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By Dorothy Cook,2014-05-13 06:30
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    Video Notes

    Textbook Video Titles Pages Chapters Operations as a Competitive Weapon at Starwood 1 21 Project Management at the Phoenician 2 24 Nantucket Nectars: ERP 2, 15 27 Pearson Education: Information Technology 3, 4, 10 31 Process Analysis at Starwood 4 33 Starwood: Process Performance and Quality 5 37 Christchurch Parkroyal: TQM 5 40 Gate Turnaround at Southwest Airlines 6 45 st1 Bank Villa Italia: Waiting Lines 6, C, 7 49 Constraint Management at Southwest Airlines 7 57 Lean Systems at Autoliv 8 61 Versatile Buildings: Lean Systems 8 65 Inventory and Textbooks 9, 12, 15 70 Clif Bar: Supply Chain 9 77 Sourcing Strategy at Starwood 10 80 Forecasting and Supply Chain Management at 13 83 Deckers Outdoor Corporation

    Air New Zealand: Service Scheduling 14 86 Sales and Operations Planning at Starwood 14 90

    20

    Copyright ? 2010 Pearson Education, Inc. Publishing as Prentice Hall.

    Video Notes 21

Starwood: Operations as a Competitive Weapon

    10:29 Length:

    ―Operations as a Competitive Weapon at Starwood‖ Subject:

    Chapter 1: Competing with Operations, Textbook Reference:

    Video Case, page 30

    Summary:

    Recognizing that Starwood‘s individual properties had their own approaches to convention planning, and that future growth and success relied heavily on its relationship with meeting planners, the company focused on standardizing it operating processes. In 2002, Starwood standardized its operating processes so that it could measure, improve, and ultimately grow its convention business.

    Discussion:

    In this video, the uses of operations management concepts are shown in action at Starwood Hotels & Resorts. The video begins by asking students to consider the concept of a ―competitive weapon.‖ Then, a new program developed first at the Westin Kierland Resort in Phoenix, Arizona is presented. The program is called the ―Starwood Preferred Planner‖ program, and it was designed to simplify the meeting and conference planning process for professional meeting planners. Prior to the program‘s development, each hotel within the Starwood umbrella of brands (Sheraton, Westin, Luxury Collection, W, Four Points, and St. Regis) had its own approach for working with planners. The video presents the problems with the old approach, and includes a point for instructors to ―pause‖ the video, if desired, to discuss this question: ―What changes do you think Starwood implemented to turn this situation and the meeting planning process into a competitive weapon?‖ After the break, the video wraps up by showing how Starwood resolved the issues of inconsistency and meeting planner expectations to create loyalty to the company.

    Inputs come from hotel managers and employees who participate in the meeting planning

    process such as the on-site meeting coordinator, banquet and catering managers, hotel rooms managers, and support departments (bell staff, stewarding), information from meeting planners

    regarding program details, meeting room and hotel room reservation requirements, and food & beverage needs, equipment such as Nextel radio phones, and materials, facilities and services like

    food ingredients, banquet linens and tables, and computer services. The output of Starwood‘s meeting planning process is a successfully planned meeting, as evidenced by the scores and comments returned on the meeting planner surveys.

    Customer Relationship: Starwood attracts business travelers through numerous print

    advertisements in key outlets such as The Wall Street Journal and USA Today. Television advertising also is used. So, when business travelers become part of the decision-making process for meetings and conferences, it is hoped that previous stays and good experiences at Starwood properties will encourage them to bring their meetings back to Starwood. The deployment of the Starwood Preferred Planner program certainly helps with loyalty, especially since the company offers incentives for ―frequent‖ planner business such as airline miles, hotel points, or charitable contributions on their behalf. Internally, the consistency of the planning process helps when a planner does business between brands, since the paperwork and processes are now the same. Additionally, Starwood provides internal incentives to its convention services managers to share meeting ―leads‖ within the company. For example, if a meeting planner wishes to hold a

    Copyright ? 2010 Pearson Education, Inc. Publishing as Prentice Hall.

    Video Notes 22

    convention at a Luxury Collection property but can‘t afford those rates, the manager will refer the

    meeting planner‘s business to a nearby Westin or Sheraton property to keep the business internal. The referring manager is given a bonus, based on the business at the new location, for the referral.

