HTM209 Hospitality

Operations Management
Semester Two - 2014

HTM 209 Hospitality

Operations Management

Tutor : Julian Galt

Room : B2-24
E mail : julianv.galt@sit.ac.nz

HTM209 Operations Delivery:

Planning and Control

The nature of
planning and
control
Planning and
control

The market
requires products
and services delivered to
requested time, quantity
and quality

The operation
supplies... delivered
products and services

Direct

Design

Operations
management

Deliver

Develop

Operations in Practice:
Joanne manages the schedule (Text page 289)
Consider, note and prepare to report as
follows...:
What are the main activities of the planning
and control system that Joanne manages?
How does Joanne attempt to meet the,
sometimes conflicting, requirements of
customers...
...and the workshop, as she manages the
planning and control system?

Operations in Practice:
Joanne manages the schedule (Text page 289)
Main activities of the planning and control system that Joanne manages?

The system must interface with customers. This customer interface is important
because it defines the nature of the customer experience. This is why Joanne
stresses the importance of managing customer expectations.

The system interfaces with suppliers The timing and level of activities within the
operation or process will have implications for the supply of products and services to
the operation. In this case, the most important supply will be the spare parts that
are needed

The system performs basic planning and control calculations Planning and
control requires the reconciliation of supply and demand in terms of the level and
timing of activities within an operation or process.

How does Joanne attempt to meet the, sometimes conflicting, requirements of

customers... and workshop, as she manages the planning and control system?

This involves attempting to maximize the utilization of her workshop

resources while keeping customers satisfied. Partly, as previously mentioned,
this involves managing customer expectations. But also, in addition, Joanne tries to
build in as much flexibility as possible by getting customers to bring vehicles in as
early as possible and collecting them as late as possible.

Planning and Control

Planning

Control

A record of what is intended to happen at some

future time; an intention, but not guaranteed
Addresses the changes in circumstances that
arise during plan implementation

Control Activities

Adjustments made to get a plan back on track,

in order to achieve the plan objectives

Planning and control

(Continued)
Planning is deciding

What activities should take place in the

operation?
When they should take place?
What resources should be allocated to
them?

Control is

Understanding what is actually happening in

the operation
Deciding whether there is a significant deviation
from what should be happening
(if there is deviation) Changing resources in order
to affect the operations activities

A simple model of control

Input

Operation or
process

Intervention
Plans

Compare/
replan
Figure

10.15 A simple model of control

Output

Monitor

Balance between planning and

control activities... (ref pp 290-291)
Planning and
Control

Long term

Medium term

Short term

Forecast
Information

Focus of
Planning /
Control
Objectives

Resource
Contingency
Planning and Arrangements
Management

Balance between planning and

control activities... (ref pp 290-291)
Planning
and Control

Forecast
Information

Focus of
Planning /
Control
Objectives

Resource
Planning and
Management

Contingency
Arrangements

Long term

Aggregated
demand
forecasts

Emphasis is on
planning rather than
control. Broad
rather than specific
individual needs

Focus will be on
volume and
financial targets

Low priority

Medium
term

Partly
disaggregated
demand
forecasting

Increased detail.
Set objectives for
finance and
operations
management

Emphasis is on
specific resource
requirements and
contingency
plans.

Set to manage
minor deviations
from plans
reserve resources
identified

Short term

Fully
disaggregated
forecasts, and
actual demand
figures

Control priority; of
mix of operations
objectives
balancing quality,
speed, costs etc

Adjust to manage
deviations from
plans

Manage variances
from plan to
achieve required
objectives

Long-term planning and control

Uses aggregated demand forecasts
Determines resources in aggregated form

PLANNING

Days/weeks/months

Time horizon

Months/years

The balance between planning and control

Objectives set in largely financial terms.

Medium-term planning and control

Uses partially disaggregated demand forecasts
Determines resources and contingencies

Objectives set in both financial and operations

terms.

Hours/days

Short-term planning and control

Figure

CONTROL

Uses totally disaggregated forecasts or

actual demand
Makes interventions to resources to correct
deviations from plants
Ad hoc consideration of operations objectives.

10.2 The balance between planning and control activities changes in the long, medium and short term

Application: Air France... (Page 293)

With reference to the example;

Is the planning process described in the case short or

medium term?
In what ways does the planning address the operations
management performance objectives of;

quality

speed
dependability

flexibility
cost

What elements of the process represent planning, and

which incorporate monitoring and control measures?

