According to Waters-Fuller (1995) JIT activities to achieve the result of waste elimination and inventory reduction are:
∙••••••• small lot sizes delivered in exact quantities
∙••••••• few suppliers, ideally one per component
∙••••••• supplier selection based on quality and delivery performance
∙••••••• long term contracts
∙••••••• standardised packaging
∙••••••• reduced paperwork
∙••••••• delivery synchronisation to production
∙••••••• geographically close suppliers
∙••••••• improved data exchange
These practices eliminate the reasons for holding inventory. Single sourcing, long term contracts etc. enables the business use its supplier as a warehouse and requires closer inter organisational relationships. Billesbach and Schniederjans (1989) identify some JIT techniques as: (i) re-layout and merger of operations, (ii) standardisation of activities, (iii) multifunctional workers, (iv) cellular organisation. These techniques are aim to change internal processes to comply with JIT philosophy.
Is it possible in a service environment?
JIT philosophy briefly explained above was developed and successfully implemented in style="" lang="EN-GB"Japan (Barlow 2002). JIT was developed in a car factory and it is best suited to manufacturing environments. Repetitive nature of the manufacturing makes it possible to apply JIT techniques successfully in such environments.
In spite of the natural differences manufacturing and service, there are possible applications and benefits of JIT techniques in service industries. In his pioneering article, Benson (1986) argues that “service operations are organised systems of production processes with the same potential of improvement through implementation of JIT precepts as manufacturing operations”. (Cited by Duclos et. al. 1995) In this 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 (1984) 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.(cited by Inman and Mehra 1990)
Bulk of the JIT literature is on manufacturing. However, there is number of studies investigating applicability of JIT techniques in service industries. This area of research develops in a slow phase. Several authors reports on JIT applications in service industries.
Benson (1986) first points out that some JIT techniques are applicable in service and identify the JIT methods used in manufacturing and suggest possible applications of similar techniques in service industries .Following this other researchers studied the subject and either suggested or reported on JIT applications in service.
One of the first identified areas of JIT applications within the service industry is healthcare sector. Possibly due to high material handling requirements of the sector, healthcare was the first. style="" lang="EN-GB"Richardson (1987) presents a case study of a hospital and interestingly never touches the theory and just lists the results of the material management program. In this reported case inventory reductions are significant. Berling and Geppi (1989) studied the supply chain of healthcare sector and offered JIT as an inventory management approach to hospitals in order to reduce inventory. They offered closer relationships between hospitals and distributors. However, their over all approach to supply chain management of healthcare sector was not JIT focused.
Billesbach and Schniederjans (1989) present a case study on JIT application in an administration setting. Case company is big corporation and JIT programme is implemented in the headquarters of this corporation. Authors provide a theoretical background and continue on to study the results. They conclude that JIT can be successfully applied to administrative settings. They identify employee involvement and empowering of employees can improve efficiency. They suggest activities should be examined and the ones not contributing to result should be eliminated.
Inman and Mehra (1990) reports on 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 the case study, authors conclude that JIT application in service operations is beneficial but it should be carefully considered and planned before hand. In their following article same authors report on three case studies and draw similar results (Inman and Mehra 1991)
Lee (1990) presents a case study of a small bank. Study is focused on this banks loan approval process. Bank follows a two phase process and first evaluates the applications and makes the decision of lending in second phase. This process usually takes 12 days. Applying JIT approach whole process is redesigned and several tasks are unified. New approval process takes 4-5 days.
Wasco et. al.( 1991) presents a case study of another service organisation. Case company is Kodak’s quality assurance division. This division provides services to worldwide chain of Kodak. An MRP II system is implemented with JIT approach and conclusion of the study is JIT techniques enhance the potential of MRP application.
Duclos et. al. (1995) review the literature dealing with JIT applications in service industries. Dividing the literature into Benson’s (1986) guidelines of application concept, they provide a good outlook of the literature to date. Article identifies some research directions. These are modifying JIT terminology to service, developing a research framework, applying current research to service operations, developing models for evaluating success.
Probably most radical case study is presented by Barlow (2002). He investigates the applicability of JIT techniques to hotel industry. He examines three style="" lang="EN-GB"UK based large hotels and their inventories. Weakness of this study is it concentrates on liquor stocks of these hotels and draws conclusions on if statements and these hotels actually do not adopt any JIT techniques. Hotels are rather used as a data source. Although, his findings are significant there is a set back since nothing has been changed and his conclusions are based on probable actions. He goes through reasons of holding inventory and tests this reasons against his findings and concludes that these hotels would gain financial saving on their inventory by adopting JIT approach.
Conclusion:
In conclusion JIT can be described as a waste elimination philosophy. JIT philosophy does not directly aim to manage inventory but as a result of JIT application inventory reduces or completely disappears. Usability of such a philosophy in service sector is quite evident from the literature. However, when it comes to applying JIT in service, JIT means something different. Literature on the matter quite confidently states that JIT can be applied in services and through reported case studies evidence is provided.
Examples of JIT applications in service industries are vague in some sense. There are no empirical studies and reported case usually resembles manufacturing setting. When JIT is imported to services most identical aspect of it some how disappears: inventory reduction. As one of the reviewed articles points out (Duclos et. al.1995) JIT terminology should be modified in order to be used in research on service operations. And JIT concept should be re defined. All in all there is a high possibility of importing learned results from manufacturing to service operations.
References:
1- Barlow, G.L.(2002) “Just-in-time: Implementation within the hotel industry—a case study”
Int. J. Production Economics 80 (2002) 155–167
2- Benson, R.J. (1986), “JIT: not just for the factory”, Proceedings from the 29th Annual International Conference for the American Production and Inventory Control Society, St Louis, MO, 20-24 October, pp. 370-74.
3- Berling, R.J., Geppi, J.T., (1989) “Hospitals can cut material costs by managing supply pipeline” Healthcare Financial Management 43 (4), 19–25.
4- Billesbach, T. J., Schniederjans, M.J., (1989) “Application of Just-in-time techniques in administration.” Production and Inventory Management Journal 30, 40–45.
5- Duclos [et al] (1995) “JIT in services: a review of current practices and future directions for research” International Journal of Service Industry Management, Vol. 6 No. 5
6- Inman, R., Mehra, S., (1990) “JIT implementation within a service industry: A case study.” International Journal of Service Industry Management (3), 53–61.
7- Inman, R., Mehra, S., (1991) “JIT applications for service environment.” Production and Inventory Management Journal 32 (3), 16–21.
8- Lee, John Y. (1990) “JIT Works for services too.” CMA; Jul/Aug; 64 p 20
9- Richardson, J. (1987) “Just-In-Time inventory: A practical application.” Hospital Material Management Quarterly; Nov/87, 9, 2
10- Waters-Fuller, N.(1995) “Just-in-time purchasing and supply: a review of the literature,”
International Journal of Operations & Production Management, Vol. 15 No. 9 1995, pp. 220-236
11- Wasco, W. C.[et al] (1991) “Success with JIT and MRP II in a Service Organization,” Production and Inventory Management Journal; Fourth Quarter 1991; 32, 4
12- Yasin, M. M.[et al] (2004) “Benchmarking JIT: an analysis of JIT an analysis of JIT implementations in the manufacturing service and public sectors.” Benchmarking: An International Journal Vol. 11 No. 1
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