    New Service or Production Development: The Starwood Preferred Planner survey

    instrument is a valuable tool for identifying the need for new products or services within the meeting planning process. Planners also are very outspoken about their specific needs and are not shy to share them. Survey results and feedback are given to all staff, which can generate additional ideas about how better to perform a service, or a new one that should be developed.

    Order Fulfillment: The Starwood Preferred Planner program embodies all the required

    components for successful meeting and convention delivery. From the first meeting with a planner, through to execution of the event activities, and wrapping up the meeting, staff at the hotel are on alert to take care of any issue that may arise. The use of the Nextel radio phones, which are pre-programmed with key area telephone numbers for immediate access, are essential to being reachable by the meeting planner. This has freed up convention services managers‘ time, while giving the meeting planner the security that someone is just a quick call away if something is needed. Survey results indicate that order fulfillment (i.e., meeting or exceeding expectations for events) is working well.

    Supplier Relationship: Starwood properties generate a lot of business from meetings and

    conventions, so its procurement process is fully capable of supporting any banquet or meeting room requirements. If the meeting planner has a special need (e.g., food or facility) that is not already covered by the hotel property, the company‘s existing procurement process can source the necessary items or materials. All contracts for sourcing are handled by Starwood‘s Strategic Sourcing group, located in White Plains, NY.

    Figure 1.2 in the textbook (page 5) can be used to model the meeting planning process at Starwood. Inputs, in the form of meeting and event requirements, are received from meeting planners during the pre-event meeting. From here, many departments must be notified so they can plan their participation. Communication with departments such as banquets (for all food-related activities), facilities (for room set-up, layout and breakdown), A/V (for all lighting, sound, and technology needs), reservations (for rooms), receiving dock (if shipments of meeting materials and displays are to be handled), and spa/golf events may present the biggest challenge. All meeting elements must be accurately priced, as well, so that there is a clear picture of what the event‘s bottom line will be, with communication back to the meeting planner to be sure all requests are covered and costs and payment terms are understood.

    After making its process change, Starwood asked meeting planners via e-mail surveys to rate their overall experience. Planners were also asked to rate the pre-planning process, Star Meeting Concierge services, hotel staff, audio-visual support, problem resolution, and the property manager‘s involvement. After just a short time using the new process, evaluation scores are consistently above corporate benchmarks across the brands in North America. The program is now set to expand beyond the North American division so that the consistency and strengthened relationships achieved domestically can be experienced globally.

    Copyright ? 2010 Pearson Education, Inc. Publishing as Prentice Hall.

    Video Notes 23

    Important Points:

    ? Starwood‘s future growth and success relied heavily on its relationships with meeting

    planners.

    ? One clear priority emerged: consistency in the meeting planning process. ? By creating consistency across all brands, it could generate loyalty and potentially increase

    revenues from those meeting planners who drive large volumes of business to Starwood

    properties annually.

    ? Every hotel property having the same paperwork for the meeting process can share that

    paperwork electronically across properties and brands.

    ? Contracts were standardized and new standards created to recognize and reward frequent VIP

    meeting planners.

    Suggested Linkages to Other OM Topics:

    ? Process Analysis and how processes can be improved to meet the goals of the operation

    strategy.

    ? Evaluating Process Performance and Quality for improving revenues.

    ? Use of standardized processes promotes Lean Systems.

    Essay or Discussion Questions Based on Video:

    1. What are the key inputs and outputs associated with Starwood‘s new meeting planning

    process?

    2. How does the meeting planning process at Starwood interact with the following core processes

    in their hotels?

    a. Customer relationship internal and external

    b. New service or product development

    c. Order fulfillment

    d. Supplier relationship

    3. What additional challenges in operations management, as represented in Figure 1.2 of the

    textbook, need to be addressed at Starwood?

    Copyright ? 2010 Pearson Education, Inc. Publishing as Prentice Hall.

    Video Notes 24

Starwood: Project Management

    11:41 Length:

    ―Project Management at The Phoenician‖ Subject:

    Chapter 2: Project Management, Textbook Reference:

    Video Case, pages 88-89

    Summary:

    The video on project management presents a recent project initiated by The Phoenician in Scottsdale, Arizona. As part of Starwood‘s Luxury Collection brand, the resort is one of the company‘s top resorts, both in reputation and revenue generation.