The volume/variety effects of planning

and control
Volume Variety

Customer Planning
responsive- horizon
ness

Major
planning
decision

Control
decisions

Robustness

Low

High

Slow

Short

Timing

Detailed

High

High

Low

Fast

Long

Volume

Aggregated

Low

Table

10.1 The volumevariety effects on planning and control

Volume and Variety...

This dynamic affects planning and control;

High volume - low variety operations have

planning and control requirements that differ from
low volume - high variety systems...

Low volume - high variety; planning and timing may

be individualised and of high priority. Control will be
detailed and individualised

High volume - low variety; planning may have a very

long timeframe, and forecasting of demand may be
detailed and based on solid data. Volume of output will
be a priority requirement. Control will be against clear
objectives

Volume and Variety...:

Application issues... (Refer pp 192, 289, 292)
Compare the supermarket and dealership contexts...;
Factor
Operations
Management
Objectives
Volume

Variety

Planning

Control

BMW Dealership

Tesco Supermarket

Volume and Variety...:

Application issues... (Refer pp 192, 289, 292)
Compare the supermarket and dealership contexts...;
Factor

BMW Dealership

Tesco Supermarket

Operations
management
objectives

Appropriate service provided

promptly. Customers requirements
met and kept informed. Flexibility
level high, speed of service is key.

Store well laid out; goods easy to find,

smooth flow. Maximise revenue per
square metre. Speed; avoiding long
queues. Transaction times

Volume

Low daily volume; 40 80 jobs

Very high daily volume of customers

Variety

Wide range of requirements; from

scheduled maintenance to
emergencies, to pre-sale checks

Low variety of service, but a wide range

of product lines

Planning

Sophisticated scheduling of
capacity. Multi-skilled staff. Have
loan-cars, to reduce schedule
pressure. Have standard times.
Hold inventory of parts

Plan to ensure smooth flow. Layout

planning crucial as is product location
and shelf positioning impacts sales.
Plan to manage capacity flexibly; to
ensure service speed

Control

Monitor against computer based

schedule. Also against standard
job times. Follow-up re-bookings.
Manage customer expectations

Use technology to count units in, to

accurately plan for checkout capacity to
reduce waiting times

Dependent and independent demand

Dependent demand
e.g. input tyre store in automobile plant

Demand for tyres is

governed by the number
of automobiles planned
to be made

For every automobile

that are planned to be
made, five tyres will be
needed

Dependent and independent demand (Continued)

Independent demand
e.g. tyre fitting service
ACE
TYRES

Demand for tyres is governed by

the type of car arriving, the
fluctuations in the number of cars
arriving and how many tyres need
replacing

Demand for tyres is

largely governed by
random factors

Planning and control systems should

distinguish between dependent and
independent demand (Page 294)
Explain this statement through comparison of
how this concept applies in the contexts of;
The car manufacturing example provided

The BMW dealership

The Tesco supermarket

Planning and control systems should

distinguish between dependent and
independent demand (Page 294)
Explain this statement through comparison of how this concept applies in
the contexts of;

The car manufacturing example provided

The BMW dealership

Demand forecasting for a car manufacturer is relatively straightforward, and

dependant on demand that is known. Throughput daily is predictable and parts
volume can be arranged with certainty; and scheduled accordingly

Operate without certainty about what future demand will be; so subject to
independent demand. Do not have forward visibility of customer orders. Holds
parts in inventory, and manages scheduling to adjust to actual demand

The Tesco supermarket

Have to cope with fluctuating demand, and due to independent demand, hold
high levels of items in inventory; which is planned and controlled. Can track
patterns and flows so can provide some forward visibility based on historic
trends best guess... Plan to respond rapidly to fluctuations in demand.

Planning and control will vary;

subject to how much work can be done
before demand is known...#1 (pp 295-298)
The P:D Ratio

P = The total throughput time to produce the product (or

service)
D = Length of customer wait, between order and receipt of
product

Undertake a brief analysis, and comparison, of the six

systems and their associated P:D ratios, that are
illustrated in Figure 10.4 on page 296... Relate the
examples to the applicable volume / variety factors...

Which system best represents...;

A hotel restaurant operation

A fast food take-away operation

Planning and control will vary;

subject to how much work can be done
before demand is known...#1.1 (pp 295-298)

Analyse, and compare, the six systems and their associated P:D
ratios, that are illustrated in Figure 10.4 on page 296... Relate the
examples to the applicable volume / variety factors...

Operation Type
Design, resource,
create, deliv. to order

Vol / variety
Volume: Low
Variety: High

Characteristics
Resources assembled after
design is approved.

