Quality and operation management

Quality and Operation Management


Introduction

Operation Management

Operations management is a part of business concerned about the production of goods and services, and involves the responsibility of ensuring that business operations are efficient in terms of using as little resource as needed, and effective in terms of meeting customer requirements. It is concerned with managing the process that converts inputs, in the forms of materials, labor and energy into outputs, in the form of goods and services.

                    Traditionally, operation refers to the production of goods and services separately, although the distinction between these two main types of operations is increasingly difficult to make as manufacturers tend to merge product and service offerings. Jobs in services are often less structured than in manufacturing. Customer contact is generally much higher in services compared to manufacturing. In many services, worker skill levels are low compared to those of manufacturing employees. Services are adding many new workers in low-skill, entry-level positions. Employee turnover is high in services, especially in low-skill jobs. Input variability tends to be higher in many service environments than in manufacturing. Service performance can be adversely affected by many factors outside of manager's control, such as employee and customer attitudes.

                    Operations managers are concerned with each step in providing a service or product. They determine what equipment, labor, tools, facilities, materials, energy, and information should go into an operating system and how these inputs can best be obtained and used to satisfy the requirements of the market place. Managers are also responsible for critical activities such as quality management and control, capacity planning, materials management, purchasing, and scheduling.

                    Operations management is getting important dramatically in recent years. Significant foreign competition, shorter product and service life-cycles, better-educated and quality-conscious consumers, and the capabilities of new technology have placed increasing pressures on the operations function to improve productivity while providing a broader array of high-quality products and services. With the globalization of markets, firms are recognizing that the operations function can be used to strengthen their position in the market place. Managers in operations management play a strategic and tactical role in satisfying customer needs and making their firms strong international competitors.

Hotel Equatorial

In this assignment, we will discuss about the operations management in Hotel Equatorial. Hotel Equatorial Corporate has a presence in three major Asia Pacific countries with seven properties in the group, located in the region's gateway cities. These three countries are Malaysia, China and Vietnam. Those Hotel Equatorial in Malaysia are located at Kuala Lumpur, Putrajaya, Malacca, Penang and Cameron Highlands. However, we only focus on the operation management of Hotel Equatorial Kuala Lumpur.

                    Hotel Equatorial Kuala Lumpur is located at Jalan Sultan Ismail. It is an international business-class hotel that emphasises efficiency, comfort, security and value for money, the Equatorial Kuala Lumpur also delivers genuine Malaysian warmth and hospitality. Hotel Equatorial Kuala Lumpur is highly-regarded for its excellent food and beverage services. The 5-star Equatorial Kuala Lumpur is located in the heart of the city's commercial and entertainment district that's within walking distance to major offices, shopping malls, the Petronas Twin Towers or Suria KLCC and entertainment centers.

                    There are total of 300 rooms inside Hotel Equatorial. All of them are equipped with modern amenities. The rooms are pleasantly appointed with details that will make guests feel at home. There are splendid suites that can provide customers ultimate privacy. Beside that customer also can have a choice of Presidential, Senator or Executive Suites to rises a level higher.

                    There is also swimming pool inside Hotel Equatorial Kuala Lumpur. Beside that facilities and services for guest convenience at Hotel Equatorial also include business center with meeting rooms and broadband Internet access, 24-hour room service, laundry and valet service, limousine service, currency exchange, doctor on-call, shopping arcade and basement parking.

                    The Equatorial Kuala Lumpur is also renowned in the city for its award-winning restaurants such as the signature Golden Phoenix Chinese and Kampachi Japanese restaurants. The various food and beverage outlets found here are among Kuala Lumpur's most popular places for corporate or personal entertainment. Hotel Equatorial Kuala Lumpur also provides professional conference facilities with the attentive backing of trained staff that attend to your individual meeting requirements. There are ballroom, function room and business center inside this hotel.


Literature Review

The hospitality industry today has been recognized as a global industry. Indeed, it has played a vital role in Malaysia in recent years in terms of the hospitality industry itself; to develop a better diversity environment and society, and even contributes to the GDP (Gross Domestic Product) Malaysia. There are several types of hotel that have been recognized all around the world, such as budget hotels, apartment hotels, luxury hotels, resorts, and etc. There are other classifications of hotels; however, most of them will fall into one of these or a combination of these. Hospitality usually refers to the hotel industry; it is consider as a service by combining the accommodations, food and beverages services, recreation, entertainment sectors and even for the business purposes. Apart from that, hospitality is actually playing the relationship between a host and a guest by the acting and being hospitable to the public. Hepple, Kipps and Thomson (1990) reviewed the existing literature for definitions of hospitality, and identified four characteristics of hospitality in its modern sense:

(a) It is conferred by a host on a guest who is away from home.

