Management and Decision Making in Five Star Hotel Mayfair - Report Example

Management and Decision Making Briefly describe a d organization in terms of the product/service it provides to its s. Claridge’s Hotel is a traditional grand five star hotel Mayfair, Central London with a history stretching back to the 19th Century (Claridge’s, 2012b). The hotel offers accommodation services through its 203 finely designed rooms and suites. There are restaurants and bars within the hotel where guests can enjoy breakfast, lunch, diner and cocktails. Its bar offers one of the largest champagne menus in London. On the ground floor and 6th floor, there are a number of spacious rooms filled with natural light and equipped with state-of-the-art communications and audio-visual equipment. All these provide a stunning venue for various types of occasions like weddings, cocktail parties, private dining, meetings and conferences. The hotel’s beauty and fitness suite has a modern, well equipped gym and a number of treatment rooms (Claridge’s, 2010). The other services include afternoon tea, gifts and flowers. Currently, the hotel is under the ownership and management of Maybourne Hotel Group. The Claridge’s Hotel was chosen for the assignment because of reputation among the central London luxury hotels. Identify the main inputs, outputs and the transformation process involved The operations process of any organization leads to the production of a given product and/or service through the transformation of a set of inputs resources to outputs. Greasley (2009) explains that they achieve this by using the input-transformation-output process. The products and services therefore represent the organisation’s output. Just like other organizations, hotels are places where inputs are transformed into outputs. The inputs of a hotel are categorized into two, that is, transformed and transforming resources. Greasley (2009) defines transformed resources as those types of resources that are treated, converted or transformed in the process. In a hotel, these include customers and materials like foodstuff. The other type of inputs in a hotel is transformation resources. Chambers, Johnson and Slack (2007), describe these as those resources that act on the transformed resources. In other words, they carry out the transformation process. Examples of these resources in the hotel industry are hotel staff and hotel facilities like buildings and equipment. The main transformation process for the identified transformed resources is value adding. For example, food supplies are acted upon by employees through cooking to produce ready-to-eat food saleable to customers. The customers on the other hand receive accommodation and other services and the end result of this is satisfied guests. Inputs Transformation Process Output hotel stay experience Critique of Planning and Control in Claridge’s Hotel Planning and Control As noted, the operations process of any organization describes how the organization transforms its set of inputs into output. This therefore has to do with the planning and control in the organization. Planning and control provides a way of reconciling the potential of the operation of an organization to supply products and services to meet the demands of its customers. The validity of this is evident in the definitions of the two terms. Basically, planning entails setting performance expectations and laying strategies for achieving this while control is the process of responding to the changes in the plan and its related operations. Planning and control can therefore be described as the daily activities for running the operations of the organization continuously. Claridge’s Hotel falls under the service industry and this means that its most dominate input resource is staff. This also implies that staffing and staff rostering are critical tasks that require careful planning and control. Generally, hotels require the right quantity of staffing to be able to respond to the demands of its customers at various times of the year. This is because schedule for working times greatly determines the capacity of the hotel’s operation. Planning in this area of the hotel therefore entails analyzing the number of rooms and types of services offered by the hotel and using this information to determine the right number of staff the hotel requires. Control on the other side entails a close monitoring of customer demand and responding to this by adjusting the staffing levels and work scheduling. This is done to make sure that there are enough numbers of employees working and attending to the needs of guests at any given point to ensure the hotel has the sufficient capacity in order to meet customer demand at all seasons. Staff Control Claridge’s Hotel has achieved a commendable level of staff planning and control and this has kept alive the hotel’s glory and has enabled it to maintain its list of prestigious guests. Just like any other hotel in London, Claridge’s Hotel receives a high number of quests during the peak season starting from June to September and during Christmas season. The response of the hotel management evidences one important element of control, that is, periodic intervention. The management of Claridge’s Hotel recruits, hires and schedules the employees with demand in mind. This is to say that their staff control is in direct response to the demands of their customers. This is important because the service industry does not keep output in inventories unlike other industries like the manufacturing industry. For the purposes of control, staff in the hotel are mainly allocated work or hired based on demand. Since the hotel has been in operation for a long time, its management is squarely aware of the seasonal variations that are associated with customer demand. The hotel plans in advance to meet the high demands during peak seasons and contacts more employees then. During the low season, the organization maintains only its permanent employees thereby reducing