P:D
Ratio
V Low
P=D

Example
Construction
project

Design, create, and

deliver to order

Demand confidence; then

hold transforming resources

Website
developer

Create and deliver to

order

Standard products created

following customer order

House builder;
standard designs

Partly create, deliver

to order

Predictable demand so
products created pre-order

Internet retailer;
e.g. Dell

Create to stock

Standardised products,
made to stock; delivered

Appliance retailer

Collect from stock

Volume: High
Variety: Low

Customers collect their own

product or service

V High

CBD retailers

Planning and control will vary;

subject to how much work can be done
before demand is known...#1 (pp 295-298)
The P:D Ratio

P = The total throughput time to produce the product

(or service)
D = Length of customer wait, between order and
receipt of product

What is the business implication of a

high P:D ratio?

Why might a low P:D ratio not always

be advantageous?

Planning and control will vary;

subject to how much work can be done
before demand is known...#1.2 (pp 295-298)
The P:D Ratio

What is the business implication of a high P:D ratio?

Operations with a high P:D ratio will have a high level of

speculation for planning and control activities. Retailers
have no certainty before purchasing stock that the
customers will want to purchase

Why might a low P:D ratio not always be

advantageous?

Much uncertainty is removed, but although volume of work

is known, time is still uncertain may be many iterations
with customer in order to complete; to secure feedback
and approval

Planning and Control Requirements

Planning and control requires balancing of supply

and demand for;

This is achieved through activities of

Volume
Timing
Quality
Loading
Sequencing
Scheduling
Monitoring and control

Approaches include use of techniques such as

formal project management...;

The activities of planning and control

How much
to do?

When to
do things?

Scheduling

Sequencing
In what
order to do
things?
Figure

10.6 Planning and control activities

Loading

Monitoring
and control
Are activities
going to plan?

Planning and Control Activities...;

With reference to pages 299 312, briefly note the key

definitions and operations management focus and
priorities for;

Loading including examples of finite and infinite

Sequencing and key approaches to priority setting; and

performance objectives
Scheduling and scheduling tools
Monitoring and control including the model of control,
push, and pull control; and the impact of bottlenecks

Then outline the control issues illustrated in Figure 10.18

on page 315, and explain the various options

Planning and Control Activities...#1-1;

With reference to pages 299 312, briefly note definitions

Loading Amount of work allocated to work centre; how much is to

be done? Finite limited; for safety; or to booking schedule. Infinite
copes with requirement; e.g. A&E, F. food

Sequencing The order work is done. May be based on

Physical constraints mix of work arriving affects priority

Customer priority priority given to important customers; or

emergency situations police, A&E; or complaining customers

Due date, FIFO, LIFO, LOT, (Longest OT), SOT...(Shortest OT)

Dependability, speed, and cost are important performance

drivers; meeting a due date; minimising throughput time;

limiting inventory and queues; and limiting cost of downtime

Planning and Control Activities...#1-2;

Scheduling When things are to be done... Timetable for start to

end of tasks. Volume and timing as per bus timetables

Forward scheduling; start as soon as work arrives

Backward scheduling; start at latest feasible time to meet order

(JIT / Lean / MRP).

Project planning techniques; Gantt Charts, network diagrams

Shift and work scheduling to match capacity with demand

Monitoring and control Are activities running to plan? Monitoring
against plan and correcting variances

Push system; activities are scheduled centrally, and completed

work is pushed on to the next stage risk of queues and inventory,
down-time

Pull system; pace set by the recipient of supplied content, with

demand being communicated back through the system

Bottleneck = control point; this sets the pace for the system

Pull and push philosophies of

planning and control
Push control...

CENTRAL OPS. PLANNING AND CONTROL SYSTEM

OR

Instruction on
what to make
and where to
send it

Work
centre

Work
centre

FORECAST

Work
centre

Work
centre

DEMAND

Pull and push philosophies of

planning and control (Continued)
Pull control...

Request

Work
centre
Delivery

Request

Work
centre

Request

Work
centre

Delivery

Request

Work
centre

Delivery

Delivery

DEMAND

Planning and Control Activities...;

Then outline the control issues

illustrated in Figure 10.18 on page 315,
and explain the various options

Control is not always routine

Yes

Yes

Is process
knowledge
complete?

No

Are objectives
unambiguous?

No

Negotiated
control

Is activity
repetitive?

No

Intuitive
control

Needs
political skills

Needs
decision skills

Yes
Trial and
error control
Is activity
repetitive?

No

Expert
control

Needs knowledge
building skills

Needs networking
skills

Yes
Routine
control
Figure

Needs systematization
skills

10.18 Control is not always routine; different circumstances require different types of control

Planning and Control Activities...#1-3;

Control issues are illustrated in Figure 10.18 on page 315,

Difficulty with control based on the response to three questions:

Clarity of objectives

Level of process knowledge

Level of repetitiveness of activities

Where objectives are clear, effects of interventions in process are

known, and operation is repetitive, then operational control is
straightforward and routine.

