CHAPTER 5

Value-added Managers (VAMs)

Add value to the organization through there area of

responsibility by enhancing productivity in small increments
every day.
PRODUCTIVITY

A linear system that consists of inputs that feed a

transformation process, which yields outcomes in the form of
products and services.

The linear process is surrounded by nonlinear, invisible

factors to include meaning and learning systems, which
serve as dynamic feedback loops.
Productivity Process

This perspective requires us to track activities from input

through output stages to improve the learning and meaning
systems that surround the linear model.

Objective
of
using
it:
to
create
PROCESS
IMPROVEMENT, which requires us to dissect and revise
subroutines to improve overall process.
From Engineering Perspective: the focus is totally on the
linear equation of inputs, transformation process and
outputs.
________________________________________________________________________
Service Enterprise Production Systems
SUPPLY CHAIN

Majority of commercial enterprise subscribes to this

approach to management

A continuum of steps that occur in manufacturing and

distribution of products that ranges from the original point of
manufacture to the end user (customer)
Five Types of Production Systems a Service Enterprise Operate
1.
Service Transaction Systems
a.
The hub of all other systems
b. Maintenance, Repair, Product and Distribution are
subsystems of the service transaction system
c.
Service Transactions are the outputs that result
from each of the four subsystem inputs and
transformation processes.
d. In operation during any touch point with the
guest/client or internal customer in which there is
a conversion process.
e.
Comprise the majority of transactions within a
service enterprise
f.
Vast production use human resources as the
PRIMARY input in the form of front-line
service personnel or those who support
front-line service personnel
i. Transaction process includes time
spent with the guest and the
sequence
of
steps
in
the
transaction process.
ii. The OUTCOME is the status of the
guest-checked-in,
informed,
transported, accommodated, etc.
iii. Include timing and sequencing of
the pricess to create an output
2.
Maintenance Systems
a.
Convert unusable space into usable space.
b.
A CYCLICAL PROCESS, there are 3 steps
taken to complete each conversion:
i. PREPREPARATION PHASE requires
human resources, equipment and
supplies to be available to the
maintenance provider.
ii. PROCESSING includes the steps that
required to convert the facility from
dirty to clean
iii. POSTPREPARATION to prepare for
the next phase, such as restocking a
housekeeping cart for use the next day.
3.
Repair Systems
a.
Convert inoperable property and equipment into
working order
b.
Work trades of people such as carpenters,
mechanics, technicians, etc.
c.
3 Steps
i. Diagnostics inspecting what is wrong
ii. Intervention replacement of the
damage item
iii. Testing test if the item is already
working

d.

4.

5.

OUTPUTS consists of operating equipment and

facilities, which is necessary to put them back in
available inventory
Distribution Systems
a.
Conversion process consists of movement of
physical items or information from one point to
another.
b.
Primary is the Human Resource Inputs
i. Transformation
process
involves
moving items or information fron one
point to another in a timely and
accurate fashion
ii. When accomplished, a favourable
Product Production Systems
a.
Only production system that produces actual
products
b.
Apply mostly to foodservice sectors of the services
industry
c.
Product production unit in the food service sector
is called the CULINARY DEPARMENT.
d.
Inputs are quite high relative to the profit
margins of food and beverage revenues
i. Once
the
raw
materials
are
available in the working stage, the
culinary teams takes steps to
convert those material into finished
plates.
ii. An
expensive
transformation
process that requires significant
levels og human, equipment and
supply
resources
to
produce
outputs
iii. The sanitation costs associated
with food production are also high.

These systems are directly related to serving external

customers or internal customers.
A KEY POINT that differentiates service enterprise from
manufacturing firms
________________________________________________________________________
THREE ASPECTS OF THE PRODUCTIVITY MODEL
INPUTS

MATERIAL RESOURCES
o
The 1st category of resources
o
Includes raw materials, equipment, and supplies
o
Must spend money to acquire resources.
o
Most equipment is considered to be a capital
expenditure with a payback period of many years.
o
Attained
through
a
procurement
or
purchasing process.
o
At the time of delivery, the purchased items are
inspected to quality and quantity then placed in
INVENTORY.

Two Categories of Inventory

STOREROOM
INVENTORY
contains
items
that
are
available
for
production
systems usage
o
Crucial
to
the
resource side of
cash flow

WORKING INVENTORY when

the requisitioned materials are
delivered to the work units.

HUMAN RESOURCES
o
in order to enhance productivity, employee
turnover should minimize

TECHNOLOGY
o
Partly a material resource from the standpoint of
electronic hardware components
o
Also intangible from the view of software used to
drive the technology to preform production tasks.

OBJECTIVE OF MANAGING RESOURCES (INPUTS)

o
EFFECIENCY is the objective of resource
management

Measured in total costs of goods

and services sold
TRANSFORMATION PROCESS

A linear process that converts materials, human capital and

technology into products and services for customers, guests
and clients

Talk about OPERATIONS, which applies to the conversion

processes in all functions, both line and staff

Two Aspects that Influence the Transformation

Process
o
Competencies

The combined knowledge, skills and

abilities of our human resources
o
Climate

Exists within each work unit contained

by the service enterprise.

Includes present worker attitudes,

management
proficiency
and
transformational systems
Two Ways for Negative Attitude to Exist in the Work
Unit
o
manager could fail to hire people with service
enterprise attitudes, which result in poor
job/person/environment fit
o
manager permits negative attitudes to evolve over
time

OUTPUTS

results that occur from the blending inputs with

transformation processes

How to measure outputs:

o
First want to be sure that the outputs meet the
established standards.

The
standards
will
identify
the
expectations for the number of outputs
produced in a timely manner called
QUANTITY STANDARDS.

QUALITY
STANDARDS
articulate
specifications for each service or
product provided

TOTAL QUALITY MANAGEMENT

o
Process of continuously improving inputs and
processes used to achieve quality and quantity
standards.
o
VALUE-ADDED MANAGEMENT goes one step
further by continuously finding ways to achieve
quality standards and to increase quantity
standards by working smarter, not harder.
When outputs meet the established standards for quality
and
quantity,
the
operation
is
being
effective.
EFFECTIVENESS consists of metrics used to evaluate
outcomes in terms of quantity and quality
In the SERVICE ENTERPRISE the ultimate outcome
resulting from effectiveness is the establishment of
CUSTOMER RELATIONSHIPS.
o
Continuing patterns of interactions with new
customers and repeat guests and clients.
Effective operation will support the MARKKETING efforts of
the organization. MARKETING is a function of acquiring and
maintaining guests and clients.
CUSTOMER LOYALTY
o
Measurement of the strength of an ongoing
customer relationship
o
Smart marketing executives realize the value of
lifetime customer relationships, which measures
the potential revenues to be realized from a guests
or client throughout his or her lifetime though
repeat business generated through customer
relationships.