operational costs and production levels. Considering the above facts, it may be noted that the hotel applies material resource planning as a control measure with regard to its staff. Having increased its staff over the years to gain the capacity it requires in an average 5 star hotel, the management of the hotel now focuses on responding to seasonal deviations in its staffing plan to ensure that vacation and other time-off blocks are covered. Through its staffing control, it also ensures that days off continuously match with the work conditions agreed by the staff like off times and that the lengths of work shifts are continuously attractive to the staff. The hotel’s staffing plan indicates that sufficient flexibility has been built in the staffing to facilitate efficient coverage of unexpected changes in the levels of staff either through unexpected increase in customer demand or employee sickness. The attendance of staff is monitored accurately as they are each required to report to the front desk and clock in as they begin and end their shifts. According to Chambers, Johnson and Slack (2007), the front desk of a hotel is the maximum revenue earner because it sells the hotel in various ways. For example, the first impressions they give to the guests will influence guest perception of the hotel and their willingness to go back another time. At the same time, the front desk staffs handle guest requests, conduct room reservations and sells rooms to the guests. Over the recent years, the English hotel industry, including Claridge’s Hotel has seen a rise in the number of non-English speaking guests and this has increased sensitivity of multi-culture in the entire English hotel industry. In response to this situation, the Claridge’s Hotel has employed people from various cultural backgrounds and its front desk is staffed hours a day with multilingual staff 24 who can provide express check-out and concierge services. The workers of the hotel are trained to handle more than one job for example the front desk staff are also familiar with food and beverage services. The main aim of doing this is to facilitate quick capacity management. This is to say that whenever there is an increased need for staff in one department of the hotel, other employees can be deployed quickly and without fear that they will fail to deliver for the hotel. Resource Allocation and Waste Control Perhaps one of the other important areas of management in an organization observing economies of scale as illustrated in the Claridge’s needs is the optimization of resources utilization to achieve results at lowest possible costs. As suggested by the drum, buffer, rope concept, resources utilization must be focused on a tight outlay that is likely to yield the highest possible returns yet operation costs and wastage should be reduced accordingly. The drum in this respect represents the weakest link or constraint in the system. The buffer is the measure taken to prevent systemic failures in the event that there are variations that result from the constraint. On the other hand, the rope acts as a communication device connecting the capacity constraint resource to the point of material release. As such, the rope ensures that the capacity constraint resource is not swamped by work in process. This inverse relationship is important for the development of the best sustainability strategies. At Claridge’s, the bulk of resort related services of a five-star category is composed of rooms and suites, restaurants and bars; conferences, meetings and private events; beauty and fitness services as well as gifts and flowers facilities. In order to ensure that the hotel remains balanced in terms of support for every component of the services portfolio, wastage and unnecessary costs cannot be accommodated (Claridge’s, 2012a). Under the hotel system with as diverse service and product lines as Claridge’s, the drum, buffer, rope concept applies well in terms of identification of disparity areas in the delivery of flawless services. At Claridge’s, control is targeted at reducing bottlenecks at different stages of the diverse operations Goldratt (Poirier and Walker, 2005:190). According to the Poirier and Walker (2005), identification of the constraint section of the operation process and timely rectification spares the rest of the operation negative impact. Management of wholesome business process requires consideration of underperforming areas and evaluating the potential of negative impact from one point affecting the rest of the business. At Claridge’s, there is a relatively perfect balance of control in terms of investment needs for every portfolio front for the said services. However an ambiguity may face this analysis since the hotel business can be seen to be composed of individual standalone service departments that may be closed down in case of an adverse effect at Claridge’s. Difficulties in running these different arms of the business may be departmental and not a general problem involving every wing of the portfolio as highlighted above. Control of the Claridge’s operations is therefore a factor of many amorphous factors which can be difficult to be conceptualized as a single business process (Jones, 1995:18). In an effort to reduce bottlenecks, the organization relies on efficient suppliers. Based on historical records, probabilistic and estimate calculations, and current booking records, the hotel plans for its material needs in advance. While this works for the hotel in most cases, there are a certain instances where additional resources are needed without prior expectation. In order to deal effectively with such cases, the hotel ensures that it always orders and receives more materials at least five days before current stock is depleted under normal circumstances. On the other hand, when the stock held is huge beyond some limit, there are chances that a lot of waste may be generated due to the expiry of some products, for example. In order to avoid such losses, the