In situations without routine control, the control may be;

Expert acquiring, and then integrating expertise internally

Trial and error learning control through experience

Intuitive objectives clear; based on judgement and insight

Negotiated objectives unclear; consensus - power structure

Application:
Planning and control at OpCo...#1;
With reference to Akroyd and Maguire, The roles of
management control in a product development setting,
prepare notes for discussion of the following with regard
to the OpCo case study:

Outline the business focus and structure of OpCo, and

The approach taken by the authors to research the issue of

management control in this context
Note definitions for;

Practice theory?

Ethnomethods?

Communities of practice? How many COPs are identified at

OpCo, and what are the characteristics of these groups?

Design Stages in NPD...;

Objectives, and focus for each stage...

Concept generation...;

Concept screening...;

Preliminary design / planning...;

Evaluation testing / improvement...;

Prototyping and final design...;

Application:
Planning and control at OpCo...#2;
With reference to Akroyd and Maguire, prepare notes for
discussion of the following, regarding the OpCo case study:

Outline the apparent dynamic that exists between...;

Creativity in NPD

Control

Cost implications
Management control (MC) is identified as being the process used
by managers to ensure efficient and effective use of resources for
achieving an organisations objectives...

What other advantages of MC are identified?

Why is goal-congruence important?

Explain the importance and role of input, process and output

controls in the OpCo context

Contrast incremental and radical NPD as applicable to OpCo

Application:
Planning and control at OpCo...#3;
With reference to Akroyd and Maguire, prepare notes for
discussion of the following, regarding the OpCo case study:

OpCo has 5 stages and 4 gates in the NPD process

Assess the focus and importance of the key planning and control
processes that are applicable during the...;

First half of NPD: idea generation to project screen gate, and;

Second half: feasibility to product launch

Evaluate the effectiveness of OpCos processes for securing

Goal congruence

Management control input; process; output

Risk management

Planning and Control

QUALITY MANAGEMENT

Quality
management

Direct

Design
Quality
management
The market requires
consistent quality of
products and services
The operation supplies...
the consistent delivery of
products and services at
specification or above

Figure

17.1 This chapter covers quality management

Operations
management

Deliver

Develop

Quality Management:
Consider in your groups, note and prepare to
report as follows...:
When you purchase a service, such as a meal at
a restaurant, how do you judge the quality of the
experience?
In what ways is your judgement different if you

compare your experience at an upscale restaurant

with that at a fast food outlet?

What factors may you judge quality by when

purchasing a tangible product? What about...

A new cell phone?

A replacement washing machine?

Quality characteristics of goods and services

Functionality how well the product or service does the
job for which it was intended.
Appearance aesthetic appeal, look, feel, sound and
smell of the product or service.
Reliability consistency of product or services
performance over time.
Durability the total useful life of the product or service.
Recovery the ease with which problems with
the product or service can be rectified or resolved.
Contact the nature of the person-to-person
contacts that take place.

Key operations questions:

In Chapter 17 Quality management Slack et al.
identify the following key questions
What
How

is quality and why is it so important?

can quality problems be diagnosed?

What

steps lead towards conformance to specification?

What

is total quality management (TQM)?

Quality & Competitive Advantage

With reference to Slack et al., pages 534 539...;

Note the potential impact of quality improvements on

revenues and costs...

What is an operations management view of quality?

Why are the following terms relevant to quality...;

Customer expectations?

Conformance to specifications?

Quality & Competitive Advantage...1-A

With reference to Slack et al., pages 534 539...;
Note the potential impact of quality improvements on revenues and costs...
Increased Revenue
Faster response time

Reduced Costs
Faster response time

Improved brand recognition

Fewer errors

Increased customer service

Less re-work

Increased volume of sales

Lower customer compensation

Reduced price competition

Increased productivity

Increased revenues

Lower costs

Improved profitability

Perceived quality is governed by the gap between

customers expectations and their perceptions of
the product or service
Gap

Gap

Customers
expectations
for the
Customers
product or
perceptions
service
of the
product or
service

Expectations > perceptions

Perceived quality is
poor
Figure

Customers Customers
expectations perceptions
of the
for the
product or
product or
service
service

Expectations =
perceptions
Perceived quality is
acceptable

Customers
expectations
for the
product or
service

Customers
perceptions
of the
product or
service

Expectations <
perceptions
Perceived quality is
good

17.3 Perceived quality is governed by the magnitude and direction of the gap between customers

expectations and their perceptions of the service or product

Quality & Competitive Advantage...2-A

With reference to Slack et al., pages 534 539...;

What is an operations management view of quality?

