Jit In Service Industry

Acknowledgement

It is with overwhelming gratitude that I thank my lecturer, Mr. Harish, for giving me the opportunity to write a report on a challenging subject like �Just-in-time in service industry’. I would also like to thank my parents for supporting me in the noble pursuit of knowledge. Special thanks to my beloved life partner who helped me in getting a lot of research material.

I also express my thanks to the authors of the books which has helped me get a better outlook of the topic. I am also grateful to all those contributors whose valuable articles and experiences have enriched this report. The internet has also been a good source for my research. Finally, I would extend my sincere thanks to my room partner to help me with all his experience of research writing.

Executive Summary

In today’s drastically changing business environment, no business can grow and prosper if it does not adapt to the rapidly changing work practices. Just-in-time, the formalized process of reducing all kinds of wastes has been popular in the manufacturing sector for a long time. The service industry has recognized that the JIT system can be adapted successfully in their processes and add value to the basic inputs used to create the end product. The most important aspect of JIT is that it lays emphasis on the process and not on the end product. It therefore can be applied to any process within the service sector. The author has followed Benson’s (1986) guidelines for applying JIT in service, which are as follows:

• synchronization and balance of information and work flow;

• total visibility of all components of the process;

• continuous improvement of the process;

• holistic approach to elimination of waste;

• flexibility in the use of resources;

• respect for people.

Many service sector organizations have achieved great success by implementing JIT in their processes. A few success stories are McDonalds, FedEx, Citibank, Domino’s, Wal-Mart and American Airlines. The author has discussed McDonalds and FedEx in this paper. An attempt has been made in this paper to analyze how JIT is applied to the processes in the service sector and about how the service sector implements the JIT principles successfully.

Introduction

During the past twenty years, the notion of time has received considerable attention from business management. Just-In-Time (JIT) and Time-based-Competition (TBC) are perhaps two of the most publicized time-related concepts in operations management. Since time is of human essence, a better understanding of the nature of time helps enhance managerial effectiveness. The JIT concept is not just in time. While it is important to produce products at the right time, issues such as quality management, waste elimination, work improvement, maintenance, procurement, etc. are fundamental to the successful implementation of JIT and therefore have occupied most of the JIT literature (Moody, 1990).

This research paper aims to provide a framework for applying JIT to processes in the service sector, with the goal of investigating how companies in the service sector have successfully applied JIT in their processes. The author has picked two different companies from the service sector and has made an attempt to see the JIT process from each company’s perspective. An honest attempt has been made to make this paper interesting and helpful for the reader.

Literature Review

“Speed is everything. It is the indispensable ingredient in competitiveness. Speed keeps business - and people - young. It's addictive, and it’s a profoundly American taste we need to cultivate.”

Jack Welch, CEO of GE

Just-in-time (JIT) has been of great interest to manufacturers and researchers alike over the past decade. Toyota Motor Company is known for developing and operating the approach. During the early 1970s, the application of this philosophy strengthened their competitiveness in the automobile industry. Soon, other Japanese companies followed in Toyota’s footsteps and US firms found they had lost much of their edge in manufacturing. The 1980s was catch-up time for western manufacturers. They thought deeply at importing the just-in-time philosophy and researchers studied both eastern and western implementations (Duclos et.al, 1994).

The literature contains a variety of definitions for the term “just-in-time”. These range from Schonberger’s (1982) “[to] produce and deliver finished goods just in time to be sold, sub-assemblies just in time to be assembled into finished goods, and purchased materials just in time to be transformed into fabricated parts”, to Hall’s (1983) “the elimination of waste in all areas of the manufacturing firm”. According to the American Production and Inventory Control Society JIT is:

A philosophy of manufacturing excellence based on pursuit of the planned elimination of all waste and consistent improvement of productivity. It encompasses the successful execution of all manufacturing activities required to produce a final product from design engineering to delivery and including all stages from conversion of raw material onward (APICS, 1992).

When we delete the word “manufacturing” from the APICS definition, it opens new possibilities for applying the JIT techniques to both service functions in manufacturing firms and service sector firms. Business sector has been slow to consider moving JIT from the factory floor to non-manufacturing environments.

Mclachlin (1990) studied the service aspects in JIT operations. He states that the inherent service aspects of JIT operations have much in common with the operations of service firms. Droy (1986) noticed that highly successful practitioners of JIT look beyond the manufacturing function of the firm for applications of the JIT methodology. These firms apply JIT to their total business. Droy