1.0 HTM 209 - OM Introductory Session

HTM 209 Hospitality
Operations Management
Semester Two - 2014
Welcome to HTM 209:

Hospitality Operations Management
Tutor : Julian Galt

Room : B2-24
E mail : julianv.galt@sit.ac.nz
Introduction to HTM 209:

Hospitality Operations Management
What
is this all about?
Management is about getting

things done...;
It is about working with people and other resources to

achieve organisational goals...; and achieving these
goals effectively and efficiently
Operations management...;
Focuses on managing the systems and resources used

to create products and services
Include all activities necessary to fulfil customer needs
Managing operations is central, critical, and demanding
Is one of three core functions of organisations;
marketing; product development; and operations
Operations in an Organization;
The operations function is key to an organization because it
produces the goods and services, but it is neither the only,
nor necessarily the most important, function. The three core
functions of any organization are:
The marketing function responsible for communicating

the organizations product and services to its markets in
order to generate customer request for goods and services.
The product/service development function responsible
for creating new and modified products and services in
order to generate future customers requests.
The operations functions responsible for fulfilling
customer requests for service throughout the production
and delivery of goods and services.
Kitchen unit
manufacturing
operation
Back office
operation in a bank
They are all

operations
Retail operation
Take-out / restaurant
operation
The support functions of any organization are:
The accounting and finance function provides the

information to help economic decision making and
manages the financial resources of the organization
The human resources function - recruits and
develops the organizations staff as well as looking
after their welfare.
In practice, functional names, boundaries

and responsibilities vary significantly
between organizations
Consider operations in practice...;

Think of an international airport that you have
visited. These are characterised by;
Dozens of aircraft movements daily
Crowded terminals
Check-in queues
Transfers of passengers and luggage
...and so on
Airports are a complex network of interlocking

systems...;
The Context...
Considering the airport

example...;
List as many operations that you can think

of that contribute to the effective running of
an airport
Then identify and record...;
The main inputs to operation of a large airport

Key processes that are of priority to travellers
Key processes that are of priority to airlines
The main outputs of an airport operation
Systems view of organisations

Environment
Inputs
Transformation
Process
Feedback
Outputs
If you operated an airport dutyfree shop...; List the inputs, processes,

outputs, and feedback applicable to your business...
Environment
Inputs:
Transformation
Processes:
Feedback:
Outputs:
If you operated an airport dutyfree shop...;
What effects may the environment have on

management of operations? Examples?
For each of your inputs note;
Where they originate from

Who supplies the input, and how
Management issues arising from this situation
How will you achieve alignment between

your inputs, your processes, and outputs?
Consider; why might effective

operations management be
important to an enterprise?
In your groups..;
Discuss this question

Identify several reasons why effective
operations management may be important to
a business
and be prepared to report back
Operations Management is
Important;
Operations management can;
Reduce costs of producing products and

service by being efficient.
Increase revenue by increasing customer
satisfaction through good quality and service.
Reduce need for investment by increasing the
effective capacity of the operation and by being
innovative in how it uses its physical resources
Enhance innovation by building a solid base of
operations skills and knowledge within the
business.
Operations Management is:

The business function responsible
for planning, coordinating, and
controlling the resources needed

to produce products and services
for a company
17
A management function
An organizations core function
In every organization whether service or

manufacturing, profit or not for profit
Wiley 2010
18
How...
...do I approach this course?
...treat it as a project;
Project
Management;
What is your purpose?
What is the scope of the work to be
completed?
How is the course organised what
are the requirements?
How is my time best managed?
How do I ensure I get best value out
of the time spent?
What represents quality? What is
expected? Assessment criteria?
Key Challenge #1 Managing Time;

80
70
60
50
40
30
20
10
0
Non-class
Class
Key Challenge #2 Keeping it Real;
Operations management theory and concepts are

not enough...
Application of theory to practice is essential
Keep good records; complete required reading; and

come to class prepared for discussion of set topics
Make a start on the assessment tasks early in the

course much of this work requires you to
demonstrate good practice; a last minute cram
session will not suffice...
References and Resources...;
Course text SIT Bookshop

Course Outline includes assessment
details
Course Readings and Cases, (1) and (2)
SIT Library
The process of management...;

Planning
Resources
Human
Financial
Materials
Technology
Information
Management Functions
Controlling
Organising
Leading
Performance
Goals
Products
Services
Efficiency
Effective

The business function responsible
for planning, coordinating, and

controlling the resources needed
to produce products and services
for a company
25
A management function
An organizations core function
In every organization whether;
Service or manufacturing
Profit or not for profit

Wiley 2010
26
Operations Management Activities

Direct
(steering)
Develop
Design
(build
capability)
(shaping)
Deliver
(plan/control)
Consider Operations Activities in

Practice: (as applicable to IKEA...;text, pp 5-6)
Read the IKEA case example, note and prepare to report

back from your group on...;
In what ways does the IKEA operations model reduce costs?
In what ways does their operations model increase efficiency?