Consistent conformance to customers expectations
May be considered as the degree-of-fit between customer
expectations and customer perceptions of the product or service

Poor quality; perceptions fall below expectations

Good quality; perceptions are above expectations

Why are the following terms relevant to quality...;

Customer expectations Service or product must be

produced by taking the views & expectations of customers
into account; and quality for a customer is whatever the
customer perceives it to be

Conformance to specifications quality requirements are

built into processes used to produce the goods or services

Quality Expectations;
and the Four Seasons Canary Wharf #1
With reference to Slack et al., pages 535, 536...;
Read the case-study and note responses to the
following...
1.

2.

3.

The company has what it calls its Golden Rule;

Do to others (guests and staff) as you would wish
others to do to you. Why is this important in
ensuring high-quality service?
What do you think the hotels guests expect from
their stay?
How do staffs using their own initiative contribute to
quality?

Quality Expectations;
Four Seasons Canary Wharf...#1-A1
Case-study
1. The company has what it calls its Golden Rule; Do to others (guests
and staff) as you would wish others to do to you. Why is this
important in ensuring high-quality service?

It may be a simple rule, but it guides the whole organizations

approach to quality as the hotel manager says. The golden rule
means treating guests with courtesy and intelligence. It also means
that treating employees with humanity and respect encourages
them to be equally sensitive to the needs and expectations of
guests. It will also encourage a culture of caring. Certainly, it would
be difficult to treat guests appropriately if, behind the scenes, there
was constant friction and conflict.

Slack et al., pages 535, 536,

Quality Expectations;
Four Seasons Canary Wharf...#1-A2
Case-study
2. What do you think the hotels guests expect from their stay?
When guests come to a Four Seasons Hotel they need to have the
assurance that they are going to get exceptional food, great service,
anything they need from the 24 hour concierge service. Most
importantly they will want the basics of the service to be faultless.
This means a great nights sleep with no administrative errors or
failures. Hotels in this category are not trading in service quality
gimmicks. They focus on giving what they call the exceptional
basics.
So they listen very carefully to their guests, give a lot of thought to their
needs, and provide what they really need.
Slack et al., pages 535, 536,

Quality Expectations;
Four Seasons Canary Wharf...#1-A3
Case-study
3. How do staffs using their own initiative contribute to quality?
Four Seasons understand that there is nothing more important than
their staff in achieving such high-quality of service. The culture of
the organization encourages creativity, initiative and attitude. (The
most important of these is attitude. You can teach people the
technical skills of the job but it is the attitude of our staff that sets
them apart from any other hotel chains.).

Slack et al., pages 535, 536,

A Gap model of quality

Word-of-mouth
communications

Previous
Experience

Image of product
or service

Customers
expectations
concerning a
product or service

The
customers
domain

Gap?

Customers
perceptions
concerning the
product or service
Gap 4

Customers own
specification of
quality
Gap 1
Managements
concept of the
product or service

The actual product

or service

Organizations
specification of
quality
Gap 3

Gap 2
Figure

The operations domain

17.4 The customers domain and the operations domain in determining the perceived quality,

showing how the gap between customers expectations and their perception of a service or product could
be explained by one or more gaps elsewhere in the model
Source : Adapted from Parasuraman, A. et al. (1985) A Conceptual Model of Service Quality and Implications for Future Research, Journal of Marketing , vol. 49, Fall.

The perceptionexpectation gap

Gap

Gap 1
Gap 2
Gap 3

Gap 4

Action required to ensure high

perceived quality
Ensure consistency between
internal quality specification and
the expectations of customers
Ensure internal specification
meets its intended concept of
design
Ensure actual product or service
conforms to internally specified
quality level
Ensure that promises made to
customers concerning the
product or service can really be
delivered

Main organizational
responsibility
Marketing, operations,
product/service
development
Marketing, operations,
product/service
development
Operations

Marketing

Quality Expectations;
and the Four Seasons Canary Wharf #2
With reference to Slack et al., pages 535, 536, 538, 539...;
Read the case-study and review the Perceived Quality information

On what basis is the business rated as, Top hotel chain?

What does the company do to minimise or avoid the following potential
expectation and perception gaps?

Organisation specification of quality vs.: The actual service

Managements service concept vs.: Organisation quality specification

Customer quality specification vs.: Organisation quality specification

Service image vs.: The actual service

Quality Expectations;
Four Seasons Canary Wharf...#2-A1
Case-study, and the Perceived Quality information...;

On what basis is the business rated as, Top hotel chain?