    Discussion:

    The recent achievement of the prestigious AAA 5 Diamond Award for the resort triggered a review of the resort‘s spa and golf programs to see what needed to be done to bring them up to the same, 5 Diamond level. The result of the review was a corporate commitment of $38 million to renovate both the spa and golf course. The video walks through the project planning process, with interview comments by Mark Vinciguerra, General Manager of The Phoenician. The project hits a snag before ground is even broken, jeopardizing the entire project‘s scope and timing. The video pauses to allow the instructor to discuss the risk management side of project management, and asks students what they would do, given the facts presented in the case. The video wraps up with Mark Vinciguerra describing what Starwood chose to do and how they resolved the serious problem they faced.

    Defining and organizing the project: Operations was instrumental in defining the scope

    of the project and marshaling the resources to prepare the plan. Included in Operations is senior management at Starwood‘s headquarters, Starwood Field Operations, and the Corporate Design & Construction group. The analysis of strengths, weaknesses, opportunities and threats was conducted in this stage. Accounting & Finance at the property level, as well as at Corporate (called the Capital Committee) needed to be involved early on to determine the $38 million price tag, and to determine the project‘s fit with other competing project needs globally.

    Planning the project: The Corporate Design & Construction (operations) team

    continued its involvement into this stage by developing the architectural and engineering plans and the work breakdown structure and diagrams showing the critical path for the different project options. Accounting prepared detailed cost projections, based on data received from outside contractors. Finance continued its involvement, including the creation of alternative financing plans such as the spa/golf membership concept. With the approval of the project, Human Resources became involved to develop the staffing plans for the new facility. Marketing began its development of promotional materials and packages for the new facility during this stage.

    Monitoring and controlling the project: When the project breaks ground, Operations and

    Finance will still be involved. Accounting will play a more active role in cost tracking against budgets. Marketing will launch its promotions to generate bookings.

    Clearly, the desire to have a ―grandiose, luxury‖ type of spa experience is a priority. The tremendous growth in the day spa category, particularly in Phoenix, means that any new facility will need to exceed the offerings of existing day spas. In addition, with a strong international clientele already familiar with The Phoenician, comparisons are bound to be drawn to the best in class from around the world. Location of the spa, which supports the ―grandiose, luxury‖ spa

    Copyright ? 2010 Pearson Education, Inc. Publishing as Prentice Hall.

    Video Notes 25

    experience, is another consideration. World class facilities in a ho-hum location weren‘t an

    acceptable option. Instead, the mountainside location, complete with sweeping vistas of the surrounding terrain, emerged as the primary factor. As for the type of spa, the retaining the reputation of the holistic resort spa versus moving to the ―over the top‖ indulgence theme of Bliss

    spas was more important (students may want to check out Bliss at www.blissworld.com).

    Financial projections for the different scenarios were prepared at the local and corporate levels so that the Capital Committee had enough detail to approve funding for the chosen project. For the Centre for Well-Being, managers agreed that the short-term course of action didn‘t mesh

    well with the rest of the resort‘s new 5 Diamond rating and grandiose image. Neither did the use

    of the parking garage location since having scenic vistas from the spa carried high value. Having a spectacular mountainside facility, however, would garner international attention for both The Phoenician and Starwood, and would place the spa among the world‘s most desirable. So, the option to carve out a portion of the hillside was chosen. A full-time project manager was assigned, and the work started to secure bids for construction. The sale of spa/golf memberships has also emerged as a viable way to finance the construction of the project, and is being pursued. Groundbreaking was planned for May 2006, with project completion in November 2007.

    The project originally had a start date of May 2005, but was eventually postponed because of delays during pre-planning. The various zoning issues associated with land use took longer to resolve, and additional neighborhood support needed to be generated. Additional plot restrictions implemented decades ago were discovered that significantly limited what type of guests could use any facilities built into the mountainside location. These required more legal research and resolution before proceeding. This project underscores several important points in project management. First, managing risk from the outset of project planning is critical to overall project success, as evidenced in this case. Second, the time spent in planning a construction project can easily exceed the actual time spent in physically building the structure. While the project‘s

    construction phase was scheduled to take 18 months, project pre-planning actually took years by the time all the legal and risk management issues were resolved.

    Important Points:

    ? The decision to renovate the golf course and existing spa became not a question of whether to

    undertake the projects, but to what degree they needed to be pursued.

    ? The Phoenician management team prepared an extensive analysis of strengths, weakness,

    opportunities, and threats to better understand the environment.

    ? The result of this analysis was used by the team to identify the set of activities necessary for

    each option.