organization ensures that older stock is used first and newer stock is used last, based on the FIFO (First In First Out) control model. Furthermore, the hotel stops procuring some materials temporarily or orders less in the event that the stock held is adequate or more than adequate for a working season. As a facility offering luxury services to clients, it would be easier to harmonize the various aspects of such a facility if certain features are availed by the management in order to ensure harmonized service delivery almost resembling a single complete business process. According to Chambers, Johnson and Slack (2007, p292), enhanced control will be facilitated at a facility such as Claridge’s if high level definitions are present for clear operations objectives are agreed, if the output is measurable for all the input areas, knowledge of operation’s attributes and repetition of duties for each portfolio function. Inventory or Stock Cost Control Certain attributes of the inventory or stock cost control in order to ensure that the business operates sustainably is through economic order quantity (EOQ) which defines the least operation cost functions. Although it may be difficult to ascertain if Claridge’s management strictly observes the EOQ for all its needs in the various departments, it is important to identify the postulates of the model. There are three elements of costs that should be defined to launch a cost minimization function namely ordering, holding and total costs (Jones and Lockwood, 2004:121). Taking care of stock ordering and storage costs illustrates the direct impact they have on total costs of inventory operation. What is needed at the store should be dependent on ordering costs since both have an impact on the total stock costs. This analysis is followed by other decisions regarding the timing of placing an order as defined by the demands of the particular stock. Bearing in mind that Claridge’s use customers bookings to determine their stocks for the operations, it is important to identify at what quantity level an new order is supposed to be placed, when to place it and what quantity, which subsequently defines annual volumes of stock held. Such an analysis reduces costs on the fact that the most accurate computation eliminates idle time, wastage, extra warehouse maintenance costs and many unnecessary order costs (Rutherford and O’Fallon, 2011:297). Stock control therefore presents an area of cost reduction where managers can ensure smooth running of operations without disruption due to shortage or avoid accumulating unnecessary costs of taking care of overstocking. At Claridge’s, a continuous review of stock levels is conducted to avoid running out of stock particularly during rapid changes in booking patterns. Reorder level is never reached at such a scenario where continuous stock control is exercised to create some shield against depletion during abrupt changes in hotel bookings (Holkar and Waghmare, 2010: p47). A computerized stocks system at Claridge’s augurs well with continuous stock control since it can be tedious to manually keep records of inventory movement (Cho and Wong, 1998:270). According to the authors, there are many ways to compute the functionality of a process in any industry with functions that can be isolated and attributed with management input. Actual stock taking in the computerized stock system is delayed a little longer since keeping track of stock is pretty accurate using the computer. It is possible to determine the various factors of maintaining the EOQ by the use of the formulae below (Chambers, Johnson and Slack, 2007:362). Where EOQ = is the quantity that should be placed in a new order for minimum cost Co = is the cost of making a new order Ch = is the cost of holding stock at the store D = is the quantity demanded in a whole year t = is the duration of time before placing an new order (reorder period) Taking care of the reordering period and quantity in stock control for sustainable operations and reducing costs thereon is heavily depended on the establishment of a safety stock quantity to mark the reorder quantity also referred to as two-bin system (Chambers, Johnson and Slack, 2007:362). The authors also propose a second review analysis referred to as the three-bin system which monitors the element of excessive consumption by separately distinguishing reorder level and safety quantity. These control systems may prompt the use of stock prioritizing system where items are classified for proper control. The ABC inventory control is based on important stocks before the less priority stocks are handled. As an illustration of the most important stocks at Claridge’s, food and beverages are class A items while sanitation items are class B items while entertainment items are class C. ABC classes possess 20, 10 and 10 percent of usage respectively but their importance in stock control should be handled in that order of priority, such as maintaining safety levels for the higher classes. According to the demands of the nature of business at a white-star hotel, a little imbalance may result in serious consequences that may result in huge loses, such as failure to maintain a sustainable stock level (Botherton and Wood, 2008:195). Claridge’s is operated by professional process operating systems that are in touch with the proceedings of every stock need. Bearing in mind that the hospitality industry presents a unique set of challenges to the management roles in terms of decision making needs, clarity and precision are of essence at Claridge’s, which makes it one of the most successful hotels with a rich British history (Claridge’s, 2012b). References Botherton, B. and Wood, R. (2008) The Sage Handbook of Hospitality Management. London, UK: SAGE Publications. Chambers, S., Johnston, R. and Slack, N. (2007) Operations Management. (5th Edn). New York, NY: Prentice Hall/Financial Times. Cheng, J. and Chew, M and Petrovic-Lazarevic, S. 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