Escolar Documentos
Profissional Documentos
Cultura Documentos
perspective
Cem Canel
The University of North Carolina at Wilmington, Wilmington, North Carolina, USA
Drew Rosen
The University of North Carolina at Wilmington, Wilmington, North Carolina, USA
Elizabeth A. Anderson
University of Houston, Houston, Texas, USA
Table I
Rate of growth of US jobs, January 1982-January 1992
Non-farm jobs, Non-farm jobs, Non-farm jobs, Non-farm jobs, Growth of
January 1982 January 1982 January 1992 January 1992 non-farm jobs
('000s) % ('000s) % %
Service-producing: Finance,
insurance, real estate 5,341 6.0 6,665 6.2 24.8
Miscellaneous services 19,036 21.3 28,577 26.4 50.1
State and local
government 13,098 14.6 15,476 14.3 18.2
Wholsesale trade 5,296 5.9 6,010 5.6 13.5
Retail trade 15,161 16.9 19,118 17.7 26.1
Transportation and utilities 5,082 5.7 5,746 5.3 13.1
Federal government 2,739 3.1 2,981 2.8 8.8
Total 65,753 73.5 84,573 78.3
Goods producing:
Construction 3,905 4.4 4,587 4.2 17.5
Mining 1,127 1.3 657 0.6 41.7
Manufacturing 18,781 21.0 18,283 16.9 2.7
Total 23,813 26.7 23,527 21.7
Total jobs 89,566 108,100 20.7
Source: Council of Economic Advisors (1992)
[ 53 ]
Cem Canel, Drew Rosen and Figure 1 into intimate contact with the production
Elizabeth A. Anderson The service continuum process'' (Carmen and Langeard, 1980).
Just-in-time is not just for
manufacturing: a service Simultaneous production and
perspective consumption also eliminates many
Industrial Management & opportunities for quality control
Data Systems intervention. Unlike manufacturing,
100/2 [2000] 5160
where the product can be inspected before
delivery, services must rely on a sequence
of measures to ensure the consistency of
technocratic terms. This is why
output. This emphasizes the importance of
manufacturing industries are considered to
process control in services even more so
be progressive and efficient while service
than in manufacturing, since services at
industries are, by comparison, primitive and
times do not deal with a physical product
inefficient. Levitt (1972) argues that service
to inspect.
industries must take a manufacturing
2 Intangibility. Because services are
approach to service activities one that
performances, ideas, or concepts, rather
substitutes ``technology and systems for
than tangible objects, they often cannot be
people and serendipity''.
seen, felt, etc., in the same manner in
Given the unique operational nature of
which goods can be sensed (Zeithaml et
services, an investigation of any
al., 1985). When buying a product, the
management concern should begin with an
consumer may be able to see, feel, and test
understanding of the service environment.
its performance before purchase. With
Chase and Tansik (1983) indicate that the
services, the consumer must often rely on
major environmental factor is the length of
the reputation of the service firm. These
time a customer spends in the system (the
less measurable considerations have the
operations viewpoint), whereas Berry et al.,
potential to greatly influence consumers'
(1983) believe the major factors to be the
perceptions and expectations of quality.
expectations and perceptions that a customer
3 Perishability. This refers to the concept
has of a particular service (the marketing
that a service cannot be saved or
viewpoint). Schmenner (1986) states that the
inventoried (Benson, 1986; Thomas, 1978).
major challenge of service systems is to
The inability to store services is a critical
devise delivery systems that meet acceptable
feature of most service operations. Vacant
service levels based heavily on the degrees of
hotel rooms, empty airline seats, and
labor intensity, contact, and customization
unfilled appointment times for a doctor
provided for the customer. Fitzsimmons and
are all examples of opportunity losses.
Sullivan (1982) view the primary
Perishability leads to the problem of
environmental factor as how one changes
synchronizing supply and demand,
from product-oriented management styles to
potentially causing customers to wait or
people-oriented management styles. For
to not be served at all.
services, inputs are the customers 4 Heterogeneity. Since the same service can
themselves. Customers typically arrive at be provided by various employees at one
their own discretion, with unique demands or more facilities, the quality of the
on the service system. Resources (i.e. goods, service can vary from provider to
labor, capital) are applied by the service provider, from customer to customer, and
manager to facilitate interaction with the from day to day. Attempting to measure
customer. the variability of different performance
types and offer a consistent service can be
Differences between services and difficult.
manufacturing
Any discussion of service systems must look It is readily apparent from the above
at how they differ from manufacturing discussion that there are many potential
systems. A review of the specific differences between manufacturing and
characteristics of services and the service operations.
