Republic of the Philippines

City of Taguig
Taguig City University
General Santos Avenue, Central Bicutan, Taguig City

MODULE 1 – MIDTERM
COLLEGE OF HOSPITALITY AND TOURISM MANAGEMENT
COURSE MODULE in

OPERATION MANAGEMENT IN TOURISM INDUSTRY

I. Lesson 01 – Introduction to Operation Management

II. Introduction

In this lesson learners will define Operations, as it is termed, are

focused on conversion of input to output and involvement of managers in planning,
organizing and controlling, operations managers have the direct responsibility of
getting the job done timely, economically and with quality.

They must provide the leadership that is needed to produce the goods and
services demanded by the customers. With quality, productivity, and timeliness more
competitively significant than ever before, operations management has added
behavioural and modelling approaches to its historical use of the classical/scientific
schools of management techniques. All of these many elements come into play in
the fascinating field of operations management. This unit begins by describing what
the operations management in organizations means, followed by the operations
functions and its environment.

Next we traced operations management history to observe how operations

management has evolved from simple manufacturing to achieve its current stature
as a major element of competitive strategy in contemporary organizations. In the
lesson two the operations objectives, the life cycle process and its operational issues
are discussed and analysed in details emphasizing the role of operations managers.

III. Learning Objectives

At the end of the lesson, you should able to:

 Understand the concept of goods and services
 Define operations management
 Identify operations objectives
 Discuss the concept of new product
 Explain the life cycle and operations issues
 Identify the role of operations managers

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IV. Lesson Proper

The Concept of Product: Goods & Services

Product is the core of operations. In this introductory chapter we begin

our journey by explaining what a ‘product’ is because a thorough idea of
product is vital to the understanding of productions and operations
management. When we say an operation is converting inputs into outputs,
these outputs are products or things that satisfy consumer needs. A product
can be either a good (i.e., a physical object) or it may be a service (i.e., an
intangible product) that offer benefits to customers in forms of financial,
medical, legal or educational, etc.

Remember:
Goods are physical objects and services are intangible products that offer
benefits to the customer.

Operations Management Defined

What does production and operations management mean? First the

term production conjures up images of factories, machines, and assembly
lines. Too many production simply means to make products. Therefore,
production management seems the management of making products. What
then, does the term operations management specifically mean? Operations
management, a term that more closely reflects the diverse nature of activities
and situations outside manufacturing, such as, health care, food service,
education, recreation, banking, etc. Therefore, Operations management is
defined as the process of designing, operating, and controlling a productive
system capable of transforming physical resources and human talent into
needed goods and services. In simpler terms,

Operations Management is the process of converting inputs into desired

outputs. More specifically, it is the management of the conversion of land,
labor, capital, technology and management inputs into desired outputs of
goods or services.

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Deeper Definitions: What Does Operations Management Mean?

In its broadest sense, operations management handles all aspects of creating

goods and services. It manages resources such as materials, machines,
technology, and people, and makes products and services that the
marketplace wants. The whole chain of events must be professionally
managed for a business to be competitive.

As we define operations management more fully, we consider these

foundations of OM:

Planning: Operations managers must constantly forecast, plan, and adjust to

optimize processes based on conditions.

Process: Production of goods or services requires having strong, repeatable

processes.

Efficiency: Managers must troubleshoot bottlenecks, inadequate resources,

and downtimes to create optimal efficiency.

Cost Control: Production is typically a major part of a company’s cost

structure, and you must manage it wisely.

Quality: Good quality control is necessary to maintain customer satisfaction

and the company’s reputation. Companies can greatly suffer without it.

Continuous Improvement: To remain competitive, companies need to have

processes in place to consistently seek better ways of doing things.

Technology: Underlying all these foundations is technology. Well-used

technology keeps a company ahead of the curve.

Profitability: Executed properly, all the above foundations lead to a strong

bottom line.

The History of Operations Management

We can trace the origins of production management back to 5000 B.C. with
the Sumerians, who tracked inventories, transactions, and taxes. Later, the
Romans used early operations management methods to plan and build
projects, such as the pyramids. Here are other historical highlights:

 The Industrial Revolution (1760s to early 1800s) ushered in the

foundations of division of labor and interchangeable parts, keys to
efficient production. Eli Whitney, inventor of the cotton gin, also
manufactured 10,000 muskets by using the concept of interchangeable
parts.

 In 1883, Frederick Winslow Taylor used the stopwatch method to time

tasks for complex jobs. This became key for studying efficiency and
productivity.