To what extent does IKEA demonstrate what OM is all about?
Use the case information to complete the following analysis...
Operations
Activity
Examples identified in IKEAs

operation
Direct
Planning to improve customer

service remove bottlenecks
Design
Deliver
Develop
Operations Function
Process design smooth flow
Consider Operations Activities in

Practice: (as applicable to IKEA...;text, pp 5-6)
Operations
Activity
Examples identified in IKEAs

operation
Operations function
Direct
Planning to improve customer

service remove bottlenecks
Improve efficiency and

effectiveness
Design
Improve layout of stores

Stylish flat-pack furniture
Staff contributions
Convenient store location
Process design smooth flow

Product design
Job design
Supply network design
Deliver
Delivery of products to stores

Manage changes in demand
Maintaining stocks
Supply chain management

Capacity management
Inventory management
Develop
Enhancing service to customers

Improving processes, and
practices
Quality management
Operations improvement
Operations Processes...;
Input
Resources
Output
Products
Operations Management Model...;

Direct
(steering)
Input
Resources
Develop
Design
(build
capability)
(shaping)
Deliver
(plan/control)
Output
Products
Consider how this model applies

to your duty-free shop scenario;
Categorise your list of inputs into

transformed and transforming inputs
What transformation of materials and
customers takes place in this operation?
Which elements of the transformation
represent...;
A product?
A service?
Which of these is likely to be of most
importance to the customer?
Inputs to the Process;
Transformed resources resources that are treated,

transformed or converted in the process. They are a
mixture of
Materials
Information
Customers
Transforming resources these are the resources
which act upon the transformed resources. They are two
types:
Facilities
Staff
Within the Process
Materials processing transforms materials physical

properties, location, possession or materials are stored.
Information processing transforms information

properties, possession, location or information is stored.
Customer processing transforms customers physical

properties, location, physiological state, psychological
state or store (accommodate) customers.
Outputs from the Process
Outputs from process can be differentiated between

products and service based organization tangibility of
products and intangibility of services
Most operations produce both products and services
Services and products are merging all operations are

service providers who may produce products as a
means of serving customers.
Psychotherapy clinic
Tangible
Can be stored
Production precedes
consumption
Low customer contact
Can be transported
Quality is evident
Management
consultancy
Computer systems
services
Restaurant
Specialist machine tool

manufacturer
Pure goods
Aluminium smelting
Crude oil production
The output from most types of operation is

a mixture of goods and services
Intangible
Cannot be stored
Production and
consumption are
simultaneous
High customer contact
Cannot be transported
Quality difficult to judge
Pure services
However, when comparing

product with service operations
Both use technology
Both have quality, productivity, & response issues
Both must forecast demand
Both will have capacity, layout, & location issues
Both have customers, suppliers, scheduling and

staffing issues
Manufacturing often provides services
Services often provides tangible goods
Consider how this model

applies to your duty-free
shop processes;
Categorise your processes
to reflect the four Ds, and
provide some examples of
applicable processes...;
Direct
Develop
Operations
Activities
Includes...
Directing
Overall strategy and operations
Designing
Services, products, and

processes
Delivering
Through planning and control
Developing
Improving process
performance; capabilities
Design
Deliver
Examples of processes from
the duty-free scenario
Systems view of organisations

Environment
Inputs
Transformation
Process
Feedback
Outputs
The activities of core functions in some organization

Core functional
activities
Marketing and
sales
Internet service
provider
Promotes service
to users and get
registration
Sell advertising
space
Product/service Device new

services and
development
commission new
information
content
Operations
Maintain
hardware,
software and
content
Fast-food chain
Furniture
manufacturer
Advertise on TV
Device
promotional
materials
Design
hamburgers,
pizzas, etc.
Design dcor for
restaurants
Design new
furniture
Coordinate with
fashionable
colours
Make burgers,
pizzas, etc.
Serve customers
Maintain
equipment
Make
components
Assemble
furniture
Deliver furniture
Advertise in
magazines
Determine pricing
policy
Sell to stores
New Trends in Operations

