. Presently, an increasing number of businesses recognize the societal responsibilities that operation managers have and the concerns that are not within their activities directly. Operations Management Model The operations management model comprises of two ideas. The first on is input-transformation-output model mentioned earlier. The second step is categorizing the activity fields of operations management. Operations strategy entails refers to the way operation management functions contribute to an organization’s ability to meet its competitive advantage in the market it is. The competitiveness of an organization is its position in the market. This is in terms of how it can be able to contend with the other organizations in the same industry or market in which it operates. An organization may possess more than one strategy that it uses to achieve its competitiveness in the market. The concerned personnel design and create these strategies from the competitive priorities of the organization. These prerogatives may include; high quality, low cost, fast delivery, flexibility, and lastly, service. Yield management encompasses exploitation of these competitive priorities by hotels and other service industry affiliations. In the hotel industry, where there is fixed capacity, and the demand is extremely unstable yield management is well suited. In this industry, the marketers segment the market (Bessant and Tidd 2007). Hotels have extremely low marginal costs. Yield management preconditions include the fixed capacity where hotels are always capacity-constrained and lack of the opportunity to put their products or goods into inventories. Lots of hotel services and merchandise are perishable. They alter their capability, for example, increasing the number of newsrooms or a new occupation suite but this normally involves a large financial input in terms of resources and plant. It also includes elevated fixed costs, where the business comprises of high preset costs and, as described above, the cost of adding incremental capacity can be exceptionally high and does not adjust accordingly. Adding new quarters at a hotel not only requires a large capital expense but may also comprise a long planning and building period. Since demand varies with time, hotel capacity stagnates where companies or hotels cannot easily adjust their capacity to meet the highs and lows in demand. Bessant and Tidd (2007) explains that when demand changes, hotels can benefit from controlling capacity when demand is at its peak and relaxing that control when demand is extremely low. Resemblance of inventory items as a common rule, YM systems working a situation where inventory units are similar. Notably, service firms like hotels can differentiate their units by, for example, offering appended lucrative features. The components for successful YM include segmentation of the market where hotels normally have the capacity to divide their customer base into diverse market segments such as business, leisure, and long and short stay. Old booking and sales patterns affect operation model where detailed knowledge of a hotel’s sales and booking data per market segment helps managers predict highs and lows in demand and assist the hotelier in more successfully bring into line demand with supply valuing knowledge. This defines YM as a form of price discrimination; however, in practice hotels operate YM systems that hinge on opening and closing rate bands. Additionally, overbooking strategy is a vital YM technique. Foreseen cessations and disclaimers all form part of an intricate calculation carried out in advance. In this way, the corporation faces the peril of disappointing a client who has booked earlier declines. Effective management information is crucial for fruitful yield management whether the hotelier is operating a manual or computerized system. However, information technology can assist significantly in the sorting and management of required data. The application of artificial intelligence has vast potential for managing the intricacies of yield management because of its abilities in complex problem solving, analysis, discernment, scheduling and analysis of widespread data. Expert systems are ‘Information based’ software packages that reflect the expertise in the area of the application and these types of systems have extensive capacity in dealing with qualitative data (Bessant and Tidd 2007). References Greasley, A, 2008, Operations Management, SAGE, London. (Greasley 2008) Lewis, M & Slack, N 2003, Operations Management: Critical Perspectives on Business and Management, Routledge, London. (Lewis and Slack 2003) Bettley, A, Mayle, D & Tantoush, T 2005, Operations management: a strategic approach, Sage, London. (Bettley, Mayle and Tantoush 2005) Vidler, C 2001, Operations management, Heinemann, Oxford. (Vidler 2001) Wild, R 2002, Operations management: text and CD-ROM, Cengage Learning EMEA, London. (Wild 2002) Karlsson, C 2008, Researching Operations Management, Taylor & Francis, Oxon. (Karlsson 2008) Young, S 2009, Essentials of Operations Management, Sage, London. (Young 2009) Leseure, M 2010, Key Concepts in Operations Management, SAGE Publications Ltd, London. (Leseure 2010) Mahadevan, B 2010, Operations Management: Theory and Practice, Pearson Education, London. (Mahadevan 2010) Lowson, R 2002, Strategic operations management: the new competitive advantage, Routledge, London. (Lowson 2002) Burtonshaw-Gunn, S 2010 Essential Tools for Operations Management: Tools, Models and Approaches for, John Wiley and Sons, West Sussex. (Burton-Gunn 2010) Klassen, R & Menor, L 2006 Cases in operations management: building customer value through world-class, SAGE, London. (Klassen and Menor 2006) Langabeer, J 2008 Health care operations management: a quantitative approach to business and..., Jones & Bartlett Learning, London. (Langabeer 2008) Loader, D 2002 Relationship and resource management in operations, Butterworth-Heinemann, Oxford. (Loader 2002) McCrie, R 2006 Security Operations Management, Butterworth-Heinemann, Oxford. (McCrie 2006) MacLennan, 2008 Making Strategy Work, Taylor & Francis, Oxon. (MacLennan 2008) Halevi, G 2001 Handbook of production management methods, Butterworth-Heinemann, Oxford. (Halevi 2001) Mayle, D 2006 Managing innovation and change, SAGE, London. (Mayle 2006) Bessant, J & Tidd, J 2007 Innovation and entrepreneurship, John Wiley and Sons, West Sussex. (Bessant and Tidd 2007) Foss,B & Stone, M 2001 Successful customer relationship marketing: new thinking, new strategies ..., Kogan Page Publishers, London. Read More