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  In about 1912, Frank and Lillian Gilbreth laid the foundation for
predetermined motion time systems (PMTS), which predict the time it
takes to complete tasks.
 In 1913, Henry Ford’s first moving assembly line started rolling, cutting
production time for a car from 12 hours to less than three.

 In post-World War II Japan, Toyota developed just-in-time production

(JIT), later called the Toyota Production System. The company
designed it to eliminate waste and increase productivity and quality.

 In 1971, FedEx started overnight package deliveries. Nowadays,

Amazon even offers same-day delivery on orders.

The Importance of Operations Management

Operations management serves as the engine room of the organization,

planning and driving manufacturing or services. To compete in an ever-
changing market, operations managers must maximize efficiency,
productivity, and profit, which have always been vital to a company’s survival.
At most companies, there are many operations employees, and the
department’s budget is large. Forbes magazine reported in 2011 that three-
quarters of CEOs come from an operations background, showing the
importance of understanding how a company function.

We can also see the importance of operations management in these aspects

of a company’s success:

 Customer service
 Product or service quality
 Correctly functioning processes
 Market competitiveness
 Technological advances
 Profitability

Functions and Roles in Operations Management

The field of operations management includes a diverse set of functions and roles,
which can differ among industries and different-sized companies:

 Planning and implementing manufacturing plants

 Managing projects
 Planning information systems
 Helping to design and develop products and services
 Managing inventory through the supply chain
 Managing delivery to customers in a timely manner
 Optimizing quality control
 Conducting procurement/purchasing
 Managing logistics
 Managing transportation and distribution
 Managing and maintaining facilities

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  Conducting enterprise resource planning (ERP)
 Forecasting for planning
 Planning for capacity
 Navigating industrial labor relations
 Analyzing the value chain
 Optimizing resource usage
 Eliminating waste and bottlenecks
 Continuously improving processes
 Executing a company’s strategic plan

To carry out these tasks well, operations managers need to be organized, analytical,
creative, resourceful, versatile, and skilled in leading people. Now more than ever,
they also need to be tech savvy in a rapidly changing market. They make multiple
decisions every day that affect the company’s ability to compete. One avenue to
consider becoming a more proficient OM is pursuing an MBA in operations
management. This specialization can arm you with the analytical and problem-
solving skills vital to succeeding in this information and technology-driven field.

The Relationship of Operations Management to Other Departments

This depends on the company’s size and industry. At startups or small companies,
the operations person or people will work hand in hand with sales, marketing,
finance, IT, and other people. However, operations teams at large companies also
need to work closely with other departments to be effective. The work of operations,
from planning to production to distribution, touches the work of most other
departments. A company’s product or service is its lifeblood, and that’s what
operations provides. Everything else in other departments should, in a sense,
support that.

Operations Management Strategies

Today’s operations managers are deeply involved in strategy, along with their
daily production role. Here are several key strategy and tactics points:

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Use of Data: Analytics are essential for strong planning, adjustments, and
decision making. Two common types are efficiency metrics and effectiveness
metrics.
Inventory Analysis: To manage inventory in the supply chain, ABC analysis
(also called Pareto analysis) comes into play. It divides inventory into three
categories A, B, and C; “A” has the most value and tightest controls, and “C”
has the least.

Data Challenges: Data is often siloed, which makes it difficult to compare.

But newer systems and setups are making this easier and helping analysts
and managers examine data in new, helpful ways.

Process Design: Researching, forecasting, and developing a sound process

takes expertise and energy, but the results can be lasting.

Forecasting and Goal Setting: The best forecasting often combines a look
at historical data with analysis of changing conditions.

Collaboration Among Departments: With good communication and

collaboration, operations management can work effectively with finance,
sales, marketing, human resources, and other departments.

Being Green: Ecological soundness has become a strategic and legal

necessity at companies nowadays, especially in manufacturing.

Managing People: With all the advancements in machinery and technology,

people remain critical to the equation, though often in different types of jobs.

Principles of Operations Management

Randall Schaefer, CPIM, described The 10 Principles of Operations
Management at his presentation at the 2007 conference of the American
Production and Inventory Control Society (APICS).

1. Reality: There is no universal solution to the problems in your

business.

2. Organization: You must organize all aspects of production into a

coherent whole.

3. Fundamentals: Adhere to fundamentals, such as accurate inventory

records.