Management;
Ethics
Global focus
Environmentally sensitive production
Rapid product development
Mass customization
Empowered employees
Supply-chain partnering
Just-in-time performance
From Heizer and Render; 2011

Pearson Education, Inc. publishing
as Prentice Hall
Changing Challenges#1;
Traditional
Approach
Reasons for
Change
Current
Challenge
Ethics and
regulations
not at the
forefront
Public concern over

pollution, corruption,
child labor, etc.
??
Local or
national
focus
Growth of reliable, low

cost communication
and transportation
??
Lengthy
product
development
Shorter life cycles;

growth of global
communication; CAD,
Internet
??
From Heizer and Render 2011 Pearson

Education, Inc. publishing as Prentice Hall
Changing Challenges#2
Traditional
Approach
Reasons for
Change
Current
Challenge
Low cost
production,
with little
concern for
environment;
free
resources
(air, water)
ignored
Public sensitivity to
environment; ISO
standard; increasing
disposal costs
??
Low-cost
standardized
products
Rise of consumerism;
increased affluence;
individualism
??

Changing Challenges#3
Traditional
Approach
Reasons for
Change
Current
Challenge
Emphasis on
specialized,
often manual
tasks
Recognition of the
employee's total
contribution; knowledge
society
??
In-house
production;
low-bid
purchasing
Rapid technological
change; increasing
competitive forces
??
Large lot
production
Shorter product life

cycles; increasing need
to reduce inventory
??

Changing Challenges#1-A;
Traditional
Approach
Reasons for
Change
Current
Challenge
Ethics and
regulations
not at the
forefront
Public concern over

pollution, corruption,
child labor, etc.
Local or
national
focus
Growth of reliable, low

cost communication
and transportation
High ethical and

social
responsibility;
increased legal
and professional
standards
Global focus,
international
collaboration
Lengthy
product
development
Shorter life cycles;

growth of global
communication; CAD,
Internet
Rapid product
development;
design
collaboration

Changing Challenges#2-A
Traditional
Approach
Reasons for
Change
Current
Challenge
Low cost
production,
with little
concern for
environment;
free
resources
(air, water)
ignored
Public sensitivity to
environment; ISO
standard; increasing
disposal costs
Environmentally
sensitive
production; green
manufacturing;
sustainability
Low-cost
standardized
products
Rise of consumerism;
increased affluence;
individualism
Mass
customization

Changing Challenges#3-A
Traditional
Approach
Reasons for
Change
Current
Challenge
Emphasis on
specialized,
often manual
tasks
Recognition of the
employee's total
contribution; knowledge
society
Empowered
employees;
enriched jobs
In-house
production;
low-bid
purchasing
Rapid technological
change; increasing
competitive forces
Supply-chain
partnering; joint
ventures,
alliances
Large lot
production
Shorter product life

cycles; increasing need
to reduce inventory
Just-In-Time
performance;
lean; continuous
improvement

Consider operational processes in

a hospitality context...#1;
Environment
Supply
Chain:
Input
Resources:
Transformation
Processes:
Transformed
Transforming
Operations
management (4 Ds)
Outputs:
Feedback:
For a hospitality business that you familiar with, note and

prepare to report back from your group on...;
The key inputs, transformations, & outputs of this operation
Main sources of supply, & feedback into the system? Examples?
Identify a key environmental factor, & explain the likely impact
Consider operational processes in

a hospitality context...#2;
(Refer to the text, pages 6, and 14 17)
Using your selected hospitality business as an example,

note and prepare to report back from your group on...;
Operations Activities
Process design
Job design
Supply chain
management
Capacity management
Inventory management
Quality management
Operations improvement
Example of Occurrence
Required Processes
The Process Hierarchy;

All macro operations are made up many microoperations.
Micro operations have inputs.

Each micro operation produces outputs of goods and services
for the benefit of customers.
Within each micro operation there might be sections or groups.
Internal customers and internal suppliers
Internal customers take outputs from other micro operations.

