Sangeeta Alex is a Manager at Kangan Institute. She is so kind to share some of her knowledge on how to implement operational plans and how to create KPIs. It is a great opportunity to ask her questions. So, try to get as much information of her and use the time well.
All these terms need to be seen in relation to applying an operational plan.
Today’s class is about contingency planning.
Contingency planning is an important part of operational planning. A contingency plan is basically an alternative plan or a ‘Plan B’, when events do not turn out as planned.
You could refer to it as Planning for Disaster by anticipating potential problems, or events that could have a negative impact if not dealt with (by using an alternative plan).
‘Events not turning out as planned’ could mean either an emergency or simply a change of events (leading to a change of plans). Life is really a lot about change, so life is in a sense about contingency plans.
Here are some examples:
(Events as planned) You were going to make Sticky Date Pudding for desert at a dinner party> (Emergency or problem) You realise too late that you have forgotten to buy an important ingredient, eg cream> (New or Contingency Plan) Your contingency plan may be to use an alternative or to quickly go to the 7/11 and buy cream at a higher price
(Events as planned) You are about to start a group assignment with 2 other students> (Emergency or problem) One students gets very sick and will not be able to meet you in person> (New or Contingency Plan) You decide to collaborate online, using Google or other online conference and sharing tools or You decide to drop that student from the group and approach someone else
(Events as planned) Rudi B has 3 children and and his wife is a full-time mother> (Emergency or problem)Rudi loses his job and monthly income. >(New or Contingency Plan)His Income Protection Insurance provides him with an ongoing income for 18 months. He has time to look for a new job.
(Events as planned) We are in class at Kangan. It is a beautiful day (Yong is sleeping, Lucine is not on Facebook and Adam is glad that Toni is back in class). >(Emergency or problem) The fire alarm rings! > (New or Contingency Plan) We follow the Contingency Plan which is the Emergency Plan. We leave the class room, the teacher locks it and we assemble in the car park.
You see that all these examples are simple and easy to deal with. Each requires a different level of foresight and each emergency or change of events may be dealt with differently.
Contingency Plans are necessary on many levels:
Supplies of ingredients for a restaurant – it is worse to run out of an ingredient when someone pays for the food!
Anti Terror Laws and Measures are a form of contingency plan.
Increase of petrol prices will require transport businesses and suppliers to react (this may be an increase in their fees)
A cheaper competitor that undercuts the prices of an established brand and wins customers over will have an impact on the prices of the established brand.
Think of 5 scenarios for something going wrong or not to plan in your life and write down:
the event as planned (eg driving to TAFE)
the change of events or emergency (eg the car breaks down)
the contingency plan (eg SMS Federico and come by Public Transport)
Keep it simple and have ready for next class. 😉
Here are some simple examples and explanations online:
We will start today’s class by thinking about the terminology introduced in class 1 –
on a sheet of paper write your own understanding of:
KPI – Key Performance Indicator
Key Performance Indicators (short: KPIs) are an extremely important measure in successful businesses. We will look at the definition of KPIs, how to create a KPI and look at examples. You will then need to create an example KPI.
Please open the presentation below and follow it in class.
In 6 teams we will look at examples of KPIs used in hospitality and report back to the class.
Examples of KPIs used in restaurants, cafes and similar businesses
Below is a text with examples of KPIs used in restaurants, cafes and similar businesses. Read and write one from each category that you can relate to on a sheet of paper. We will use it in a group discussion.
Source: http://www.profitablehospitality.com/public/88.cfm (Sourced in August 2012)
Key Performance Indicators for Restaurants, Cafes, Catering, Clubs and Hotels
Remove the guesswork from managing your business by checking the numbers that tell you what’s really happening.
There’s a business saying: ‘if you can’t measure it, you can’t manage it!’ Real, responsive management needs reliable and truthful figures on which decisions can be based. If there are problems, you can take corrective action quickly. If you are having success, you’ll know to do more of what you’re doing! Good figures also give you a wider understanding of your success – sometimes if it’s a quiet month (when your suppliers are telling you that ‘everyone’s quiet!’) you’ll see that some of your KPIs are actually improving (eg sales per head). Well done – it is not all doom and gloom!
Watch several figures from each of the 6 following sections.