implications for operations managers follows Until recently, services have been sheltered
(Rosen, 1990). from competition and have had little
1 Inseparability of production and incentive to drive out inefficiency. Shielded
by regulation and confronted by few foreign
consumption. This involves the
competitors, service companies have allowed
simultaneous production and their white-collar payrolls to become bloated,
consumption which characterizes many their investments in information technology
services. Since the customer must be to outstrip the paybacks, and their
present during the production of many productivity to stagnate. Deregulation and
services, inseparability ``forces the buyer foreign direct investment are introducing
[ 54 ]
Cem Canel, Drew Rosen and new players that are challenging the practices Integration of JIT themes and service
Elizabeth A. Anderson and philosophies of individual companies, characteristics
Just-in-time is not just for whole industries, indeed the entire US service
manufacturing: a service The main themes of JIT consist of:
sector. Service companies should not make 1 total visibility;
perspective
the same mistakes as their manufacturing
Industrial Management & 2 synchronization and balance;
counterparts did: cutting costs at the expense
Data Systems 3 respect for people;
100/2 [2000] 5160 of securing enduring competitive strength.
Overzealous cost-cutting may make the 4 flexibility;
companies more efficient over the short run 5 continuous improvement;
but unable to motivate, respond to customers, 6 responsibility for the environment;
or provide quality services over the long run. 7 simplicity; and
The US service sector must re-examine its 8 holistic approach (Chase et al., 1998;
strategy to meet the imperatives of a new Stonebraker and Leong, 1994).
competition . . . (Burnham, 1987).
These basic themes of JIT have been
The above discussion expresses the need to successfully applied in the manufacturing
improve productivity and quality in service sector and they can be modified and extended
businesses. Many of the JIT techniques used further in application to the service sector.
by manufacturing firms can be successfully These themes of JIT can be examined within
applied by service organizations (Chase et al., the framework of the differences between
1998; Schniederjans, 1993). As in manufacturing and service operations
manufacturing, the suitability of each outlined earlier.
technique to the corresponding work process 1 Inseparability. The customer's
depends on the characteristics of the participation in a service delivery process
company's markets, production technology, suggests a multifunctional approach that
skill levels, and the corporate culture. incorporates both marketing and
operational concepts. Such a combined
approach provides service managers with
JIT issues in service industries an improved understanding of business
Service system design is similar to that of that otherwise could not be obtained
manufacturing, which indicates that service through a single functional perspective.
industries could benefit from the application
. Total visibility. With the simultaneous
of materials requirements planning (MRP) offering of marketing and operations
and other inventory control techniques in functions in services, the customer is
the same way as have manufacturing very aware of not only the tangible
operations (Khumawala et al., 1986; Wasco et aspects of the service (i.e. the food in a
al., 1991). The majority of JIT research and restaurant) but also of the service
case studies focus on the manufacturing delivery system (waiting time,
sector and the technical elements of JIT, and atmosphere, wait staff, etc.).
thus, generally exclude the service sector. . Respect for people. Forcing the buyer
Manufacturing and service organizations into intimate contact with the
both produce a product, whether that product production process requires all
is a good or a service. The JIT concepts and customer contact personnel to go the
techniques are equally applicable to both extra mile to ensure positive service
manufacturing and service operations encounters, lest a negative impression
because they are process rather than product of the service be formed. Improvements
oriented. It may even be argued that service in quality and productivity cannot be
organizations have a better chance of achieved without support from
successful applications of JIT because of the employees.
lack of work-in-process and finished goods . Flexibility. By virtue of the customer
inventories in pure service environments. In being part of the production process,
analyzing the differences between services services must be flexible in nature to
and manufacturing, it would be insightful to respond or react to unique requests
explore how JIT themes can support the made on them by the customers.
unique operating characteristics of services, . Continuous improvement. As in any
and their usefulness in improving service- manufacturing or service business,
sector performance measures. Vonderembse continuous improvement is critical for
and White (1991) suggest that JIT approaches continued profitability and success.
in the service sector could be implemented in More emphasis on labor rather than
terms of simplifying production processes, capital may take place in services.