Internal suppliers take give inputs to other micro operations.
Each micro operations is an internal customer and internal
supplier.
By treating their internal customers with care the effectiveness
of the operation is improved.
Consider the Process Hierarchy:
...as applicable to a hospitality operation...;

(Refer to the text, pages 18 20, Table 1.4, and Fig 1.6...)
In your groups, and using your selected hospitality

business as an example,
Develop a series of diagrams that illustrate, and then

prepare to explain the concept of the process hierarchy,
and levels of analysis, including...;
Supply network level e.g. All hospitality providers in area

Operation level e.g. Your selected operation
Process level e.g. Your selected business process
Note and explain...;
Network of resources; and network of processes
Levels of analysis
Operations Management Model...;

Direct
(steering)
Input
Resources
Develop
Design
(build
capability)
(shaping)
Deliver
(plan/control)
Output
Products
Consider ways operations differ;

Compare the in-store fast-food dining experience
with hotel restaurant dining:
McDonalds Restaurant
The dining experience...
Hotel Restaurant
The dining experience...
?
?
?
?
Include factors including
volume of patrons, menu,
speed of service,
duration, decor, service...
?
?
?
?
Include factors including
volume of patrons, menu,
speed of service,
duration, decor, service...
Which operation would you

prefer to work in?
In your groups consider and prepare to report on

the following...;
Which operation McDonalds, or a hotel

restaurant - would you prefer to work in?
Note why you have decided this. What are the
advantages and disadvantages of each model...
For those working there

For customers
Complete this analysis for the Formule 1 and

Anatara Bangkok hotel cases that are detailed on
pages 24 25 of the text
Operations Processes Have Different

Characteristics;
Operations processes differ in four distinctive ways:
The volume of their output
The variety of their output
The variation in the demand for their output
The degree of visibility which customers have of the

production of the product or service

the 4 Vs characteristics...#1:
(Refer to the text, pages 23 27, and Fig 1.8...)
In your groups, consider the two hotel cases that are detailed on
pages 24 25
Factors
Location
Hotel environment
Construction and decor
Room sizes
Room facilities
Guest services
Food and beverage
Staffing and servicing
Technology
Formule 1
Anatara Bangkok

the 4 Vs characteristics...#1-A:
Factors
Formule 1
Anatara Bangkok
Location
Accessible, close to roads

and city road junctions
In tropical gardens near river,

central Bangkok
Hotel environment
Basic and functional
Luxurious
Construction and
decor
Prefabricated, functional,
sound-proof
Cultural features, lavish

building, silk and hardwood
Room sizes
Small, 9 square metres
Large rooms river views
Room facilities
Functional, all the same,

bunk bed
Fine furniture, internet,

electronics, private balconies
Guest services
Minimal service
Full, sensitive service
Food and beverage
Self service check in, short

staff hours, no restaurant,
self serve breakfast
Ten restaurants and bars.

Wide range of cuisine
Staffing and servicing Minimal staff allocation
Many attentive staff
Technology
Guest facilities
High usage, used for

servicing rooms
Compare the 4V attributes...
The volume dimension

High volume means high repeatability people can
specialize
High volume leads to systemization of work
High volume gives lower unit costs
The variety dimension

High variety of products and services offered
High variety increases cost of goods and services
High variety operations must be flexible
Standardization minimizes cost
Compare the 4V attributes...
The variation dimension

Demand for goods and services can change depending
on the external environment seasonal factor
Creates change in resources needed
Activities must be planned effectively forecasting
Variation in demand can increase cost
The visibility dimension

Visibility means process exposure
Customers in a high visibility operation may judge the
operation by their perceptions customer contact skill is
important
A Typology of Operations
IMPLICATIONS
repetition
Each staff member performs
more of job
Less systemization
High unit costs
IMPLICATIONS
Low
High
Low
Volume
High
Flexible
Well
Complex
Match
customer needs
High unit cost
capacity
Anticipation
Flexibility
In touch with demand
High unit cost
repeatability
Specialization
Systemization
Capital intensive
Low unit cost
High
Variety
Low
defined
Routine
Standardized
Regular
Low unit costs
Changing
waiting tolerance
Satisfaction governed by
customer perception
Customer contact skills
needed
Received variety is high
High unit cost
Stable
High Variation in demand
Low
Routine
Predictable
High
utilization
Low unit costs
Short
Time
High
Visibility
Low
(Refer text, page 26)
lag between production

and consumption
Standardized
Low contact skills
High staff utilization
Centralization
Low unit costs
Compare the 4V attributes of