(b) It is interactive, involving the coming together of a provider and receiver.

(c) It is comprised of a blend of tangible and intangible factors.

(d) The host provides for the guest's security, psychological and physiological comfort.

As a staff in hotel, they have to ensure that they are providing the best service with a good attitude to customers; it will be one of the main challenges facing by hospitality management in order to attract the attention of tourists in this competitive market. In 2006, Chang demonstrates that attitude of employees is correlated with front-line employees' overall performance quality in international tourist hotels. According to Chen (1999), employee training must encompass cognitive, affective, and behavioural preparation in order for staff members to effectively address diverse customer needs. Researcher has asserts that employees must be ''inspired'' to provide service that exceeds guests' expectations (Mayo, 1997). Since a customer's satisfaction is influenced by the availability of customer services, the provision of quality customer service has become a major concern of all business (Berry and Parasuraman, 1991).

                    Services provided play an important role in hotel industry while welcoming tourists who come from different places with different requirement might take place. Service quality is so intangible that objective measurement is impossible; the challenge lies mostly in managing appearances and perceptions (Harvey, 1998). Gronroos (1984) found that the perceived quality of a service is affected by the experience that the consumer went through for a service. Among the studies that have examined the relationship between perceived service quality and consumption emotions, Wong (2004) found that service quality in retail services was positively associated with emotional satisfaction. As Bei and Chiao (2001) demonstrate, it was noted that it is generally accepted that a positive relationship exists between perceived service quality and customer satisfaction. Arnauld et al., (2002b, p.327) defined perceived quality "whether in reference to a product or service" as "the consumers' evaluative judgment about an entity's overall excellence or superiority in providing desired benefits"

                    Growth in the number of tourists leads to higher hotel occupancy rates, rapid hotel development (Wan Yim King Penny, 2007), whereas, consumers will concern about the facilities that provide by hotel. For example, there is an increasing complexity of modern technology, buildings and systems, rising employee expectations regarding the quality of working life and conditions, mounting customer demand for value-added services, and increasing governmental legislation to ensure health and safety as well as a growing pressure for reducing operational costs and improving competitiveness (Alexander, 1996). These changes create new challenges and responsibilities for hotel industry in managing the workplace. According to Ahmed Hassanien and Erwin Losekoot (2002) declared that most of the owners and operators of luxury hotels understood the importance of facilities that should be provided in hotel in order to meet consumers expectations and competition pressures, yet, that appears the problem in strategy planning with regard to facilities management in hospitality. Due to managing facilities well, therefore, it can "helps to improve a hotel's efficiency and adds value to their performance and services" (Okoroh et al., 2002, p. 239). The number of customers will increase because of the good environment that have provided in the hotel.

                    Apart from that, many hotels are having difficulty increasing their market share because of rising international competition, slower growth rates, decreased population growth, and oversupplied and mature markets. Therefore, brand loyalty is very important to hotel industry. According to Reichheld and Sasser (1990), every 5% increasing in customer loyalty can increase the profitability from 25 % to 85%. To maintain customer relationship is one of the vital parts that a hotel wants to survive in hotel industry. Loyal customers are best for hospitality firms because they are easier to serve than non-loyal customers, and they provide higher profitability (Mustafa Tepeci, 1999). Hotels will increase sales and their market shares by decreasing prices, expanding their distribution channels, launching promotional campaigns, and retaining their current customers (Cravens, 1994) to compete with other competitors.

                    In conclusion, as customers' satisfaction is widely accepted, the market share of hotel industry will increase. However, low customer demand, lack of hotel managerial knowledge will affect the operation in the hotel. As hospitality firms also face strong competitor environment, therefore, managers may perceive strong customer relationships. It is worth noting, though, that as markets become more competitive firms may have to become more market-oriented simply to survive. With the globalization of the hospitality industry and rapid changes in technology, market turbulence is likely to increase. In the longer term, as hospitality firms become more market-oriented and customer-focused, they are likely to reap other benefits including improved brand awareness, customer satisfaction and loyalty.


