Running head: OPERATIONS MANAGEMENT 1

OPERATIONS MANAGEMENT 6

Operations Management

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Operations Management

Focusing on process improvement is necessary for the success of any company. Process improvement determines the profitability, market share, efficiency, and overall output of a company. Both benchmarking and performance measures are tools that companies use in order to extensively drive process improvement. In benchmarking, a company measures its services, products, and business processes against market leaders in the same industry. This way, companies are able to identify areas that require continuous improvement. On the other hand, performance measures are determined after collecting and analyzing information about performance of product. Information collected from performance measures reveal level of consumer satisfaction, attainment of goals, quality of output, and sections that require improvements. Current paper focuses on how Toyota and Hilton Hotel & Resorts use benchmarking and performance measures to drive process improvements.

Toyota Motor Corporation operates in the manufacturing sector. In 2012, this company was the largest manufacturer of automobiles. It earns the highest revenues in Japan. However, natural disasters such as earthquakes and tsunamis have been affecting its operations significantly. The current company uses benchmarking. Toyota is best known for its benchmark - lean manufacturing systems. The company wanted to provide the best quality products using the lowest cost and shortest lead time by eliminating all its wastes. Utilizing these principles, Toyota was able to increase its market share in the automotive industry. Toyota utilized both Just-in-Time (JIT) and Jikoda, while developing lean manufacturing system as their benchmark. JIT system aims at reducing the levels of inventory in a corporation. When Toyota adopted this system, it worked closely with their suppliers with the aim of reducing the level of inventory. Inventory costs of this company reduced significantly, compared to other companies in the automotive industry. They paid less in insuring their vehicles and also incurred less storage costs. Under the Jikoda principle, Toyota wanted all its operators and machines to have ability of detecting abnormalities in production, as soon as they occurred. Men and machines were separated in order to create efficiency in production. This made the quality of Toyotas products to be higher, compared to products that other companies offered. Recently, Toyota introduced a new benchmark known as Toyota Way. It focused on 14 principles in order to achieve process improvement. One of these principles is creating continuous process flows, in order to identify the problems affecting its production process.

Toyota also uses performance measures for improvement of its processes. These measures are referred to as Key Performance Indicators (KPI). KPI were designed in order to determine the progress of this company in attaining Toyota Global Vision. The KPI of this company include: safety, quality, and response to inquiry of consumers, suppliers, distributers, manufacturing eco-cars, caring for the environment, and caring for its workers. In the recent financial year, Toyota was able to increase safety of its vehicles after it developed Pre-collision system. It has the ability of detecting pedestrians. It also developed Intelligence Clearance Sonar that prevents parking lot accidents. Regarding response to its customers, Toyota was able to implement customer feedback exhibitions that were aimed at responding to all inquiries from its customers. It also educated its staff about customers first principle in an attempt of improving how they handled consumers of this company. Toyota also revised its corporate social responsibility towards its suppliers in an attempt of improving how it handled its suppliers. The suppliers became satisfied with the quality of services offered to them after the revision of Toyotas corporate social responsibility towards suppliers. It was also able to increase its sale on hybrid vehicles to one million. Concerning the environment, Toyota succeeded in adopting energy saving production technologies. This effort was directed towards energy efficiency.

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Hilton Hotel & Resorts also uses both benchmarking and performance measures for process improvements. Hilton Hotel is one of the largest hotels in the world. Conard Hilton founded it in 1919. Currently, Hilton has about 530 branded hotels around the world. One of the benchmarks of Hilton Hotel is ensuring diversity in their suppliers, compared to other hotels operating in the same industry. The management of Hilton Hotel always strives to create good relationship with all its suppliers. It also respects the cultural diversity of all its local suppliers. This prompted the management of this company to create Supplier Diversity Program as a measure for its success. This program has enabled Hilton to procure high quality goods from businesses owned by women and other businesses owned by minority people in the society. Due to this benchmark, Hilton Hotels have been able to provide quality goods and services, value for its services, stability in its business operations, and good business practices. Compared to its competitors, Hilton has succeeded in creating diverse employment practices, while selecting its suppliers. Sustainability is also another key benchmark for measuring process improvements. With this benchmark, Hilton has set up goals for reducing wastes in all the countries where it performs its operations. Recently, it partnered with The Global FoodBanking Network, Feeding America, and DH Hospitality Group in an attempt of reducing wastes in about 4000 hotels across the globe. This goal has made consumers see that this company is more socially responsible, compared to its competitors. Hilton also aims at creating sustainability in its energy use. This goal prompted the management of this hotel to acquire excess of 450 million kilowatts of green power in the financial year that ended in 2012.

Hilton also uses performance measures for process improvements. These performance measures include: Satisfaction and Loyalty Tracking (SALT) survey, Product Standards, Quality Assurance, and Brand Management. In the SALT survey, the management of Hilton sends its customers email surveys in order to ascertain the level of consumer satisfaction regarding Hiltons services. These scores are used in Hilton Hotels located in Homewood Suites, Embassy Suites, Hamptons Inn, and Garden Inn. Product Standards performance indicator helps in ensuring that Hilton Hotel offers superior products to all its consumers. This is the reason that this hotel started the Product Improvement Plan (PIP) used for approving assets by Hilton Hotel. Before any investor forms any partnership with Hilton Hotel, all sites for his assets are inspected, in order to ascertain whether they attain the required standards. Hilton management then gives recommendations on all alterations to be made, so that the property attains Hiltons standards. Hiltons Design and Construction Standards Manual helps in ensuring that all new buildings meet the pre-specified designs of Hilton. This is a key performance measure of Hilton Hotel. Quality assurance is another key performance indicator of Hilton Hotel. In October 2011, Hilton was able to earn ISA 9001 certification because of its quality management systems. It also earned the ISO 14001 certification due to its environmental management systems.

To conclude, both Toyota and Hilton Hotel & Resorts successfully use benchmarking and performance measures to drive process improvements. This has increased the market share and quality of services that they offer to consumers. Toyota uses lean manufacturing system as its benchmark. This principle has helped it to offer high quality products to its consumers, reduce lead time, and minimize its wastes. Toyota uses KPI to assess whether it responds well to inquiries by consumers and take care of the environment. Hilton Hotel uses benchmarking to ensure diversity in its suppliers. Some of the performance measures used by this hotel include SALT and Product Standards.

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