Formule 1, and Anantara Bangkok
Formule 1
Anantara Bangkok
Volume
Volume
Variety
Variety
Variation
Variation
Visibility
Visibility
Then compare your conclusions with Fig 1.9, page 27
Introduction to HTM 209:
HOSPITALITY OPERATIONS MANAGEMENT
TEST:
Concepts and Terminology!
Note two examples of a transforming resource
Note two examples of a transformed resource
1.
2.
Define the 4Ds of operations management

Define the 4Vs; factors that are used to
compare operational processes
3.
4.
For supply network; operation; and process;

which are at
5.
1.
2.
Macro level of analysis?

Micro level of analysis?
1 - 3A:
Operations Management Model
Direct
(steering)
Input
Resources
Develop
Design
(build
capability)
(shaping)
Deliver
(plan/control)
Output
Products
4-A:Operations Processes Have

Different Characteristics;
Operations processes differ in four distinctive ways:
The volume of their output
The variety of their output
The variation in the demand for their output
The degree of visibility which customers have of the

production of the product or service
5-Ai, ii:
The Process Hierarchy;
All macro operations are made up many microoperations.
Micro operations have inputs.

Each micro operation produces outputs of goods and services
for the benefit of customers.
Within each micro operation there might be sections or groups.
Internal customers and internal suppliers
Internal customers take outputs from other micro operations.

Internal suppliers take give inputs to other micro operations.
Each micro operations is an internal customer and internal
supplier.
By treating their internal customers with care the effectiveness
of the operation is improved.
Map the 4V attributes of

McDonalds and a hotel restaurant
Low
Volume
High
High
Variety
Low
High
Variation
Low
High
Visibility
Low
Refer to the example in Fig 1.9, page 27, for guidance...
Consider the tasks & attributes of

a competent operations manager...
Using the information on pages 26, and 28 - 29, note and prepare
to report back from your group on the key tasks and attributes of
an operations manager...;
Tasks:
Attributes:
Operations
Managers..
Consider the tasks & attributes of

a competent operations manager...
Using the information on pages 28 - 29, note attributes of an
operations manager...;
Tasks:
Directing organisation strategy
Designing the organisations
products, services, processes
form, shape, composition
Planning and controlling
delivery from the suppliers to
the customers
Developing process
performance develop
capabilities, and improve
process performance
Attributes:
Understanding the range of
operations responsibilities
Ability to get things done
Understanding customers
knowing how to meet customer
needs effectively
Strong communication skills
Operations
Managers
Ability to learn and improve

Ability to innovate; contribute
Calm under pressure
Strong analytical ability
The Ten Critical Decisions facing

Operations Managers#1
1.
Design of goods and services
2.
What good or service should we offer?

How should we design these products and
services?
Managing quality
How do we define quality?
Who is responsible for quality?

The Critical Decisions#2

3.
Process and capacity design
4.
What process and what capacity will these

products require?
What equipment and technology is necessary
for these processes?
Location strategy
Where should we put the facility?

On what criteria should we base the location
decision?


5.
Layout strategy
6.
How should we arrange the facility?

How large must the facility be to meet our
plan?
Human resources and job design
How do we provide a reasonable work

environment?
How much can we expect our employees to
produce?


7.
Supply-chain management
8.
Should we make or buy this component?

Who should be our suppliers and how can we
integrate them into our strategy?
Inventory, material requirements planning,

and JIT
How much inventory of each item should we

have?
When do we re-order?


9.
Intermediate and shortterm scheduling
10.
Are we better off keeping people on the payroll

during slowdowns?
Which jobs do we perform next?
Maintenance
How do we build reliability into our processes?

Who is responsible for maintenance?