Operation Strategies

Operation strategies means companies and organization making products or delivering services, be it for profit or not for profit relies on a handful of processes to get their products manufactured properly and delivered on time. Each of the process acts as an operation for the company. To the company this is essential. That is why managers find operations management more appealing. Therefore, Hotel Equatorial has their own unique operation strategies in operate their business.

Advertising and Promotion

Hotel Equatorial have a marketing team whereby they understand the hotel very well from the hotel mission, vision, goal to the products or services offer to the customers. Therefore, marketers or would able to explain well and with confident to the customers. Thus, it would able to attract customers as customers will feel more confident with the hotel services. When customers feel comfortable and confident with their services, they will continue come to hotel for next time tourism or trip and recommend it to their family and friends. Indirectly, Equatorial Hotel have free promotion from their customers to their family and friends as word-of-mouth are more useful and convincing other than promote by their marketers regarding their hotel services to the customers.

Quick Respond

Other than marketing team Equatorial Hotel have customers service team whereby they will answer all the customers enquires and complains regarding hotel services. The team will respond to the customers' enquiries as fast as possible as it shows how efficient the hotels and it shows that our hotels appreciates the customers. They will also accept customers' opinion because they know that the reason why customers give the hotel their opinion is because the hotel services and facilities provide by their hotel or some problem they face when they stay at our hotel. It is one of the ways to bring in or improve and update the hotel services to customer. Besides, quick respond to customer is one of the competitive advantages to Equatorial Hotel compare to other same industry competitor.

Customer wants and needs

Customers are hotel main priority. There are various ways for us to identify customers need and want such as through survey or research. Hotel Equatorial will be able to attract more customers to the hotel when their trip or other purpose when hotel understand their wants and needs. Thus, it is important for them to understand and identify customers need and wants.

Hotel Quality

Quality may refer to material, facilities, and customer service delivery. In Hotel Equatorial services, quality refers to the service that they offered to the customers. Standard of quality service will be stated clearly and will be well informed to all the employees from manager, marketing team to customer services team. The main purpose is to make sure the customers are satisfied with the service provided and the quality of the hotel services. Besides, Equatorial Hotel will provided training to the employees in order to make sure that the level of service is up-to-standard and keep the employee update and make sure customer satisfied with their hotel services.

Management level

There will be a hierarchy in all the work place and so do Equatorial Hotel services. It will be divided into Presidents which is the largest shareholder followed by Chief Executive Officer (CEO) and Chief Financial Officer (CFO). Going down would be the manager and assistant manager followed by the employees. Managers and worker which in this case will refer to the manager or supervisors are the one who deal with customers. Competent among the workers and motivation from the managers would able to increase the level of services offered. The employees would do their best as they want to be the most outstanding employees.

Supply Chain Management

There are various departments in Hotel Equatorial services. In order to be cost-effective, the company will have internal phone calls whereby the employees may used it for working purposes and internal extranet where they employees and the managers may contact each other through webcam or mail. Furthermore, internal phones and internet able to help the company save cost besides times.


Forecasting

Forecasting is the process of estimation about the future value of a variable of interest which actual outcome has not yet been know or observed. A forecast process is usually carried out in order to make a decision or planning the future of a company. Forecasting can let the company modify the behavior or strategy to be in a better position if they able to forecast the future of company. Forecasting is important and cannot be neglected in all industries. Thus, hotel industry is also not an exception. The hotel industry is sensitive to fluctuations in demand because of the structure of business. Forecasting in demand has become an important mission in hotel industry because of its nature of business and business characteristics. The crises of a hotel is always appear because of the unexpected in demand reducing. It is needed to predict demand in a hotel to increase occupancy rate not only because of fluctuations that will appear.

Forecasting is important to the hotel industry to predict the customer demand in a period, the length of staying and hotel room demand over time. There is a need to know the qualitative and quantitative aspects of demand due to group customers because forecasting in a hotel has a different for group customers and individuals. The accuracy of a forecast will be higher as the hotel always repeats the forecasts during a month. The data that can used to forecast are when the room was consumed and when the reservations was made. The reservation of room and consumption of room can provide extra information for the hotel manager to update the forecast. If fail to do so, the manager only can rely on historical information on the room booked and daily number of guests.