reducing inventories of supplies, and . Holistic approach. JIT is a total
focusing on the quality of the service being organizational approach to
provided. improvement, a factor which becomes
[ 55 ]
Cem Canel, Drew Rosen and even more important in services organizations. For goods providers, in
Elizabeth A. Anderson because of the issue of inseparability. which there is a product that is
Just-in-time is not just for 2 Intangibility. The lack of a physical homogeneous, the measurement of
manufacturing: a service
perspective product in most services presents unique performance is simplified. For service
Industrial Management & applications for JIT themes. providers, the ``product'' is offered by
Data Systems . Total visibility. Services provide an various employees at various facilities
100/2 [2000] 5160 intangible output that cannot often be and at different times. This lack of
seen or felt. This exposes the service homogeneous input/output complicates
firm in all areas to the customer; the the measurement of performance in
customer is able to see all aspects of the services.
organization through the service . Total visibility. With the service
delivery process. delivery system being the most
. Synchronization and balance. Service tangible aspect of some services,
providers typically have a more performance of the system should
difficult time matching supply and improve by removing variability in the
demand than a goods producer. Since delivery of the service. Customers
the service is an act or performance typically notice variance in the system,
there is a greater reliance on employee and this could affect the perceived level
scheduling than in the manufacturing of quality.
sector. . Synchronization and balance.
. Flexibility. The service organization Machines with different speeds or
must by nature be flexible in its workers with different qualifications
offerings. The customers' requests for can be allocated properly to maintain
service can change mid-stream in the synchronized production of the
service encounter. service.
3 Perishability. The perishability of services . Respect for people. Services are
can be approached from the customers' or characterized by many interactions
providers' views. From the customers' between staff and customers, providing
view, even though they do not have a numerous moments of truth each day
physical commodity to enjoy, the (Albrecht and Zemke, 1985). The key to
lingering benefits of the service may last high quality services is to respect the
some time (i.e. a motivational seminar). In employees who are in contact with the
most cases, from the provider's viewpoint, customers and to listen to their
we assume that most inventories in suggestions for improving the process.
services are perishable, such as unused . Flexibility. At times it is not only the
seats at a showing of a movie or unfilled service system that is variable, but also
reservations at a restaurant. the customer. All customers will have
. Synchronization and balance. This is varying needs and criteria to be met at
critical for services. Service various times. The service system
organizations must be able to must adjust to these variances through
successfully balance supply and flexibility of staffing, scheduling, etc.
demand for the service. Otherwise, . Continuous improvement. Service
customers will use a competitor's organizations operate with a wide
service. variety of personnel that may be totally
. Respect for people. Owing to the labor- interchangeable at any time. Thus,
intensive nature of services, and the they must strive to improve all
need for employee scheduling to employees and systems throughout the
provide the service, each worker lifetime of the organization.
should be allowed to participate in the . Responsibility for the environment. The
production/service process. Thus, the service firm can emphasize
workers will get a chance to make environmental awareness by reducing
suggestions, propose improvements, all types of waste from excessive
and receive awards (Monden, 1993). production resources, overproduction,
. Flexibility. Without physical excessive inventory, and unnecessary
inventories to act as a buffer against capital investment (Monden 1993).
fluctuations in demand, the service . Holistic approach. The more each
provider must be flexible enough to employee knows and understands the
handle all incoming requests that may company as a whole, the less variance
deviate from the normal flow of in the service delivery there will be.
operations. This can significantly reduce the
4 Heterogeneity. System performance is an heterogeneity associated with the
important concept and measure for all service.
[ 56 ]
Cem Canel, Drew Rosen and . Simplicity. To reduce heterogeneity in more than the jobs lost in manufacturing. In
Elizabeth A. Anderson services, and to move toward offering a the 1970s, the service sector accounted for 55
Just-in-time is not just for percent of all jobs in the private economy; in
manufacturing: a service homogeneous ``product'', a service firm
perspective should strive toward simplifying the 1990s, it accounts for 75 percent (Chase et
Industrial Management & processes to allow those who work al., 1998; Krajewski and Ritzman, 1999;
Data Systems within the firm to isolate areas of Murdick et al., 1990; Roach, 1991). It is
100/2 [2000] 5160 important to address the problems and
improvement and help themselves to
improve. opportunities in the service sector since the
USA has become more dependent on services.
Areas of greatest potential for improving Roach (1991) asserts that ``the massive
performance investments in technology have not
The following activities would most likely improved productivity; they have made
demonstrate the greatest potential for service organizations less profitable and less
improving performance in services and prepared to compete on other fronts''. Roach
achieving the successful implementation of also points out that US service companies are
the JIT themes stated earlier. These are in spending more than $100 billion annually for
accord with those found in Chase et al. (1998) the new technologies. The advances in
and Schneiderjans (1993). technology should be used to support the
activities of the service employees, not to
Training of employees monitor or replace them.