1. Staff and Employment KPI’s
Wage Cost % – wage costs as a percentage of sales.
Total Labour Cost % – not just wages but also the other work cover insurance, retirement and superannuation charges and other taxes that apply on your payroll.
Total Labour Hours – how many hours worked in each section. This is useful to compare against sales to measure productivity.
Function Labour charge-out. Caterers usually charge-out service staff at a markup on the cost of the wages paid. Are you achieving a consistent mark-up?
Sick days taken – sometimes a measure of morale and the management skills of your management team.
Labour turnover (number of new staff in any one week or month) Everyone says high staff turnover is ‘part of the territory’ in hospitality. It doesn’t need to be like that, but one way to measure how good (or bad) you are at controlling this is to measure labour turnover. Count the number of positions you have (A), then count the number of people who you have employed during a certain period (B). Divide B by A and you will get a labour turnover figure, sometimes expressed as a percentage. For example if you have 10 staff positions and you have employed 38 people in the last year, your Staff Turnover is 38/10 or 380%!!
Average length of employment – another way to look at your success in keeping staff. Add up the total number of weeks all your people have worked for you and divide this by the total number of staff.
Average hourly pay – divide the total payroll by the number of hours worked by all staff.
2. Kitchen Management
Food Cost % can be measured quickly by adding up food purchases for the week and measuring them against your food sales. This is based on the assumption that you are not holding very much stock (as it’s perishable, you need to sell it or throw it out!). You may also do a stock-take regularly to get a more accurate food cost percentage, although the burden of kitchen stocktaking often means it is not done very often.
Total Food Costs – how much was your total food bill? Sometimes a useful figure to show staff who think you are made of money!
Food Costs per head. It can be useful to see every week how much it costs to feed an average customer. If your menu and sales style is consistent, this should also remain much the same. If it starts to go up, you will have to find out what’s happening!
Kitchen Labour % – it’s only fair to measure kitchen productivity by comparing kitchen labour against food sales, not total sales (alcohol and beverage sales may be influenced by other factors).
Kitchen Labour hours – how many hours worked in this section? Compare against sales to measure productivity.
Stock Value – how much food stock are you holding? It should be less than a week’s use, but can slip out if you are storing frozen seafood or Cryovac meat (a packaging method that is supposed to prolong the life of meet).
Best (and worst) selling items – check the weekly sales from your POS or dockets. Did you know what the best sellers were? Map these on the Menu Profitability Analyser.
Kitchen linen costs – the cost of uniforms, aprons and tea-towels can be a shock! How many tea-towels are you using each day? (Have you thought about laundering them yourself?)
3. Front of House and Restaurant Management
Total Sales Per Head – your total sales divided by the number of customers. How does it compare to last week and last month? This may vary between different times of the day .
Number of customers – simple! A good measure of popularity.
Food, Dessert, Beverage Sales per head. These are divided into key areas of choice – main course and starters, desserts, non-alcohol beverages, alcohol and perhaps also side orders (eg breads and salads) and other product sales. It’s the perfect indicator of two things – how much your menu appeals to your customers (do you have all the choices they want, eg the right dessert selection?), and how well your staff are selling. This KPI can be a good basis for a bonus system.
Seating Efficiency – how well your tables are being turned over while still offering high quality customer service. Usually many small things combine to have a large impact – cooking time, seating, service and clearing. The size of tables relative to the average group size will also make a difference.
Basket Analysis – eg how many items do lunch customers buy? What else do morning coffee drinkers order, or red-wine drinkers (mineral water if the servers are awake)? A recent analysis with a client showed that typical diners ordered only 2 items (most ordered nothing after the main course) and many of the lunch customers did not order a beverage. Grab a pile of dockets from a typical day, and look for ordering patterns.
Linen costs – uniforms, aprons etc.
Front of House Labour % – how many hours worked in this section? Compare against sales to measure productivity.
FOH Labour hours – how many hours worked in this section? Compare against sales to measure productivity
Customer satisfaction. This is measured in different ways. Feedback forms, complaints and other methods that are hard to quantify sometimes but worth making an attempt.
Strike Rate – if 500 people came to your club last night and only 100 ate at the bistro, your ‘strike rate’ would be 1 in 5, or 20%. Good enough? Compare with similar businesses and different times.