Application of Concepts
SUNBRIGHT OPERATIONS
Application of these process

concepts in a product context...;
Sunbright Outdoor Furniture
Supply
Chain:
Inputs:
Transformation
Processes:
Outputs:
Distrib.
Chain:
Feedback:
For Assessment 1: What are the key inputs, transformations,

and outputs of this business operation?
Sunbright Outdoor Furniture:

products and services...;
What elements of their outputs are services, and

which are products?
Where should we locate Sunbright on a product
service continuum?
(Ref also the text pages 16 17)
Pure
products
Mixture of products
and services
Product Elements
Service Elements
Pure
services
Sunbright Outdoor Furniture...;
Evaluate the new GMs...;
marketing objectives
marketing strategy, and implementation process
Identify the key elements of the supply chain

Assess the impact of the changes occurring in the
distribution chain, and the implications arising
Evaluate the causes, and effects, of the operational
issues arising, including...;
Communications
Supply-chain management
Consider, and then respond to questions 1 3
Sunbright Outdoor
Furniture
Direct
Four D strategies...;
Consider, and then identify
potential improvements to
operating processes;
Develop
Operations
Activities
Includes...
Directing
Overall strategy & operations
Designing

processes
Delivering
Through planning & control
Developing
Improving process
Design
Deliver
Possible strategies to resolve
process issues at Sun-bright
Understanding Customer Needs is

Key to Operations Management...#1;
Consider in your groups, discuss, note and prepare to report back as
follows: (Refer to Slack et al., pp15 & 18)
For the case examples, identify how customer needs are identified, and how
operations are managed to ensure that the business delivers customer value
First Direct (Co-creation):
Pret A Manger (Service):
Customer
Value

Key to Operations Management #1-A;
(Refer to Slack et al., pp15 & 18)
For the case examples, identify how customer needs are identified, and how
operations are managed to ensure that the business delivers customer value
First Direct (Co-creation):
Pret A Manger (Service):
Internet and phone bank
Strong word of mouth
Training in customer care
Training investment, not cost
Invites customer input/advice
Customer
New ideas on website
Value
customers can comment
Direct customer engagement
Customers at heart of
operations learn from this
Sandwich service chain

Invite customer contact
Fast fresh healthy food
Food prepared on site
Focus on building teams who
care about customer service
Weekly review of feedback
Bonus pay for service
Mystery shoppers rate staff
engagement level

Key to Operations Management...#2;
Consider in your groups, discuss, note and
prepare to report back as follows:
(Refer to Slack et al., pp18 and 34)
Complete exercise one on page 34
For part (a), use table 1.4 on page 19 as a guide

For part (b), develop a list of implications with
examples of each
For part (b), be prepared to justify each advantage
and disadvantage
Application of Concepts
SUGAR AND SPICE DESSERTS
Competitive Model Porters 5

Forces
Application to a case study:

Sugar and Spice Desserts #1
Read the case-study from Readings (1)
Develop a brief analysis of the...;
Operating environment opportunities/threats

Direct competition focus on capabilities
Compare the transformation systems applicable

to both Sparkles, and to Sugar and Spice, i.e.;
Inputs
Transformation Processes
Outputs
Note any key similarities and differences

Sugar and Spice Desserts #1-A
Operating Environment:
Trendy product rising demand
Small indulgence in a tight economy

High margin business quick and easy to make
Portable and appealing product
Considered relatively healthy
Competitive environment; market entry barriers
low, high threat of new entrants, many substitute
products, and buyers have power / choice

Sugar and Spice Desserts #1-A
Factor
Sparkles
Sugar and Spice
Input
Customers mainly general

public, passing traffic.
Ingredients are bulk mixes.
Permanent PT / FT staff.
Facility a specialised bakery.
Inventory planned and based
on previous sales
Corporate customers
High quality product
Wide variety flavour and design
mix and match
Made in apartment, moved to
commercial kitchen. Orders over
phone, large, placed in advance
Transformation Advantage of scale; operates

9 hours / day. Sold off the
shelf in retail outlet. Visibility
and branding
Based on customisation, made to

order. High level of variety and
design. Scale limited to orders recd;
limited by production system
Output
Wide range of product variety

Distributed by courier, or customer
pick-up. Customised at $48/doz...
Ten flavours per day. Low

variety, and rel. high volume.
$36/doz. Store and truck for
distribution. Some specialty
items and merchandise sold
Comparing product service at

Sugar and Spice, and Sparkles #2
Compare the product - service elements of the

two operations featured in the case article
What are the advantages and disadvantages of

Allisons approach to providing service
(Ref also the text pages 16 17)
Pure
products
Mixture of products
and services
Product Elements
Service Elements
Pure
services
The 4 Ds: Sugar and