Weighted Moving Average

There are many methods of forecasting in hotel industry. One of the forecasting methods is weighted moving average. This method is quite frequently used in hotel forecasting. Weighted moving average model is a time-series forecast. It is usually popular for a short term time series forecasting. Weighted moving average is a forecast method that the value for a given time period is replaced by the weighted mean of that value and the values for some number of preceding time periods based on an artificially constructed time series. The formula for weighted moving average is below:

Weighted moving average method is able to clear up peaks and troughs in the observations. Moreover, weighed moving average can get a content result than other forecasting methods when the time series to be forecasted encompass trend. Thus, the hotel manager might obtain a better forecast result when there is a trend. It is very suitable to use weighted moving average in a forecast when the data indicates a cyclical pattern around constant trend. It tends to closer to the trend. The more accurate result can get to forecast the customer demand. It is reliable to use to predict few periods in the future.

On the other hand, weighted moving average is less weight to the older data and prefers to weight the recent data. The hotel manager should emphasize more information of customer demand on recent period so that the forecasting can proceed smoothly. Weighted moving average method is more susceptible than other methods such as simple moving average because of it is emphasize on recent data. Rely heavily on recent data also allow weighted moving average to provide stronger and earlier signs to trend direction and reversal. Hence, it will manage to response more quickly to changes. The hotel manager needs to change the weighted factors as the time series pattern is changed. The weighting factors are the key in weighted moving average methods and the accuracy of forecast is relying largely on it. Weights are distributed to the previous periods in the weighted moving average. It is important to note that the sum of the weights must be equal to one and it is weights heavily on recent period. Weighted moving average can provide a better volatility in a forecast and it will able to increase the contribution and effect from recent data.

Reason of Weighted Moving Average not suitable to forecast customer demand

The weighted moving average is not suitable to use to forecast the customer demand because this method does not come out with an actual equation. Hence, this method is not very useful as a medium-long range forecasting tool to predict the customer demand. It is only credible to use to predict a few periods into the future. Weighted moving average method also has a more complicated calculation at each step of the procedure which may lead to intricate to manager in a forecast process. Moreover, it will always appear to lag behind either increases or decrease in the observed value or data since the forecast value for a period is a weighted average of the previous periods. It might cause the hotel manager unable to obtain the forecast result on time. The other reasons that weighted moving average are not suitable to predict customer demand is this method is not adaptive. Thus, it might affect the accuracy of the result. Improper selection of the weights will also have an effect on the result of customer demands with errors. The weighted moving average is difficult to construct. Hence, it is time-consuming for a manager to adopt it in forecast customer demand. In addition, weighted moving average is more suitable in short term time series forecasting. The result is unreliable if forecast in a long time horizon.

Na´ve Forecast

However, there is still a forecast method which is more suitable to predict the customer demand in a period, the length of staying and hotel room demand over time. Na´ve forecast is a techniques used to forecast future trends, for example the demand for a product. The result of naive forecast for a time period is equal to the previous time period's value. It is a simplest forecast method and use single previous value of a time series as the basis for a forecast. According to Fred Tolbert (2002), a simple forecasting techniques work better than complex ones. Typical na´ve models include the moving average, which forecast equals average of last year actual demand and the random walk, which forecast equals last week's actual demand. 'Seasonal na´ve' can be used with seasonal data and postulates that the next period's value is equal to the value of the same period in the previous month. The MAPE achieved by a na´ve forecasting method depends entirely on the volatility of the demand pattern it is applied to. Smooth patterns will have a lower MAPE than seasonal and erratic patterns. Performance of the na´ve forecast establishes the level of accuracy that is reasonable to expect for a given demand pattern.

The na´ve forecast method is suitable to use to forecast the customer demand because this method does come out with an actual equation. It is an easiest method compare with weighted moving average method. Na´ve forecast do not involve any complicated calculation and make the manager's work easier. Furthermore it consumes low cost and it is cost effective. It is best in short run forecasting. In conclusion, Equatorial Hotel should use na´ve forecast method to predict the customer demand in a period, the length of staying and hotel room demand over time, because na´ve approach is reliable, result is more accurate, simple to use and cost effective.