RevPASH – Revenue per Available Seat Hour. The same idea hotels use to measure Revenue per Available Room. For RevPASH take the total number of ‘seat hours’ and divide total revenue for a period by this number.
4. Bar and Cellar Management
Sales per head. Useful to have them separately for alcohol beverages and non-alcohol (juices, mineral waters, soft-drinks and coffee etc). It’s the perfect indicator of two things – how much your beverage and wine appeals to your customers and how well your staff is selling. This KPI can be a good basis for a sales bonus system.
Gross Profit on sales – the difference between what you sold and what it cost you. The sales mix can influence this heavily. If you are selling two bottles for the same price, but one costs you $5 to buy and one costs you $7 to buy, you should try to maximise the sales of the one with the highest dollar profit.
Average Profit % on Sales – useful to see if your sales are holding steady, although ultimately the actual Gross Profit (real money) will matter the most.
Stock Value – how much cash is locked up in the value of your cellar? Tens and even hundreds of thousands of dollars can be tied up in cellar stock and you don’t realise it! It’s worth checking with your suppliers and seeing how much you can order ‘just in time’. This is where retail business models are useful to compare, because unlike food stock, these supplies are not perishable, which can lead to a temptation to hoard. Also, the romance of wine lists and ‘special deals’ can lead to stock blow-outs! Weekly stocktakes are essential for proper management.
Stock turnover – how fast is your cellar stock selling? If you are carrying wine stock worth $50,000 and the value (not sales) of what you sell each week is only $10,000, it’s taking 5 weeks to turn over your stock. That’s too long! An accurate figure here will be based on regular stocktakes and accurate sales information.
Carrying cost of stock – what is the cost of financing this $50,000 of stock? Take the current interest rate for borrowing money, apply it to your stock value, and divide by 52 to get a weekly figure. If stock is valued at $50,000 and interest rate is 8%, annual cost of financing the stock is $4000 or $77 per week.
Sales / stocktake discrepancies. Alcohol means security problems, and keeping an eye on ‘shrinkage’, staff drinks and stealing is a constant problem. As an essential KPI, measure the difference between what you used (from comparing two stocktakes) and what your POS system says you sold. You often need to find our why they aren’t the same!
5. Sales and Marketing plus Function Management
Number of customers – simple! A good measure of popularity.
Visits by your top 100 or 200 customers – they provide a huge proportion of your sales! Track their frequency and spending – these people are gold!
Sales per Head – across all areas
Marketing and advertising costs – the total value of what you spend, always trying to measure it against the response you get. A difficult one to measure, but worth investigating.
Response rates – how many people responded to different campaigns and what effect did this have on profit?
Press Mentions – keeping your eyes open for favourable mentions.
Bookings – in the current week and month and coming up. Also in peak times, eg Christmas.
Function Inquiries – number of inquiries about large bookings and functions, especially if you have undertaken a campaign to promote them.
Sales inquiry conversion rate – the number of inquiries that turn into actual sales. If 50 people asked for information about your function packages and this resulted in 10 firm bookings, this would be a conversion rate of 1/5 or 20%. You would want to look at why so few people were ‘converted’ – was it the quality of the promotional material, skill of the sales staff, pricing or make-up of your function menus and facilities?
6. Management of Finance and Administration
Cash position at bank – how much do you have available after reconciling your cheque book?
Stocktake discrepancies – a measure of the efficiency of each department, but also of the administrative systems in place. They need to be simple and easy for line staff to fill in, and the results should be made known quickly if they are to have an impact.
Total accounts due – how much do you owe?
Total accounts payable – not usually a problem in restaurants and pubs, but needs careful management if you have accounts, eg large restaurants.
Return on Investment – the profit your business makes can be measured as a percentage return on the amount you have invested in it (see the Balance Sheet). Is it sufficient?
Taxes owed – most of these taxes are not paid at the time they are collected. Hence the need to know how much is owed at any one time so it is not ‘spent’.
Sales & costs – actual figures compared to what you budgeted for the period. You will want to see real dollar figures and percentages.
Administration labour costs. This is often begrudged in hospitality businesses and seen as ‘not productive’. But strong and skilful administrative support will be essential to manage the KPIs listed above!