Many awards, and one of Fortunes 100 best companies to work for
What does the company do to minimise or avoid the following potential
expectation and perception gaps?

Organisation specification of quality vs.: The actual service

Have developed consistent operating standards; empowered
employees to deliver personalised and high quality service; treat staff
well, customers in turn are then well treated (Gap 3)

Managements service concept vs.: Organisation quality specification

Careful staff selection. Aim is for service oriented motivated, happy
and well trained employees; company runs career development and
training programmes in-house in dedicated facilities. (Gap 2)
Slack et al., pages 535, 536, 538, 539...;

Quality Expectations;
Four Seasons Canary Wharf...#2-A2
Case-study, and the Perceived Quality information...;

Customer quality specification vs.: Organisation quality specification

Aim is to exceed customer expectations... Maintain customer
database to record all feedback; analyse to identify service gaps;
maintain a record of guest history (Gap 1)

Service image vs.: The actual service

Quality service image provides the business with competitive
advantage. Business uses database records to provide individualised
attention to guests; based on previous preferences and feedback
comments. Focus is on providing exceptional service resulting in
repeat business (Gap 4)

Slack et al., pages 535, 536, 538, 539 (Figure 17.4)...

Customer Quality Expectations;

Operations Management Responsibilities #1

Four Seasons Canary Wharf provides an example of a

business responding to customer perceived quality...;

Managing the potential gap: expectations vs. perceptions of service

Managing customer perceived quality;

Requires operations managers to take responsibility for designing a

service (or product)..., and then specifying its quality...
Customer expectations may be determined by;

Previous experiences with the service in this case at the Four

Seasons Hotel

The organisations marketing strategy

What others who have experienced the service are saying

Customer Quality Expectations;

Operations Management Responsibilities #2

Potential expectation and perception gaps..:

Gap 1: Customer specification vs. Operations specification

Gap 2: Concept vs. Specification

Mismatch between P/S concept, and the specification of quality

Gap 3: Quality specification vs. Actual quality

Mismatch between internal quality, and customer specifications

Mismatch between specification of quality, and actual quality of P/S

Gap 4: Actual quality vs. Communicated image

Mismatch between marketing communication & actual delivery

Consider these mismatch scenarios, and then develop an example

for each perception gap, in the context of;

Purchase of a new laptop computer

Purchase of a restaurant meal

Customer Quality Expectations;

Operations Management Responsibilities #2-2
(Slack et al., pages 540 - 541...)
Perceived Quality Gap
Gap 1: Customer
specification vs.
Operations specification
Gap 2: Concept vs.
Specification
Gap 3: Quality
specification vs. Actual
quality

Gap 4: Actual quality vs.

Communicated image

Computer Purchase

Restaurant Meal

Customer Quality Expectations;

Operations Management Responsibilities #2-2A
(Slack et al., pages 540 - 541...)
Perceived Quality Gap

Computer Purchase

Restaurant Meal

Gap 1: Customer
specification vs. Operations
specification

Expectations about level of

functionality memory size
for example

Customer may have been

expecting a certain type of
food but its not on the menu

Gap 2: Concept vs.

Specification

The computer concept is for

The owner intends to offer an
high levels of connectivity, but upbeat efficient service; but
its really only average
staff are slow, and low key

Gap 3: Quality specification

vs. Actual quality

The battery is supposed to

give power for five hours, but
runs out in four

Gap 4: Actual quality vs.

Communicated image

A rather dull machine; not the Service was opposite to the

status building, ego improving fast, efficient, friendly service
device hoped for
advertised on the website

The meal received does not

match menu specification; thin
rather than creamy soup

Conformance to Specification;
Four Seasons Canary Wharf #2
With reference to Slack et al., pages 535, 536, 541 - 548...:

Review the case-study and read the Achieving Conformance to

Specification information in the text...;

Explain and provide examples for how the hotel is achieving the
conformance to specification steps;
i.
ii.
iii.

iv.
v.
vi.

Defining service quality characteristics

Measuring quality characteristics
Setting quality standards for each characteristic
Controlling quality against the identified standards
Finding and correcting causes of poor quality
Making continuous improvements

Conformance to Specification;
Four Seasons Canary Wharf #2-A
Application of Achieving Conformance to Specification...;

How is the hotel is achieving the conformance to specification steps;

i.
Defining service quality characteristics Guiding principle, to make service
quality a competitive advantage. Seek new ways to better serve customers.
ii.
Measuring quality characteristics Have developed and documented
standards for all service operations; and then closely monitor customer
perceptions of delivery of these
iii.

iv.