4. Accountability: People try harder when they’re held accountable.

5. Variance: Variance is part of every process.

6. Causality: Problems are often symptoms. Get to the root cause.

7. Managed Passion: People with a passion for their jobs will drive your
company.

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 8. Humility: You do not have to know everything.

9. Success: Define success and change with the market.

10. Change: Every manufacturing solution is temporary.

Another set of operations management principles comes from author Dr.

Richard Schonberger. His 16 principles are:

 Team up with customers. Know what they buy and use.

 Engage in continual, rapid improvement.
 Maintain a unified purpose. Involve employees in strategy.
 Know the competition.
 Focus.
 Organize resources.
 Invest in HR.
 Maintain equipment.
 Use the simplest, best equipment.
 Minimize human error.
 Cut times. Shorten the product path to the customer.
 Cut setup.
 Pull the system. Improve the workflow and cut the waste by producing
on demand.
 Employ total quality control.
 Fix root causes.
 Manage visibility. Let the market know about your achievements.

Recent Issues of the Operations Management

In today’s world production and operations management considers certain

factors as vital to the success of any organization. These recent trends are:

• Global market place: The world economy is, “…not trade among 160
countries; it is the world moving from trade among countries to a single
economy. One economy, one marketplace.”

• Operation strategy: “...Involves fitting the operations mission into the

corporate strategy, a strategy that should blend the environment and
corporate resources into a corporate position statement.”

 TQM—total quality management: A continuous attention to

manufacturing details rather than attainment of a fixed quantitative
quality standard.

• Flexibility: Capability of a manufacturing system to adapt successfully

environmental conditions and process requirements.

• Time reduction: Increasing efficiency by reducing time taken.

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 • Technology: The level of sophistication in plant, equipment, and skills
in the conversion process.

• Worker investment: Considering worker benefit and improving human

relationship with the top management.

• Reengineering: Updating the complete conversion process by

reprocessing the entire set of information and recreating the entire
MRP (materials requirement planning).

• Environmental issues: Profit maximization through operational

activities with the social and environmental welfare in mind.

The Operations Objectives

The major objective of the operations subsystem is to provide conversion

capabilities for meeting the organization’s goal and strategy. The specific
objectives (sub goals) of the operations subsystem are:

 To define product and service characteristics

 To define process characteristics
 To define product/service quality
 To ensure efficiency in terms of
(a) Effective employee relations and cost control of labor
(b) Cost control of material
(c) Cost control in facility utilization
 To provide customer service through
(a) Producing quantities to meet expected demand
(b) Meeting the required delivery date for goods & services
 To ensure adaptability for future survival

These operations sub-goals or the objectives can be attained through the

decisions that are made in the various operations areas. Each decision
involves important trade-off between choices about product and process vs.
choices about quality, efficiency, schedule and adaptability. Again the
priorities among these sub goals and their related emphasis should be direct
reflection of the organization’s mission. Once again the general thrust of the
process is guided by competitive and markets conditions in the industry,
which provide the basis for the organizations strategy.

The PLC- Product Life Cycle

The demand for a product – its market acceptance – generally tends to follow
a predictable pattern called the product life cycle (Figure 1.2.1). A product life
cycle is nothing but a graphic representation of the sequential rise and fall of a
product. Any products go through a series of stages, beginning with low

8|Page- PROF. JOSHAR OBUS

 demand during market development, proceeding through growth, maturity,
high volume saturation, and finally decline.

V. Summary of the Lesson

They make multiple decisions every day that affect the company’s ability to
compete. One avenue to consider becoming a more proficient OM is
pursuing an MBA in operations management. This specialization can arm
you with the analytical and problem-solving skills vital to succeeding in this
information and technology-driven field.

The work of operations, from planning to production to distribution,

touches the work of most other departments. A company’s product or
service is its lifeblood, and that’s what operations provides. Everything
else in other departments should, in a sense, support that.

VI. Supplementary Readings/Materials

file:///C:/Users/hp.pc/Downloads/Introduction_to_Operations_Managem
ent.pf

VII. References

Internet Sources

https://independent.academia.edu/balugmat

file:///C:/Users/hp.pc/Downloads/Introduction_to_Operations_Management.pf

9|Page- PROF. JOSHAR OBUS

 Republic of the Philippines
City of Taguig
Taguig City University
General Santos Avenue, Central Bicutan, Taguig City

MODULE 1 – MIDTERM
COLLEGE OF HOSPITALITY AND TOURISM MANAGEMENT
COURSE MODULE in

OPERATION MANAGEMENT IN TOURISM INDUSTRY

I. Lesson 02 – Organizational Structure of a Travel Management

Corporation (TMC)

II. Introduction

The tourism industry is a combined of industries and entities where private

and public is involved. It also that each sector has a vital role in planning,
development, marketing, sales, operation and evaluation of destinations,
products and services that cater to the needs of the travelers.