Computer and technology efficiency – how much down-time for your computer system? How accurate is the POS system? How many of your staff know how to use the equipment they use each day, eg telephones – can everyone transfer a call properly?
Please complete the comprehension task below by answering the questions!
In-class discussion on what the words strategic and operational imply:
Strategic: theory, plan, ideas
Operational: practical, the actual doing of it
Looking at strategic and operational planning in the context of:
Chess: the strategy relates to the moves ahead, the player is thinking about a number of combinations. The player will try to determine and anticipate the opponent’s moves, while thinking through a number of moves that would give the player an advantage.
Military: the general may think about astrategy of attack, while on a lower level of the hierarchy, the Captain may think about how to implement the orders and how to make it happen.
This may include thw day to day running of an army, the resource management, the movement of the troops.
Strategic and Operational Planning for an Institute
In teams Use Kangan Institute as an example and list aspects that relate to planning on a strategic level and planning related to the operational level of a business.
Discuss your findings.
View the VMB (Visual Management Board) used by ICT
Students will view the VMB used by ICT and understand how ICT manages the strategic vision of the institute and translates it to an operational level.
If you missed this class you will need to check with your colleagues and teacher on what the VMB was about.
The Glossy Reflection is transparent on top and gets whiter towards the bottom.
Britons, Lord Kitchener Wants You! Propaganda poster design from WWI by Alfred Leere. Image: courtesy of WorldWarEra.com
The gentle curve of the river and the light green tones of the grass give this image a calming feel. The montains and the clouds have a less calming effect. Image: courtesy of Icon Photography School – http://www.photographyicon.com/line/
Only practice will help you learn! Photo by BreonWarwick on morgueFile
Good Morning! Photo: wallyir, from: morgueFile.com
Colours, Numbers and Boxes – very happy and alive, personally I do not like the distortion of the word content – found at: Flickr
Italian movie poster found on Abduzeedo.com
From ‘Henri’s Walk to Paris’ 1962 – children’s book by Saul Bass Found at: Brainpickings.org
Milk Poster – Swiss International Style Reference – by Annabel Stephen Salip
Illustration by Kate Miller, found on DzineBlog.com
The calming effect of horizontal lines, image: courtesy of flickr.com, Photographer: jaikdean
Contemporary design in style of Construcitvism by Teo Brito found at LauraGreen92 – click image for more information and link to her blog
Photo by Seemann on morgueFile.com
Free Transform and Ctrl – I am loving it!!!
I Want You – Emily Strange, The lovable Emily Strange came to life in 1991, designed by Nathan Carrico for Santa Cruz Skateboards. She is referred to as a counterculture icon. I would just call her a sceptic. Image found at: Kollectable Kaos
Illustration by Jessie Ford, found on DzineBlog.com
Photo by matthewbridges on morgueFile.com
Work by Justin Anderson
Photo by hotblack on morgueFile.com
Fruity Design – This is great for a menu, very appetizing thumbnails – found at: WeddingPhotography.com
Geese in Ameland, Photo by Frans Schouwenburg
Mosaic of Sofia Coppola – by Maurizio Galimberti – www.mauriziogalimberti.it
Illustration by Gary Neill found on Dzineblog.com – http://garyneill.com/ http://garyneill.tumblr.com/
Work by Jo W
Based on photo by dhester from morgueFile.com
Courtesy of The Art of Mass Effect Universe’, 2012
Lines and Gradients- Courtesy of: psdtuts+
The Face by drfranken found on ChromoArt.de
Uncle Sam Wants You, WWI Propaganda Poster for US Army recruits, Design by James Montgomery Flagg, 1916, image found at: Live Auctioneers
Illustration: Jamie McKelvie – Art Brut Record
Study – Lines and Grace Kelly – by Federico Viola photo: courtesy of GettingCheeky.com and curved lines wallpaper: courtesy of FreeFever.com
Photo by frenchbyte on morgueFile
Vista Lighting Effect – Courtesy of: Tutorial9
Based on photo by xandert found on morgueFile
Steel Curves, Image: courtesy of flickr.com, photographer: Margeois.