    ? The management team created a work breakdown structure in order to compare different

    project options.

    Suggested Linkages to Other OM Topics:

    ? Forecasting provided insight to the changing environment.

    ? Location decisions and the availability of required labor for a given Process Choice. ? Sales and Operations Planning.

    Copyright ? 2010 Pearson Education, Inc. Publishing as Prentice Hall.

    Video Notes 26

    Essay or Discussion Questions Based on Video:

    1. Coordinating departments in a major project is always a challenge. Which departments within

    the Starwood organization likely played a role in each of the following project-related

    activities?

    a. Defining and organizing the project

    b. Planning the project

    c. Monitoring and controlling the project

    2. Many times, project decisions do not rely solely on financial hurdles, such as return on

    investment or internal rates of return, but put a lot of weight on intangible factors. Which are

    the salient intangible factors associated with selecting one of the three options for the spa? 3. Timing is also a challenge. Construct a network diagram for the spa selection process. How

    soon can The Phoenician management make a decision on the spa?

    Copyright ? 2010 Pearson Education, Inc. Publishing as Prentice Hall.

    Video Notes 27

Nantucket Nectars: ERP

    16:47 Length:

    Enterprise Resource Planning Subject:

    Project Management

    Chapter 2: Project Management Textbook Reference:

    Chapter 15: Resource Planning

    Summary:

    In this video, project management is used for implementing an enterprise resource planning system. The project scope and objectives are defined. The project format is described, followed by a review of the project implementation results.

    Discussion:

    In 1989, Tom Hurst and Tom Scott (―the juice guys‖) started Nantucket Nectars with a blender and an idea for a peach nectar juice drink. Their factory consisted of a blender and a bottle-cap device. They sold their concoctions out of their boat in Nantucket to those visiting the island. Today, their privately held company makes 48 flavors of juice drinks, ranging from the best selling Orange Mango to super nectars with names such as Mama Calcium, Beta Carrot, Protein Smooth, and Vital Seed. The juices are all natural with no artificial colors, flavors, or preservatives. Sales last year topped $70 million dollars.

    In order to get those juice drinks to customers, Nantucket Nectars works with a variety of business partners. These companies range from suppliers of raw ingredients to juice bottlers and distributors. Ninety ―juice guys‖ sales reps around the country manage the relationship between

    Nantucket Nectars and its distributors. The company contracts with five bottlers, called co-packers, to produce the juices. At each bottling plant, ingredients are batched in 5,000-gallon tanks to the production line. Each batch is heated to 190 degrees to inhibit bacteria growth. Empty glass bottles pass through 200 degrees steam-bath to temper the glass so it does not shatter when filled. The line speed is set to fill 550 bottles per minute.

    As bottles emerge from the cooling tunnel, they are checked for proper temperature and sealing. The tunnel cools the bottles down to about 100 degrees and draws a vacuum seal in each one. This is important for maintaining product quality and colors, since no preservatives are added. After cooling, the bottles are packed into cases of 20-bottles each. Cases are shrink-wrapped and then stacked onto pallets. Finally, the palletized cases are transported by forklift to trucks headed for the warehouse.

    As recently as the late 1990s, financial information and data from operations were kept on a small accounting system and multiple Excel spreadsheets. Managers manually extracted the information they needed for decision making from worksheets designed by Nantucket Nectars staff. But as the company has grown, so has its need for timely integrated information. The spreadsheets just were not adequate for the business anymore.

    Mark Hellendrung, President, speaks on the problems of the old system. The company decided they needed an ERP system because the company basically outgrew the existing system. After having record sales one summer, and literally all accounting transactions in the system were being processed 6 to 8 weeks after it took place. For example, invoices were not being sent to customers for 6 or 7 weeks after actual shipments. This had massive cash-flow and financial reporting implications. The system was crashing every-other-day. Customers were also calling

    Copyright ? 2010 Pearson Education, Inc. Publishing as Prentice Hall.

    Video Notes 28

    and asking for a bill because they could not get their books right, they needed to process the invoice in order to update their records.

