Just-in-Time Principals in the Hospitality Industry - Essay Example

Name : xxxxxxxxxxx Institution : xxxxxxxxxxx Title : Macroeconomics policy Tutor : xxxxxxxxxxx Course : xxxxxxxxxxx @2011 JUST-IN-TIME Principles in the Service Sector Introduction Just-in-time has been a widely used principle and strategy in the manufacturing industry though in recent years the idea has spread to the service sector where its application and integration has resulted into increased productivity. The strategy entails laying more emphasis on the production process such that product quality is enhanced so as to satisfy the needs of customers. The hospitality industry has applied just-in-time in the course of service delivery such that costs incurred during delivery are reduced while at the same time the client is assured of high quality services. Although the service sector as well as the manufacturing sector has all employed and integrated the strategy in their production process hence cutting down on the production costs to attain better profits. Discussion Just-In-Time The strategy is integrated in the production process as a way of cutting down on the inventory costs that are incurred by manufacturers and hospitality sector entrepreneurs to increase returns. During the application of this process, signals are given on the correct timing when production of the next product should begin. Therefore, the production of the next product is just in time as it will not be stored in a warehouse awaiting demand. This is because the timing is done to correspond with the diminished supply of products that are already in the market (Holweg, 2007). In the hospitality industry, just-in-time strategy is put in place to enable hotels to attain their goals which place customers at a special category. This category must have its needs met efficiently as part of the just-in-time philosophy in addition to this purchasing also plays a key role in attainment of company objectives when the strategy is put in place. Just-in-time purchasing of the hotels supplies results in increased quality of raw materials as fresh foodstuffs will be availed each day while at the same time creating better avenues to reduce wastage especially in off peak periods. The hospitality industry has direct effects on the health of customers such that poor handling of raw materials would result in severe customer dissatisfaction. Therefore, it is equally important to minimize such incidences by reducing the amount of time raw materials spend in the premises before being used (Balci, Saadettin and Omer, 2007). Just-in-time is based on the concept of reducing wastes in the production process while characterizing wastes as anything that is not maximally utilized in the course of production. These items or wastes are further categorized as anything that is not involved in the production of high quality products regardless of the sector in question. The other coincidence that is presented by the just-in-time strategy is the improved quality of products in addition to increased returns from the sale. Consequently, due to the fact that the producer will only avail another product when the supply reduces, there will be no or minimal costs in warehouse and storage as raw materials will be bought receipt of the signal to begin production (Wadell and Bodek, 2005). Major issues related to integration of Just-in-time in the hospitality industry A major issue in the hospitality industry upon the integration of the just-in-time strategy is the supply shock and the demand shock that suppliers as well as customers are exposed to. Such shocks lead to changes in the overall demand and supply of the products and the entire market ahs to be braced up to handle the situation. This is mainly attributed to the fact that the nature of just-in-time strategies for the hospitality industry is quite diverse unlike those in the manufacturing industry. In the hospitality industry, the locality and capacity of the hotel plays a key role in establishing just-in-time strategies more than the scale of operation (Liker, (2003). Consequently, failure of the hospitality industry to improve product quality will cause reduced sales as continued production will not be capable of meeting the needs of existing customers. This causes a major hold up at the point where the customer is supposed to purchase the product due to prevalent changes in supply as demonstrated by the action of the strategy (Meybodi, 2003). The other issue in the integration of the strategy in the hospitality industry is the need for entrepreneurs to develop long-lasting relationships with the suppliers as in the long run they will be in a position to identify with the timing of supplies thus reducing inconveniences. However, due to the high level competitiveness in the hospitality sector, the producers always obtain an added advantage if their suppliers are competitors as this guarantees them sufficiently high quality supplies which will meet the preferences of customers (Balci, 2007). Such a plan not only ensures that at any given time the entrepreneur in the hospitality industry has sufficient supplies, but it also creates a better working relationship by availing high quality products whenever they are required to cut down on storage