Spice Desserts #3;
Consider, and then identify
potential improvements to
operating processes;
Direct
Develop
Design
Deliver
Operations
Activities
Includes...
Directing
Overall strategy & operations
Designing

processes
Delivering
Through planning & control
Developing
Improving process
Possible improvement strategies

for Sugar and Spice Desserts
The 4 Ds: Sugar and

Spice Desserts #3-A;
Consider, and then identify potential improvements to
operating processes; (as per text page 26...)
Operations
Activities
Includes...
Possible improvement strategies for

Sugar and Spice Desserts
Directing
Overall strategy &

operations
Develop clear goals and a business model

that will improve efficiency and profitability
Designing
Services, products,
and processes
Identify and remove process bottlenecks

Consider moving to an increased volume of
standardised products
Delivering
Through planning &

control
Manage and control the input;

transformation; output process to maximise
capacity, and use resources more efficiently
Developing
Improving process
performance;
capabilities
Assess options to build capability and

capacity evaluate cost benefit of changes
to production facility, staffing use, marketing
The 4 Vs, at Sugar and Spice;

Volume; Variety; Variation; Visibility #4
Using the information on pages 23 27 of the text,
complete the following analysis;
Element
Volume
Variety
Variation
Visibility
Effect on process,
labour, and costs
Application to
Sugar and Spice
Application to
Sparkles
The 4 Vs, at Sugar and Spice;

Volume; Variety; Variation; Visibility #4-A
Using the information on pages 23 27 of the text, complete;
Element
Effect on process,
labour, and costs
Application to
Sugar and Spice
Application to
Sparkles
Volume
High volume high level of

repeatability and
systematisation; lower unit
costs
Low volume high

cost per item
High volume , lower

unit costs
Variety
Low variety, routine,

defined, standard, lower
unit costs
High variety high

cost
Narrow range which

assists with lowering
costs
Subject to irregular
demand, peaks and
troughs. Cannot hold
stock or capacity;
casual staff
Retail outlets meet

daily demand needs
and smooth
throughput.
Inventory history
Low visibility lower

costs as a result
High visibility for

retail staff, low for
others. Costly facility
Variation Low variation in demand

stable, routine, predictable;
lower cost.
High - requires changing
capacity, ...higher costs
Visibility Exposure to customers if

high, waiting time, staff
attitude are important. Cost

Sugar and Spice, and Sparkles #5
Low
Volume
High
High
Variety
Low
High
Variation
Low
High
Visibility
Low

, and
#5-A
Low
Volume
High
High
Variety
Low
High
Variation
Low
High
Visibility
Low
Case study: Sugar and Spice

Desserts #6;
Consider the case, and identify issues that

may be of concern to Allison Thatcher;
With regard to operational processes
In terms of competitiveness
For her proposed growth strategy

Desserts #7;
Consider, note and prepare to report back
as follows:
If you were advising Allison on her business

expansion options, what criteria should she
use to evaluate these alternative strategies?
Assess the suitability of her expansion options
What are the advantages and disadvantages

of each one?
What further information would you need in

order to be able to evaluate these properly?
What should she do, and why?
How may we assess:
PRODUCTIVITY?
Productivity
Units produced
Productivity =
Input used
Factors supporting productivity?

Factors reducing productivity?
Productivity:
Units produced
Productivity =
Input used
Measure of process improvement
Represents output relative to input
Only through productivity increases

can our standard of living improve

Productivity Calculations
Labour Productivity
Productivity =
=
One
Units produced
Labour-hours used
1,000
250
= 4 units/labour-hour
resource input single-factor productivity

Multi-Factor Productivity
Output
Productivity =
Labor + Material + Energy
+ Capital + Miscellaneous
Also known as total factor productivity
Output and inputs are often expressed

in dollars
Multiple
resource inputs multi-factor productivity


Desserts #8;
Consider in your groups, discuss, note and
prepare to report back as follows:
If you were advising Allison on improving
operations management, how might she;
Evaluate her operational processes relative to

her main competitor?
Judge her productivity against that of her main

competitor? (Productivity = Outputs/Inputs)
Factor
Expenditure
Ingredients/dozen
Decoration
Packaging
Ingredient total
Time Required - minutes @ 4 dozen
Time Required - minutes /dozen
Hours per dozen
Labour cost per dozen
Variable Salaries / hourly rate
Fixed Salaries
Total Salaries
Sugar and Spice - Current

Standard
$5.58
$ Total/Month
$0.69
$6.27
Custom
$6.90
$7.20
$0.69
$14.79
55.00
13.75
0.23
$2.98
164.00
41.00
0.68
$8.88
$13.00
Rent
Labour productivity / month