Setting quality standards for each characteristic Employees encouraged

to ensure good service against standards, and use judgement, creativity.
Controlling quality against the identified standards - Individual customer
responses are recorded, reviewed, tracked and acted on. Aim to exceed
expectations of hotel guests

Finding and correcting causes of poor quality Constantly seeking service

gaps in order to remedy these
vi.
Making continuous improvements Depend on staff, so recruit with care
and provide training and career development. Develop quality culture.
(Slack et al., pages 535, 536, 541-548)
v.

Quality Expectations;
Four Seasons Canary Wharf #3
With reference to Slack et al., pages 535, 536, & 541 - 544...;
Read the case-study & review information on quality characteristics

Then for the Four Seasons Hotel, complete the following table:
Quality
Characteristic
Functionality
Appearance
Reliability
Durability
Recovery
Contact

Hotel Customer
Transformation

Variable

Attribute

Quality Expectations;
Four Seasons Canary Wharf #3-A
Quality
Characteristic

Hotel customer
transformation

Variable

Attribute

Functionality how well

service performed

Efficiency of check-in; Time taken to check in

suitable room; meals and access room

Staff were attentive

and knowledgeable

Appearance appeal,
look, feel, characteristics

Decor & presentation

of facilities. Ambience

Time taken to makeup rooms

Rooms attractively
presented

Reliability service
performance over time

Room availability;
consistent services

Number of times room

unavailable when
requested

Feedback data
consistently positive

Durability useful life of

the service

Service reflects
current trends

Number of repeat
bookings

Brand loyalty

Recovery ease of
problem resolution

Problems and issues

resolved effectively

Number of complaints
identified/resolved

Staff provided
efficient assistance

Contact nature of
person to person contact

High levels of
personalised and
attentive service

Number of guest
feedback cards
analysed

Staff were polite

Quality
Quality
fitness for purpose

Quality of Design
degree to which
design achieves purpose

Reliability
ability to continue
working at accepted
quality level

Quality of Conformance
faithfulness with which the
operation agrees with design

Variables
things you can measure

Attributes
things you can assess
accept/reject

Total quality management

What does total quality management include?
Includes

all parts of the organization

Includes

all staff of the organization

Includes

consideration of all costs

Includes

every opportunity to get things right

Includes

all the systems that affect quality

And

it never stops!

Total quality management is a natural extension of

earlier approaches to quality management
Quality

is strategic
Teamwork
Staff empowerment
Involves customers and suppliers

Makes quality
central and strategic
in the organization

Quality

Broadens the
organizational
responsibility for quality
Solves the root
cause of quality
problems
Prevents out of
specification products and
services reaching market

Statistics
Process

analysis
Quality standards
Error

detection
Rectification

Inspection
Figure

17.7 TQM as an extension

systems
Quality costing
Problem solving
Quality planning

Quality
control

Quality
assurance

Total quality
management

Total Quality Management (TQM) #2

With reference to Slack et al., page 548...;

Note the main objectives of Total Quality Management

Integration of quality development, maintenance and

improvement in an organisation; putting quality at the
centre of all processes
TQM stresses the following;

Meeting customer needs and expectations

Application to all parts of the operation

Inclusion of everyone in the organisation

Examination all costs relating to quality, and quality failure

Systems and processes that support quality and improvement

Continuous improvement

Achieving Your Objectives#1

Assume for the purpose of TQM discussion, that your
group has purchased a small business (caf-bar / light
manufacturing), that you intend to operate and
develop over the next three years. Due to his financial
difficulties the previous owner has sold the business to
you at an attractive price; and you now have the lease
of a facility, equipment, four full-time staff, and five part
time casual employees.
Before long you begin to understand the reason for the
low price you encounter many problems of poor and
uneven quality. The business operates at the
Inspection stage

Achieving Your Objectives#2

Assume for the purpose of TQM discussion, that your
group has purchased a small business (caf-bar / light
manufacturing) Discuss and prepare to report as
follows:

Develop a strategy to improve quality in the operation

over the next 1 2 years

What will you do, and how will you go about

achieving progression from;

Inspection to quality control

Quality control to quality assurance

Quality assurance to TQM?

