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Chapter 1 Operations management 23
Worked example
Figure 1.8 illustrates the different positions on the dimensions of the Formule 1 hotel
chain and the Mwagusi Safari Lodge (see the short case on ‘Two very different hotels’).
Both provide the same basic service as any other hotel. However, one is of a small,
intimate nature with relatively few customers. Its variety of services is almost infinite in
the sense that customers can make individual requests in terms of food and entertainment.
Variation is high and customer contact, and therefore visibility, is also very high
(in order to ascertain customers’ requirements and provide for them). All of this is very
different from Formule 1, where volume is high (although not as high as in a large citycentre
hotel), variety of service is strictly limited, and business and holiday customers
use the hotel at different times, which limits variation. Most notably, though, customer
contact is kept to a minimum. The Mwagusi Safari Lodge hotel has very high levels
of service but provides them at a high cost (and therefore a high price). Conversely,
Formule 1 has arranged its operation in such a way as to minimize its costs.
Figure 1.8 Profiles of two operations
The activities of operations management
Operations managers have some responsibility for all the activities in the organization
which contribute to the effective production of products and services. And while the exact
nature of the operations function’s responsibilities will, to some extent, depend on the way
the organization has chosen to define the boundaries of the function, there are some general
classes of activities that apply to all types of operation.
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Understanding the operation’s strategic performance objectives. The first responsibility
of any operations management team is to understand what it is trying to achieve. This
means understanding how to judge the performance of the operation at different levels,
from broad and strategic to more operational performance objectives. This is discussed
in Chapter 2.
Developing an operations strategy for the organization. Operations management involves
hundreds of minute-by-minute decisions, so it is vital that there is a set of general principles
which can guide decision-making towards the organization’s longer-term goals. This
is an operations strategy and is discussed in Chapter 3.