Quality Matters

                    Total Quality Management (TQM) is systematic management approaches that originated in the 1950's and has steadily become more popular since the early 1980's. Total Quality Management (TQM) is a structured quality method to organizational management that management philosophy seeks to improve the quality of products and services through ongoing refinements in response to continuous feedback. It is apparent that organizations need to use a TQM process and the critical success factors if they are to attain business quality (Zairi 2002). Hence, Total Quality Management can be used by several type of organization, it originated from the manufacturing sector and now it has been adapted for much organization such as schools, highway maintenance, and hotel management.

                    Nowadays there is a focus of e-business, therefore as for hotel management, the online booking system through their website or check-in and check-out systems be done, Total Quality Management will be based on quality management from the customers' point of view. From Hotel Equatorial's website, it is apparent to see how the hotel presents the idea of quality, value, and comfort. It presence in three major Asia Pasific countries with seven properties in the group, located in the region's gateway cities, offering the quality accommodation and excellence in food and beverage services. In Hotel Equatorial, the website provides the category of leaving feedback and enquiries purpose. At Hotel Equatorial, customer feedback is very important, positive or otherwise, they willing to hear from customers about the experience of stay or any suggestion given to the hotel for improvement. Hotel Equatorial appreciated the comments from customers and will respond to the particular customer within 24 hours. Moreover, it is also with quality reports tracks that Loyal Guest Recognition Programme is available in Hotel Equatorial and guest preference reports are recorded in database. The key components of TQM include persistent enhancement, teamwork, quality being everybody's business, doing it right the first time, training, internal customer care and etc. Hotel Equatorial has actually put in effort to achieve industry-best clean room appearance. Also Equatorial Hotel Penang become known for comfort, value and the friendly attention of a welcoming staff that cares as the hotel staff is responsive and help out with your needs. Combining the flexibility and space options with the hotel's unique ambiance and suitable location, have made the hotel a top choice for businessmen and conference organizers.

                    Total Quality Management process included four sequential categories which are plan, do, study and act, which is also called as PDSA cycle. In the planning phase, management define the problem to be addressed, collect relevant data, analyze the data and decide upon a measurement to gauge its effectiveness. In the doing phase, management develop and implement solution, document any changes made, and collect data for analysis. In studying phase, management confirm their results through comparison of before-and-after data while in acting phase, if the results are successful, new method will be standardized and relevant personnel will be communicated, training will also be implemented for the new method. If the results turn out unsuccessful, the plan will be revised and the process will be repeated.


Summary

Growth in the number of tourists leads hotel occupancy rates increasing. Due to the rapid development of hospitality industry, it has been recognized as a global industry. To maintain good reputation of the hotel, management should to ensure that they are providing the best service with a good attitude to customers. Since a customer's satisfaction is influenced by the availability of customer services, the provision of quality customer service has become a major concern of all business. In addition, consumers will concern about the facilities that provide by hotel. It can help to improve a hotel's efficiency and adds value to their performance and services with good facilities. As hospitality firms also face strong competitor environment, it is essential to maintain a good relationship with customers. This is one of the vital parts that a hotel wants to survive in hospitality industry. Hotel Equatorial has their own operation strategy in operate their business in services industry. Equatorial hotel has a well operation management to operate in a well condition. Hotel Equatorial also has their own well strategies in marketing and promotion and response to the customer wants and needs. Besides that, a well hotel quality let the Hotel Equatorial become more productive and profitable the services business. Equatorial Hotel should use na´ve forecast method to predict the customer demand in a period, the length of staying and hotel room demand over time, because na´ve approach is reliable, result is more accurate, simple to use and cost effective. Nowadays for hotel management, there is website available for online booking system or check-in and check-out systems to be done; therefore the present of Total Quality Management will be based on quality management from the customers' point of view. From Hotel Equatorial's website, it is apparent to see how the hotel presents the idea of quality, value, and comfort in offering the quality accommodation and excellence in food and beverage services. Through Hotel Equatorial's website, the category of leaving feedback and enquiries purpose are available as customer feedback is very important, positive or otherwise, they willing to hear from customers about the experience of stay or any suggestion given to the hotel for quality improvement. The key components of TQM include persistent enhancement, teamwork, quality being everybody's business, doing it right the first time, training, internal customer care and etc. Combining the flexibility and continuous improvement of hotel's quality, Hotel Equatorial have made the hotel a top choice for businessmen and conference organizers.

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