III. Learning Objective

At the end of the lesson, you should able to:

 Understand the Organizational Structure of TMC
 Define Tour Operator
 Identify the Functions of Tour Operator
 Discuss the Intermediary
 Explain the life cycle and operations issues
 Identify the role of operations managers

IV. Lesson Proper

What is Travel Management Corporation?

Travel Management Corporation is a company’s structure to facilitate business

travel. This includes planning a business trip, organizing a corporate event, or
any other necessary task for the corporate traveler. Ensuring the process is

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handled properly and according to compliance is the job of corporate travel
agents. All this must be done without jeopardizing business productivity.

Why Businesses Should Use Corporate Travel Management Agencies

Reduce costs: a major advantage of using corporate travel management

agencies is reducing travel costs. This includes accommodation rates, insurance,
airline tickets, and any other related expense. A business travel agent will have
the necessary experience to find or negotiate the best possible deals for the
company.

Time management: organizing a business trip can take considerable time, so if

you manage a medium or large company, you won’t have time to book your
business travel yourself. A dedicated corporate travel manager will take care of
these tasks so you and your staff can focus on everything else.

Efficiency: as corporate travel is on the rise, most businesses opt for a corporate
travel management agency to ensure their employees travel safely whilst
adhering to all the relevant travel policies.

Externally-based Corporate Travel Management vs. In-House vs. Agent

Businesses tend to use a corporate travel management company in order to

minimize costs. There are two types of corporate travel agencies; in-house and
external.

In-House Travel Management Agents

An in-house travel management agent is an employee you hire for taking

responsibility of booking trips, making last-minute changes to the travel
itineraries, and maximizing your savings whilst finding the best deals for your
employees.

By hiring an in-house travel management agent, you can be sure of working

alongside a trusted employee who’ll make your business travel planning easier.
Another advantage of hiring an in-house agent over an external one is the fee or
commission you will avoid paying to that agent.

External Corporate Travel Management Agents

External travel management agents are specialized in the field of corporate travel
and have extensive experience in booking business travel. These individuals are
available at your request and use online booking tools that will maximize cost

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 savings. The main difference between an external and in-house agent is that
you’re not employing the person to handle your business travel needs; you’re
paying them a fee or commission every time they make a booking for you.

An in-house travel agent may not always be available in times of a crisis as they
often work solo. On the other hand, a dedicated team of external travel
management agents will be available 24-hours a day. Should one of your
employees run into difficulty abroad – whether they’ve fallen ill or lost their
luggage – the agents will be on-call 24/7 to assist them.

What Are the Tasks of a Corporate Travel Management Agent?

Whether you hire an in-house agent or opt for an external agency, the tasks of
these agents are very similar. Here are the top 6 responsibilities of corporate travel
agents:

1. Create and Manage Travel Itineraries

If you book your flights directly with an airline or use an online ticket service, it’s likely
you’ll get charged high fees for any changes you wish to make to your itinerary.
Schedule changes are difficult to avoid in the world of business, but in order not to
get penalised, you should use a corporate travel agent to make the necessary
changes without any extra charges.

By leaving all your business travel plans in the hands of a corporate travel agent, you
can rest assured that nothing will go wrong during your business trip. This is thanks
to the agents’ extensive knowledge of the travel industry.

2. Find the Best Price

A major part of the corporate travel management involves finding the best possible
rates, and even negotiating with a number of different service providers.
Travel agents for businesses have the adequate expertise in handling the task of
negotiation since them deal with different parts of the travel industry on a day-to-day
basis. This means they can find you the best rates or even get special discounts that
you may not otherwise be able to get yourself.

3. Arrange Suitable Accommodation

Arranging the most suitable accommodation for business travellers is another key
responsibility of a corporate travel agent. The agent looks for all the available options
at the right price, including guest houses, hostels, and hotels, before booking the
rooms for the required number of days and employees.

If you were to take care of this task yourself, you wouldn’t have enough time to look
for inexpensive accommodation in the right location. This is where a corporate travel
agent comes handy for finding the best accommodation without going over budget.