As the expectations of the customers from the Because customers participate directly in
service businesses increase, companies have some service processes, the success of
started to value investments in people as technological innovations will depend to
much as investments in machines some extent on customer acceptance. To
(Schlesinger and Heskett, 1991). The largest enhance productivity of various services, the
portion of service employees includes customer is able to interact directly with the
receptionists, waiters, telephone operators, system without the intervention of an
insurance company claims processors, flight employee. ATMs at banks and credit card
attendants, sales clerks, and others with low readers at gas pumps are two such examples.
pay and little input in their companies. Service organizations must ensure that a
Companies need to make recruitment and customer's mistake does not turn into a
training as important for service employees defect. The ability to failsafe a service will be
as for managers. Service employees who are highly dependent on the ability to generate
well trained and fairly compensated provide timely information concerning a customer's
better service, need less supervision, and are service encounter. With the advent of ATM
much more likely to stay on the job. machines, for example, numerous errors
Consequently, customers who are in contact could occur because of customer mistakes or
with well-trained service employees are likely lack of operating knowledge. Advanced
to be more satisfied, return more often, and information and control systems will ensure
perhaps even purchase more than they that a minor transaction error will not result
otherwise would (Schlesinger and Heskett, in a major flaw.
1991). Training provides service employees
the ability to identify and resolve problems Layout
and operational weaknesses hindering Another applicable JIT technique involves
organizational effectiveness and efficiency re-layout and merger of operations. Service
(Billesbach and Schniederjans, 1989). Training employees whose tasks are interrelated
service employees to perform a variety of should be physically close together, which
service activities will also provide an facilitates better information flows and
reduces throughput time. Layout changes
organization with a great deal of flexibility.
should be allowed in order to improve
Proper training and empowerment will
operations. Service companies must strive to
allow these workers to resolve any perceived
remove communication barriers and
conflicts before they become a negative
facilitate effective communication by proper
service encounter for the customer. Hotel
layouts. If physical proximity cannot be
desk clerks or airline counter employees, for
achieved, then effective communication
example, should have the training and
means must be developed.
authority to make a decision whether a
Bottlenecks during service delivery can be
customer should be given some form of
devastating to the quality and success of a
restitution to ensure a positive service
service firm. If one were to relate this to most
interaction.
US State Department of Motor Vehicles
Technology offices (a standardized service), it is evident
Over the past decade, the service sector has that layout is critical to the timely delivery of
created nearly 20 million new jobs, which is services. At the opposite extreme, most fast-
[ 57 ]
Cem Canel, Drew Rosen and food restaurants (another standardized service. The effort for lead time reduction
Elizabeth A. Anderson service) have reduced bottlenecks to a begins with order entry and setting due
Just-in-time is not just for minimum and increased throughput by
manufacturing: a service dates. Simplifying the procedures for any
perspective efficient layout designs. other paperwork relating to this transaction
Industrial Management & will help in considerably reducing the order
Quality
Data Systems processing time. A major insurance company
100/2 [2000] 5160 One of the basic requirements for successful
benefitted from JIT by reducing the average
implementation of JIT is the existence of total
quality management (TQM) principles. One time spent for each claim (Lee, 1990).
simple way to achieve quality in services is the
establishment of processing consistency. Examples of JIT applications in the service
Employees must perform their tasks correctly sector
the first time, which requires adequate Increasing productivity and quality in the
education of employees as to the proper way to service sector are the two main issues to be
perform their tasks. The use of the ``quality addressed if the US service sector is to remain
circle'' concept can be helpful in service competitive. JIT concepts can provide some
companies. The employees' ideas for helpful insights into these issues. In order to
improving the quality of the services and compete successfully by providing better
increasing the satisfaction of customers should services at lower costs, some service
be carefully analyzed and implemented. In companies have undertaken aggressive
order to improve the quality of the services productivity improvement projects which
being provided, the existence of a mechanism included the application of JIT to service
to identify the individuals who are responsible functions. For example, Hewlett-Packard's
for the performance of the different tasks direct marketing division's implementation of
enables the individuals to perform their tasks JIT resulted in reduction of overdue
properly. Another benefit of this mechanism receivables and the lead time in its shipment
would be the identification of quality-related operations (Lee, 1990). Application of JIT
problems and solutions for these problems. principles at West Coast Finance Company
As previously discussed, the use of reduced the time for the credit approval
failsafing techniques will help ensure that a process (Lee, 1990). JIT and MRP II at
defect in the offering of a service does not Eastman Kodak improved customer service
harm the consumers' overall impression of and resulted in cost savings (Wasco et al.,
quality. The idea of failsafing manufacturing 1991). Inman and Mehra (1991) and Mehra and
systems, as originally promoted by Shingo Inman (1990) describe the benefits resulting
(1986), can be applied to service situations from the application of JIT concepts at a large
with great success (Chase and Stewart, 1993). corporation providing telecommunication
services, a government contractor to the
Standardization
Department of Energy, and an overnight
The emphasis on the standardization of
package delivery service company. Wieters
activities arises from balancing between
(1984) claims that service companies such as
processes, which is expected to improve
hospitals, education facilities, finance
operational effectiveness and efficiency. By
services, communications services,
standardizing job activities, resources can be
advertising agencies, and transportation
focused on only a few areas. The resulting
services, can benefit from JIT through
impact on productivity can be significantly
higher if one standardizes activities and inventory cost savings. These examples show
concentrates organizational efforts and that the application of JIT in service
resources on those limited activities. companies can improve overall operations.
