OPMAN

Efficacy, Efficiency, Effectiveness

• I can do it right.

• I can do it quickly and economically.

• I can do it well.

Operations Management

• A discipline that applies to various sectors, including restaurants like Hard Rock Cafe, and factories like Ford and Whirlpool.

Key Concepts in Operations Management

• Efficiency and Effectiveness

• Value Creation

Efficiency and Effectiveness

• OM focuses on ensuring that processes are efficient, using the least amount of resources necessary, abd effective in meeting customer requirements.

Value Creation

• OM involves transforming inputs into outputs that provide value to customers

1. Design Of Goods and Services

• Defines of much of what is required of operations in each of the other OM decisions.

• Determines the lower limits of cost and the upper limits of quality as well as major implications for sustainability and human resources.

2. Managing Quality

• Determines the customer’s quality expectations and establishes quality and procedures to identify and achieve that quality.

3. Process and Capacity Strategy

Determines how a good or service is produced and commits management to specific technology, quality, human resources and capital investments that determine much of the firm’s basic cost structure.

4. Location Strategy

Requires judgments regarding nearness to customers, suppliers, and talent, while considering costs, infrastructure, logistics, and government.

5. Layout Strategy

Requires integrating capacity needs, personnel levels, technology, and inventory requirements to determine the efficient flow of materials, people, and information.

6. Human Resources and Job Design

Determines how to recruit, motivate, and retain personnel with the required talent and skills. People are an integral and expensive part of the total system design.

7. Supply Chain Management

Decides how to integrate the supply chain into the firm's strategy, including decisions on what to purchase, from whom, and under what conditions.

8. Inventory Management

Considers inventory ordering and holding decisions and how to optimize them based on customer satisfaction, supplier capability, and production schedules.

9. Scheduling

Determines and implements intermediate- and short-term schedules that effectively and efficiently utilize both personnel and facilities while meeting customer demands.

10. Maintenance

Requires decisions that consider facility capacity, production demands, and personnel necessary to maintain a reliable and stable process.

The Interconnection of Operations, Marketing, and Finance

• All organizations rely on three essential functions: operations, marketing, and finance.

• These functions are key for both producing goods/services and for the survival of the organization.

• In the hospitality and tourism industry, these areas are closely linked to ensure smooth service delivery and overall business success.

1. Marketing

Marketing generates demand for hospitality and tourism services by promoting and selling experiences such as hotel stays, restaurant dining, and travel packages. It involves advertising, market research, and customer relationship management.

2. Production/Operations

Operations are responsible for creating, producing, and delivering hospitality and tourism services. This includes managing daily activities, maintaining facilities, and ensuring a high-quality guest experience.

3. Finance/Accounting

Finance monitors the financial performance of the business by managing budgets, paying bills, and collecting revenue. It ensures the financial health and sustainability of the organization.

Roles Of Operation in Service Industries
Operations for Goods and Services

• Goods are tangible, can be stored, and standardized.

• Services are intangible, consumed when delivered, and vary per customer.

• Many products combine both goods and services.

Characteristics of Goods

• Tangible: Can be touched or held (e.g., the seat itself).

• Can be inventoried: Products can be stored for later use (e.g., beauty care products).

• Standardized: Products are usually the same across units (e.g., iPhones).

• Limited customer interaction: Customer involvement in production is minimal.

• Easy to define: Product specs are consistent and clear.

• Automation-friendly: Tangible products make automation easier.

• Produced at fixed locations: Typically made in a centralized facility.

• Quality is measurable: Quality can be objectively assessed (e.g., strength of a bolt).

• Can be resold: Goods often have residual or resale value.

Characteristics of Services

• Intangible: Cannot be touched (e.g., airline seat experience).

• Simultaneous production and consumption: Created and used at the same time (e.g., haircuts).

• Unique: Tailored to individual needs (e.g., medical care, investments).

• High customer interaction: Customer is deeply involved in delivery (e.g., consulting, education).

• Variable definitions: Service outcomes may vary (e.g., insurance policies).

• Knowledge-based: Often involve expertise (e.g., legal, medical services).

• Dispersed delivery: Can be provided in multiple ways (store, home, online).

• Hard to evaluate quality: Subjective assessment (e.g., education, consulting).

• Rarely resold: Typically has no resale value (e.g., concert tickets, surgery).

Growth of Services

• Services dominate postindustrial economies.

• Growth driven by consumer demand, technology, and globalization.

The Productivity Challenge

• Transforming resources into goods/services adds value.

• Efficiency increases productivity.

• Productivity is harder to improve in services due to their nature.

Challenges in improving Productivity in the Service Sector
1. Typically Labor Intensive

Service-sector work often requires a high level of human involvement and cannot be easily replaced by machines.

2. Frequently Focused on Unique Individual Attributes or Desires

Services are often tailored to meet specific customer needs and preferences.

3. Often an Intellectual Task Performed by Professionals

Many services require specialized knowledge and professional expertise.

4. Often Difficult to Mechanize and Automate

Some tasks need a human touch and cannot be easily replaced by machines or technology.

5. Often Difficult to Evaluate for Quality

Judging service quality is often subjective and depends on individual customer expectations.

• Leveraging Technology

Using tools like online booking, mobile check-ins, and CRM software to make operations more efficient.

• Employee Training

Investing in training to improve staff skills, efficiency, and customer service quality.

• Process Improvement

Ongoing effort to analyze and refine service processes to remove inefficiencies and improve service delivery.

• Customer Feedback

Actively gathering and using customer input to improve service quality and adapt to changing expectations.