costs. Consequently, a number of business managers in the hospitality industry have been unable to maintain or sustain long-term relationships with suppliers who are few and not rivals. This is a bottleneck towards effective integration of the just-in-time strategy as it results in poor results because it cannot be experienced fully as it should and amendments have to be made so as to increase its efficiency (Wadell, 2005). The other issue that is rather common in the manufacturing sector is lack of synchronization of raw material supply or availability and the time when it is required in the production process. This is quite critical for raw materials that are produced in connection with natural circumstances such as crops which require favorable weather conditions to mature as well as ripen. The just-in-time strategy cannot attain full effectiveness as the raw materials may not be ready at the time when the signal for continued supply is given. Such a scenario may occur when weather conditions turn drastic and the timing when the crops are required fail to synchronize with their ripening and the eventual just-in-time supply. Other uncertainties may occur thus hindering fully actualization of the strategy especially in reference to supply time when production is due. Failure to link the just-in-time process and the entire supply synchronization has been a major challenge in the manufacturing sector much to the advantage of the hospitality industry (Hirano and Makota, 2006). The hospitality industry also has to cope with issues of lack of synchronization due to the nature of product delivery. Products in the hospitality sector are mainly direct such that the supplier and the customer have to be present at the same time so as to transact business successfully. This acts as a limit for entrepreneurs who have to work really hard to ensure that products available are delivered and received by the customers at the same time as most of them are directly effected on the recipient. Consequently, poor coordination between the inventory manager and the suppliers may cause plenty of mayhem when customers are presented with poor services that may lead to poor sales while the ultimate goal of integrating just-in-time is to enhance on the product quality. Similarly, huge losses will be incurred despite the reduced production costs as the objective for the strategy application will not have being attained. These issues are quite engaging such that a greater number of entrepreneurs in the hospitality sector attribute their losses to the challenges that arise as a result of just-in-time integration (Holweg, 2007). Application of Just-in-time principles in the hospitality sector One of the principles of the just-in-time strategy that are applicable in the hospitality sector is production of services that are needed. In this respect, the products that should be in the production process are those whose demand is current or those which will not require much space to be stored before delivery to the customers. The other aspect of producing what is needed by customers is in line with the demand that is posted by the customers such that excess or unwanted products are done away with by the inventory team. There are a number of ways that can be emphasized to ensure that only products that are needed are produced. Some of them include reducing time wasted by employees in the cause of production while at the same time minimizing on storage of the products. This is because when minimal storage space is present in the enterprise, then only products that can be accommodated by that space are produced thus overproduction is cut down (Liker, (2003). Similarly, faulty working techniques and production of services that have many defects can hinder application of the just-in-time production strategy as there will be several avenues creating extra costs such as the loophole of producing services that have defects. Such products are bound to cost money during production while very few customers will be wiling to make purchases therefore, resulting into great losses to the sector. The just-in-time strategy can therefore, be applied to minimize wastes by counterchecking on the areas or points where unnecessary expenses are witnessed and rectify such areas so as to maintain a steady profit with respect to low production costs (Hirano, 2006). The strategy allows employers to make sufficient use of skilled employees such that specialization allows everyone to apply their very best in areas where they are much needed. This is an advantage to the hospitality sector which attributes most of its productivity on the impact of the individual who delivers the service to the customer. Such competence in service delivery as well as the ability of an industry to cut down on employee salaries especially where human capital is lying idle acts as a pathway to attaining effective application of the just-in-time strategy in waste reduction. There are a number of tools that are used in just-in-time strategy to cut down on wastes in the principle of producing what is needed. One of the tools is through use of continued product enhancement such that customers have their needs met such that the production process is given adequate support by management. Use of appropriate technology