Productivity (dozen per month/ Month Cost)
(138 dozen / $6225.90 in salaries)

(138 dozen / $11266.92 costs)
Month
$2,041.02
$2,041.02
$1,225.90
$5,000.00
$6,225.90
$6,225.90
$3,000.00
$3,000.00
0.0222
0.0122
Total
Income
Price per dozen
Capacity/Volume (dozen)
Total
Balance
$11,266.92
$30.00
$51.00
138.00
$7,038.00
$7,038.00
-$4,228.92
Factor
Expenditure
Ingredients/dozen
Decoration
Packaging
Ingredient total
Hours per dozen
Fixed Salaries
Total Salaries
Sugar and Spice - Projected @400 units

Standard
$5.58
$0.69
$6.27
Custom
$6.90
$7.20
$0.69
$14.79
55.00
13.75
0.23
$2.98
164.00
41.00
0.68
$8.88
$13.00
Rent
Productivity (dozen per month/ Month Cost)
400 / 8553.33
400 / 17469.33
$ Total/Month
Month
$5,916.00
$5,916.00
$3,553.33
$5,000.00
$8,553.33
$8,553.33
$3,000.00
$3,000.00
0.0468
0.0229
Total
Income
Price per dozen
Total
Balance
$17,469.33
$51.00
400.00
$20,400.00
$20,400.00
$2,930.67
Factor
Expenditure
Ingredients/dozen
Decoration
Packaging
Ingredient total
Hours per dozen
Fixed Salaries
Total Salaries
Sparkles
$ Total/Month
Standard
$7.95
$0.50
$8.45
Custom
$9.83
$7.20
$0.69
$17.72
36.50
9.13
0.15
$1.98
145.50
36.38
0.61
$7.88
Day
Month
$12.00
Rent
Productivity (dozen per month/ Month
Cost)
$15,210.00
$15,210.00
$3,558.75
$8,750.00
$12,308.75
$12,308.75
$15,000.00
$15,000.00
1800 / 12308.75
0.1462
1800 / 42518.75
0.0423
Total
Income
Price per dozen
Total
Balance
$42,518.75
$36.00
60.00
1800.00
$64,800.00
$64,800.00
$22,281.25
HOMEWORK...
1.
2.
3.
4.
5.
Review the Course Outline document

Consider the assessment requirements carefully...
Readings and cases
Textbook, Slack et. al.; Chapters 1 - 3
Prepare for next sessions

1.0 HTM 209 - OM Introductory Session

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HTM 209 Hospitality

Welcome to HTM 209:

Tutor : Julian Galt

Introduction to HTM 209:

Management is about getting

It is about working with people and other resources to

Focuses on managing the systems and resources used

The marketing function responsible for communicating

They are all

The support functions of any organization are:

The accounting and finance function provides the

In practice, functional names, boundaries

Consider operations in practice...;

Airports are a complex network of interlocking

Considering the airport

List as many operations that you can think

Then identify and record...;

The main inputs to operation of a large airport

Systems view of organisations

If you operated an airport dutyfree shop...; List the inputs, processes,

If you operated an airport dutyfree shop...;

What effects may the environment have on

For each of your inputs note;

Where they originate from

Management issues arising from this situation

How will you achieve alignment between

Consider; why might effective

Discuss this question

and be prepared to report back

Reduce costs of producing products and

Operations Management is:

controlling the resources needed

Operations Management is:

An organizations core function

In every organization whether service or

Key Challenge #1 Managing Time;

Key Challenge #2 Keeping it Real;

Operations management theory and concepts are

Application of theory to practice is essential

Keep good records; complete required reading; and

Make a start on the assessment tasks early in the

References and Resources...;

Course text SIT Bookshop

Course Readings and Cases, (1) and (2)

The process of management...;

Operations Management is:

for planning, coordinating, and

Operations Management is:

An organizations core function

In every organization whether;

Profit or not for profit

Operations Management Activities

Consider Operations Activities in

Read the IKEA case example, note and prepare to report

In what ways does the IKEA operations model reduce costs?

In what ways does their operations model increase efficiency?

Use the case information to complete the following analysis...

Examples identified in IKEAs

Planning to improve customer

Process design smooth flow

Consider Operations Activities in

Examples identified in IKEAs

Planning to improve customer