4. Arrange for Transportation

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One of the biggest parts of travel planning is transportation. This can easily be
handled by a corporate travel agent, who will arrange your transportation needs in
advance. They will ensure your flights are booked, a rental car is organised, airport
transfer is arranged, and train tickets are purchased. Sure, you will be required to
pay the agency for these services; however, considering the amount of time and
money they save you, the fee or commission they charge is well worth it, especially if
you or your employees travel regularly.

By using a corporate travel management agency, you’ll not only get better
accommodation rates, but you will also benefit from cheap business-class flights for
your employees. This means the overall business travel costs can significantly be
reduced.

5. Organise Business Meetings and Events

Whether your company needs to organise annual events or meetings abroad, the
process can take time and investment. By hiring a specialised corporate travel agent
to take care of this task, you will reduce costs and make your business events more
profitable.

The planning process for hosting an event can be complex and time consuming. A
reputable travel management company will, therefore, be highly advantageous in
such situations.

6. Control Travel Costs and Policy Compliance

While managing travel costs is the main task of a corporate travel agent, you would
benefit much more by allowing someone with extensive experience to handle this
job. Specialised agents comply with corporate travel policies by using real-time travel
policy management to maximise functionality for the business traveller.

Hiring a professional agency to take care of your company’s travel needs will not
only drive cost reductions but it also optimises business relationships while
complying with travel policies.

How Travel Companies Can Benefit From Corporate Travel Management

Companies

Travel companies like hotels and airlines can optimise their travel strategy with the
help of a corporate travel agent. This is because travel management companies are
responsible for booking flight tickets, accommodation, car rentals, transfers, and
business events. For hotels, this serves as an indirect link to business travellers.
They can gain more customers via the corporate travel agents since it is the job of
the agents to plan and book accommodation and business meetings for the
companies’ employees.

Most corporate travel management companies turn to GDS (global distribution

system) in order to carry out their tasks, such as finding the right accommodation,
flights, and transportation. GDS is also an important distribution channel for hotels as
it connects them with the corporate travel agents and provides them with up-to-date
information about their latest room prices and availability. Thanks to GDS systems,

13 | P a g e - P R O F . J O S H A R O B U S
the chances of corporate travel management companies finding your hotel and
booking your rooms are maximised. By becoming part of this vital distribution
system, your hotel will increase its revenue and reach a wider audience.

Our “Global
Distribution
System (GDS):
What Are the
Benefits for
Hotels?“ article
provides more
information
about the main
GDS systems,
how they
actually work
and the ways
they can be of
benefit to
companies
operating in the travel industry.
Check this out! https://www.youtube.com/watch?v=xF1OGj2MIEw

Table 2. Image of organizational structure of Travel Management Corporation

(TMC), but this lesson we will focus on the operation department.

In Travel Management Corporation, Operations Department the main function of it is

implementer in the delivery of the company’s core product which is to serve as
intermediary between the supplier and client. Among big TMC/Travel Agency,
operation is sub divided into two section namely; Travel operation and Tour
Operations

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A. Travel Operation
Take care of the needs of traveller
even before they embark on a journey
B. Tour Operation
Deals with creating, designing,
developing and costing tour for a group of
traveller. It consist tour operators, tour
coordinators, tour guides or escort are
among them

Check this out!

https://www.youtube.com/watch?
v=2X0itsT2VN0

Function of Tour
Operation

1. Intermediary
between suppliers of
travel products &
services and the
travellers.

2. Contracts the transportation services for access accommodation for lodging and
meals, entities for attractions and activities

3. Assembles the different travel products and services into a single tour package
4. Delivers the tour package to the travellers

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To better understand the tourism supply chain check this out!
https://www.youtube.com/watch?v=NUen_lEy4-c

V. Summary of the Lesson

The traditional way is still being practiced by some TMC’s in the Philippines.
The commercial enterprise conducts the business to travel as an agent or
broker for the travel service provider.

Transportation, F & B, Accommodation are on of the enterprises of

intermediary of tourism sector. These commercial entities are not owned by
the TMC’s they are the supplier that helps the TMC vis versa

VI. Supplementary Readings/Materials

https://www.youtube.com/watch?v=xF1OGj2MIEw

https://www.youtube.com/watch?v=NUen_lEy4-c

https://www.youtube.com/watch?v=2X0itsT2VN0

VII. References

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Journal/Presentation

Dr. Rey Jorda Department of Tourism Training Presentation

Internet source

https://www.revfine.com/corporate-travel-agents/

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