which is advanced will enhance ability to utilize flexible resources such that the overall production process is improved to create room for just-in-time strategy to be executed sufficiently (Liker, (2003). The other major principle of just-in-time strategy that can be applied in the hospitality sector is production of services whenever they are required. This is in line with timely delivery of products when customers need them such that the time utility in production is attained. However, this can only be attained when sufficient synchronization between the customers needs and time when the production process is on to avoid wastage of resources. Other than attaining this principle through synchronization, players in the hospitality industry can create links between the time when signals to begin production will be issued and availability of raw materials or expertise to avail the products. This way, existing and new customers will have their constant supply without the demand or supply shocks which interfere with the entire strategy (Meybodi, 2003). Consequently, most of the products that are commonly offered by the hospitality industry are perishable such that they can only be produced when needed and not before. Therefore, this makes it easier to apply just-in-time strategies as the employees in the industry will be made to embark of service production and delivery the moment a potential customer makes an order. Such an effort will reduce the number of employed individuals as well as satisfy customers as there will be equally adequate time to prepare before delivery thus customer needs will be met whenever they are presented (Holweg, 2007). The other principle in just-in-time strategy application in the hospitality industry is ensuring that the products are produced and delivered in the exact amounts that are required thus no shortages or surplus. Shortages can be devastating in the hospitality industry especially if personalized products are in question as sharing or subdividing is not logical in the sector (SM Thacker & Associates, 2011. Therefore, in order to apply the strategy adequately in a bid to produce services at the right amount, employers in the hospitality sector have to ensure that only competent employees take part in the entire production process so as to maintain the right amount of productivity. In so doing, the quality and quantity of products that will be delivered will be adequate in all dimensions. Consequently, the hospitality industry also applies another criterion of obtaining the competitive advantage by ensuring that employees who come into contact with customers are not only competent but also motivated sufficiently so that they can deliver as per the needs of the customer. This is because poorly motivated employees may fail to attain the degree of quality or quantity that has been set by the customer hence reducing the capability to apply just-in-time strategy (Hirano, 2006). Recent research that gathered data from two hotels where one had applied the just-in-time strategy and the other had not showed that customer satisfaction as well as reduced costs was eminent in the hotel with just-in-time strategies. Similarly, the hotel that had integrated just-in-time experienced better productivity as specialization was evident due to the lower number of employees working in the unit at any given time (Barlow, 2002). Conclusion In conclusion, just-in-time strategy is efficient in the attainment of a competitive advantage regardless of the nature or sector the business is placed. This is attributed to the fact that the strategy has a universal objective which is bound on reducing the cost of production thereby increasing on the overall profits that are generated by the sector. However, there are a number of issues facing the integration and application of the entire strategy due to repercussions of events surrounding the production process. Consequently, upon adequate application of relevant principles, the hospitality sector is bound to reap tremendously from the strategy which maximizes on the profits that are made by the sector. References Balci D., Saadettin, E., and Omer F., 2007, adaptability of just-in-time philosophy to service systems. Retrieved on May 6, 2011 from: http://sim.sagepub.com/content/83/9/631 Barlow G., 2002, just-in-time: implementation within the hotel industry-a case study, International Journal of Production Economics, Vol. 80, pp. 155-167 Hirano, H., & Makota, F., 2006, "JIT Is Flow: Practice and Principles of Lean Manufacturing", PCS Press, Inc, London. Holweg, M., 2007, "The genealogy of lean production", Journal of Operations Management 25 (2): 420–437, Liker, J., 2003, The Toyota Way: 14 Management Principles from the World's Greatest Manufacturer, First edition, McGraw-Hill, New York. Meybodi, M.., 2003, Using principles of just-in-time to improve new product development process, Advances in Competitive research, Retrieved on May 4, 2011 from: http://www.allbusiness.com/management/691893-1.html SM Thacker & Associates, 2011, Just in Time (JIT), retrieved on May 4, 2011 from: http://www.brighthub.com/office/project- management/articles/72095.aspx#ixzz1LQ3ifEYf Wadell, W., & Bodek, N., 2005, The Rebirth of American Industry, PCS Press, London.   Read More