Source: morgueFile, Photo by matei
A Beautiful Piece by Aerosol found on his Facebook
From ‘Henri’s Walk to Paris’ 1962 – children’s book by Saul Bass Found at: Brainpickings.org
“Step into my office” Source: The Age, click image for link
Text-based Table of Content – Very Graphic and Black and White- found at: Smashing Magazine (click image for inspiring article on table of content design)
Photo Montage by SGlider12 on Webdesign.org – Click image for great Gimp tutorial
Photo by mconnors on morgueFile
Michael Pointing in GTA V – Courtesy of Rockstar
Concept for Gallery Screnshot
Jenga, photo courtesy of: Design-Crit.com
Text and Shapes – This design lends itself to an interactive use – found at: Smashing Magazine (click image for inspiring article on table of content design)
Finding the Right Candidate for a Job… – Photo AdamRiley from www.projectnoah.org
Illustrator unknown – found at: Ephemera – World of Rare Books
Illustration: Tavis Coburn – Illustration for for an article predicting trends in Apple’s mobile strategy. Found on: TavisCoburn.com
Photo by dharder on morgueFiles.com
Colourful Table of Content – Ribbons in Primary Colours – found at: LifeBlue.com
Custom Shapes and Custom Shape Icon
Pink Ribbon Day – Swiss International Style Reference – by Hwan Rochanabuddhi
Screenshot from What’s Your Story by Joyce Hostyn
This is a template for a business website found at TemplateMonster. It is interesting in the sense that it breaks up the main image as part of the navigation. The sound it comes with is annoying.
Screenshot – 82 Everyone is a Marketer by Seth Godin from What’s Your Story by Joyce Hostyn
Photomontage: Amir Ebrahim Photography
Outlined text changed in size and colours dropped into the individual letters with Eyedropper tool using LMB + Alt
Poppies – Vector art Federico Viola based on photo by hotblack from morgueFile
Setting the grid up.
Photo by DTL on morgueFiles
Close-up at Fed Square, Federico Viola 2013
Illustration by Gary Neill found on P.A.P.-Blog – http://garyneill.com/ http://garyneill.tumblr.com/
Peace- Swiss International Style Reference – by Maryam Chananeh
Constructivism Reference – by Lylah Livingston
Multimedia Production Cycle – This image is under the Creative Common Agreement, you can use it but will need to reference this site: www.classoffederico.wordpress.com
Photo by agathabrown on morgueFile
Photo by omdur on morgueFile
Some of us have there most enjoyable moments in nature at the beach, Photo by rivediamoci on morgueFiles
Image Source: www.photoshopessentials.com
The grass layer has been turned into a clipping mask with the shape of the rabbit below.
Using the Reflect tool (o) to reflect the i downwards as if it has collapsed in front.
Image source: Data Center Knowledge
Vertical lines of a dark fence, image courtesy of p.ic – Photo Internet Collection – www.photoic.wordpress.com, photographer: Federico Viola
Couple found at http://frenchbydesign.blogspot.com.au
Based on a photo by delboysafa from morgueFile.com
Based on photo by hotblack from morgueFile.com
Image from morgueFile by lemai13
Your Lipstick Needs You, an entertaining take by Digital Media Artist Samantha Cain. Courtesy of: Samantha Cain, http://www.behance.net/samanthacain
Work by Egon Schiele, found at Mom.org
Experimental Photomontage by Robert Heinecken
Luminescent Lines – Courtesy of: PSDLearning
The underlined text and insertion point at end of the word indicates that you are still in the type mode.
Photo by clarita on www.morguefile.com
Examples of Output and Display for web-content. Image: live.surveyshack.com
What Time is it Now? by King_Bobbles
Table of Content from Textbook – This design lends itself to an interactive use – found at: Smashing Magazine (click image for inspiring article on table of content design)
Massive Attack – The Essential Mix
Typographic with Colours and Photos – The use of large numbers is effective and the low opacity of the boxes works, personally, I find it looks a bit dated- found at: JuxtaPost.com
The swirls in the image are made up of numerous lines. Courtesy of: www.openprocessing.org
Light Streaks – Courtesy of: PhotoshopEssentials
Illustration by Jessie Ford, found on DzineBlog.com
Layers in Photoshop are like a Collage of images stuck on top of each other…