    So Nantucket Nectars turned to the information systems marketplace to find the technology tools and software to meet their growing needs. After sending out a detail ―request for proposal‖ (RFP), managers selected an Enterprise Resource Planning (ERP) system created by Oracle Corporation. There was a very specific inventory management issue where Nantucket Nectars needed an inventory management module that captured the transaction in a very specific

    way, which was one of three critical requirements the system needed to have. A second requirement was an integrated database system that could eliminate the islands of information

    throughout the organizationsuch as marketing and sales analysis. Finally, there was a need for accounting modules for tracking information about the customers‘ inventory at their warehouses, which had been kept in a separate database system. The ERP package needed to import the data into one system for very detailed integrated reporting and in order to run the business better.

    In order to implement the ERP system solution at Nantucket Nectars, the company first formed a cross-disciplinary project team. Representatives from all areas of the company served on the team: accounting, sales, marketing, production, human resources, research and development, and consultants from Oracle. Team-members‘ dogs were part of the group, too.

    The team‘s goal was an implementation of a company-wide system for integrating all

    business activities. The major modules to be implemented included: accounting, manufacturing, and customer relationship management applications. Each team member had responsibility for the ERP modules affecting their departments. The IT manager made sure all technical details for each module were covered, and served as project team manager. With only 40 employees to cover daily operations at headquarters, project team members had to serve both on the team and keep up with their normal job assignments.

    Lorianne Brasseur, Controller, played a major role on the team and speaks on the project. It would have been nice to have had an ERP system where one could dedicate time to the project (and new system). But that could not happen at Nantucket Nectars; all team members had to perform their regular duties and install the software on a timely schedule.

    Project scope and objectives: defining deliverables and time frame

    The first task of the team was to outline the key deliverables for the project and the risks of not reaching the project goals. The key deliverables were user functionality, flexibility, outside database interface, and web-enabled for on-line ordering. The later phase of the project objective is to get customers on-line for ordering, shipment status reports, information passed onto sales, and profitability analysis on customers.

    As the team plotted the activities, one over-riding constraint comes into view: the system needed to be implemented well before the next busy summer season. The biggest pressure in the implementation phase was getting the implementation completed by the end of March. Therefore, February was set as the ―go-live date,‖ primarily because Nantucket Nectars is a seasonal business and selling so much juice that there was no way to be ―working out the bugs‖ in a new ERP system. Procedure manuals needed to be written and everyone had to understand the training. Basically, everyone had to learn the system and be ready before the busy season. If the date was missed, they would have been in the same position before the implementation phase (in the previous year).

    Copyright ? 2010 Pearson Education, Inc. Publishing as Prentice Hall.

    Video Notes 29

    Project format:

    Meetings for the project team were held regularly. At each meeting, progress toward the deliverables and ultimately full system implementation was discussed. Any issues to be resolved were addressed at the meetings. Team communication was critical during the project. They were all in one room together, with five workstations line-up. During pilot testing, as one finished a transaction it was ―handed-off‖ to the next person, and it would go down the line of terminals.

    Project status meetings were held with project leader and the consulting group, for updating the project status and the milestones completed. Team members also documented progress in memos and attended training sessions to learn the modules they were to implement and run on a daily basis.

    Project implementation and post-implementation review:

    In order to check the functionality of the modules in the company setting, the program modules were implemented using a pilot approach. A pilot environment was identified to include a set of transactions that accounted for about 95-98% of business. Recognizing that not everything was covered, generally those circumstances that were not included took ―special

    handling‖ and were not part of the daily routine. The pilot database was created along with a set of user instructions and test for testing the information. The procedures were repeated in order to ―take-out‖ the kinks. But mainly to understand how the different modules were interfacing and

    how the transactions flowedfor example from an ordering module to a manufacturing module.

    Because the old system was near failure, the only data converted to the new ERP system were the accounting trial balance figures and key inventory data. The remaining historical data was left in the old system. Nantucket Nectars spent five months and millions of dollars stimplementing the Oracle ERP systemgoing live on March 1.

    Sales, compensation, financial, and inventory data are all now consolidated into one report. Daily commission reports encourage sales people to log-on regularly. Distributors can place and track orders via the web. Product stock outages and partial shipments are greatly reduced. Moreover, the need for additional employees just to handle customer service issues has been eliminated.

    The information that is available has been able to improve the working environment. The need for additional staff has been reduced; and the long hours have been reduced improving the

    ―quality of life.‖ Decisions are being made quicker. Production planning has been improved, which has also improved the ordering of raw materials. The ERP system is one that will be used by ―all‖ employees at Nantucket Nectars, suppliers and customers.

    Copyright ? 2010 Pearson Education, Inc. Publishing as Prentice Hall.

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