Page 310 - DMGT501_OPERATIONS_MANAGEMENT
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Operations Management
Notes context, service is an operation, producing a product. Even this product can not be inventoried;
process of the production is similar to manufacturing.
In manufacturing organisations result of JIT application is a clear cut and measurable reduction
of inventory and lead times. However, in service environments reduction of inventory may not
be significant. Weiters states that financial justification of JIT in service industries is less likely
but in service industries JIT offers intangible benefits in terms of improved service quality and
customer satisfaction.
Example: Inman and Mehra observed the JIT in FedEx case. This package delivery
company implements JIT to reduce their inventory of quasi-MRO goods (mainly packaging,
labelling supplies). Program aims to reduce inventory but not as a primary objective. They
aimed at improving their service quality and competitiveness through implementation of JIT
and anticipated that inventories would be reduced as a result.
Based on this, they concluded that JIT application in service operations is beneficial but it should
be carefully considered and planned before hand.
Benefits of JIT in Services
The following are the some of the ways in which JIT benefits can be achieved in a service firm:
1. Elimination of disruptions in work of the employees
2. Incorporating more flexibility in the service delivery system and training employees to
handle more varied tasks
3. Reduction of the set-up time and costs
4. Elimination of service wastes including reduction of error and duplication of work
5. Minimization of work in progress.
A service firm may benefit from JIT system if it has the following:
1. The service operations are repetitive in nature like delivery of pizzas, carrying passengers
from one place to another etc.
2. The service firm plays with high volumes
3. The service firm has tangible items to support the service like pizza in a pizza delivery
system or seats, seat belt, magazines, food in an airplane etc.
4. The service firm involves manufacturing like operations.
JIT and Service Industry: An Overview
High quality in service delivery and service operations on a consistent basis: The employees can
be taught the value of providing high quality, defect free services and make them realize that
high quality in operations and resulting customer satisfaction is a definite order winner.
Uniform facility loading: The systems of reservation and the differences pricing are the ways to
level off the load on the facility.
Standardization of working methodology: Higher efficiency in operations can be achieved by
analyzing the work methods and adopting a standardised work methodology. However, it is
possible usually in service operations which are highly repetitive in nature.
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