Total Quality Management (TQM) #3

With reference to Slack et al., page 548 - 549...;

Assess and rate the application of this approach as applicable

to the following examples;

Penang Mutiara (page 64)

Four Seasons Canary Wharf (page 535)
Long Ridge Gliding Club (page 91)
Service Adhesives (page 274)

Locate each operation against the criteria included in the rating

scales on the next slide...;

Then for each organisation, indicate whether you consider them

to be at the stage of;

Inspection
Quality control
Quality assurance
Total quality management

TQM, and Case-study Examples...;

High

Meeting customer needs and expectations

Low

High

Application to all parts of the operation

Low

High

Inclusion of everyone in the organisation

Low

High

Examination all costs relating to quality

Low

High

Systems and processes that support quality

Low

High

Continuous improvement

Low

Total Quality Management (TQM) #3-A

Objectives of Total Quality Management

Integration of quality development, maintenance and

improvement in an organisation; putting quality at the
centre of all processes

(Slack et al., page 548...)

Assess and rate the application of the TQM approach as

applicable to the following examples;

Four Seasons Canary Wharf - TQM

Long Ridge Gliding Club - Inspection
Service Adhesives Quality control
Ocado online supermarket Quality assurance / TQM?

TQM Quality Costs...#1;

With reference to Slack et al., pages 535-536; 551-552; 274-276...;

Note examples of the four main categories of quality costs, as

applicable to the following service and manufacturing examples

Quality cost category Four Seasons Hotel

Prevention costs
prevention of errors and
failures
Appraisal costs
identifying errors during
production, delivery
Internal failure costs
dealing with cost of
internal errors
External failure costs
error going from the
operation to the customer

Service Adhesives

TQM Quality Costs...#1-A;

With reference to Slack et al., pages 535-536; 551-552; 274-276...;

Note examples of the four main categories of quality costs, as

applicable to the following service and manufacturing examples

Quality cost category Four Seasons Hotel

Service Adhesives

Prevention costs
prevention of errors and
failures

Service design and

specifications. Costs of
recruitment, training

Product and process design.

Training and supervising staff.
Statistical process control

Appraisal costs
identifying errors during
production, delivery

Staff time attending to monitoring

and adjusting service delivery.
Collecting, analysing feedback

Sampling of outputs for

conformance to specifications.
Analysing test data

Internal failure costs

dealing with cost of
internal errors

Costs associated with re-work, or

errors in service delivery

Rework - wasted materials . Lost

time fixing processing errors or
problems. Repair costs

External failure costs

error going from the
operation to the customer

Costs associated with managing

customer complaints; public
relations costs

Costs of re-work, costs of

remedying mistakes. Time lost
resolving complaints

TQM Quality Costs...#2

With reference to Slack et al., pages 552-553

Using the information on these pages for

guidance,

Explain the trends and the differences illustrated in

Figure 17.8 (a), and 17.8 (b);

...and then account for the differences between the

two views of costs, effort, and errors; with reference
to the TQM opinion of traditional costing logic...

Compare the traditional quality approach with the

TQM approach

How does TQM address and reduce the costs of

appraisal, and internal/external failure?

TQM Quality Costs...#2-A

With reference to Slack et al., pages 552-553

Explain the trends and the differences illustrated in Figure 17.8 (a), and
17.8 (b); - Optimal quality effort and diminishing returns as costs will
exceed benefits, vs. TQM approach; that errors are not inevitable
...and then account for the differences between the two views of costs,
effort, and errors; with reference to the TQM opinion of traditional
costing logic... TQM: Failure is unacceptable; costs of quality are hard to
measure are often not accounted for; if quality is part of everyones
work, dont need inspection processes: therefore there is not an
optimum level of quality costing...
Compare the traditional quality approach with the TQM approach
Traditional reactive; TQM, is proactive
How does TQM address and reduce the costs of appraisal, and
internal/external failure?
Error prevention reduces these costs prevention costs increase, for
training, but overall quality costs are reduced

Supporting
Quality &
Improvement...#1

Supporting Quality & Improvement...#2

Supporting Quality &

Improvement...#3
With reference to Slack et al., pages 554-555

Outline the origins and also the key objectives of the

ISO9000 approach
If you are going to use this methodology to improve
quality for the cafe-bar scenario that was discussed at the
last session; what will implementation of ISO 9001...;

Require in terms of information?

Require you to develop operationally?

Require of you as a manager?

What advantages may the ISO approach have?

Drawbacks or criticisms?

Supporting Quality:
Lean Synchronisation
Consider Lean; Slack et al., pages 464 - 467...;

Key elements of the approach, and advantages for

operations and quality management?
Compare the traditional with the lean processes, (Figure
15.2); and assess the advantages and disadvantages...
Explain the contrasting approaches to efficiency
between traditional and lean systems what changes
occur to the motivation structure?
Explain the linkages between the interrelated ideas in
Figure 15.3 and text, on page 467
Inventory provides a blanket of obscurity.... How?