Standardization of activities also reduces the
time and cost of cross-training workers, but
the ``flexibility'' theme has to be maintained Conclusions and future directions
in order to serve those customers with The basic philosophy behind JIT in
different needs. manufacturing and service operations
H. & R. Block, the largest tax preparer in represents a uniquely organized set of
the USA, is the epitome of simplified activities which can be utilized to produce low
procedures and paperwork reduction. H. & R. cost and high quality products and services.
Block has reduced the confusing and, at
The discussion presented in this paper
times, frustrating activity of tax preparation
highlights the importance of the service
to a few simple questions by the use of a
sector to developed and developing
preformatted, standardized set of forms.
economies. Global competition is forcing
Service delivery companies to improve the quality of their
One of the desired outcomes of JIT is reduced products and their customer service while
lead time for delivering the product or the reducing the cost of their operations. This is a
[ 58 ]
Cem Canel, Drew Rosen and critical requirement for maintaining Berry, L.L., Shostack, G.L. and Upah, G.D. (Eds),
Elizabeth A. Anderson competitiveness. It is postulated that the (1983), Emerging Perspectives on Service
Just-in-time is not just for implementation of JIT concepts in the service Marketing, American Marketing Association,
manufacturing: a service
perspective sector will facilitate the achievement of Chicago, IL.
benefits long realized by the manufacturing Billesbach, T.J. and Schniederjans, M.J. (1989),
Industrial Management &
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100/2 [2000] 5160 administration'', Production and Inventory
service operations was conducted in an
Management Journal, 3rd quarter, pp. 40-4.
attempt to show the transferability and
Burnham, J.M. (1987), ``Some conclusions about
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JIT concepts were analyzed and discussed. getting back to basics for American
The philosophy of JIT can bring impressive industry'', Industrial Engineering, Vol. 19
advances in productivity and quality to the No. 8, pp. 43-4.
increasingly service-dominated economies of Carmen, J.M. and Langeard, E. (1980), ``Growth
the future (Levitt, 1976). strategies for service firms'', Strategic
JIT as a strategic weapon for process Management Journal, No. 1, January-March,
improvement has been subjected to pp. 7-22.
numerous studies in the literature. Chase, R.B. and Tansik, D.A. (1983), ``The
Transferring this body of knowledge in the customer contact model for organizational
manufacturing sector to service industries design'', Management Science, Vol. 29 No 9,
requires further research in various areas. pp. 1037-50.
One of these is an analysis of how the Chase, R.B., Aquilano, N.J. and Jacobs F.R. (1998),
philosophy of JIT relates to services where Production and Operations Management,
Irwin/McGraw Hill, New York, NY.
the factors under consideration are customer
Chase, R.B. and Stewart, D.M. (1993), ``Make your
contact/interaction, labor intensity, and
service failsafe'', COMER Working Paper
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93- 018R.
Farmer (1988). Each of these factors is
Crosby, P.B. (1979), Quality is Free, McGraw-Hill,
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Research has shown that advances in Council of Economic Advisors (1992), Economic
productivity and efficiency in services are Indicators, prepared for the Joint Economic
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that offer a tangible output as opposed to challenge'', Harvard Business Review,
those services whose primary output is an November-December pp. 69-79.
act or performance (i.e. consulting services). Fitzsimmons, J.A. and Sullivan, R.S. (1982),
Other research avenues could entail the Service Operations Management, McGraw-
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Can we assume that the supplier's role in Service Management for Competitive
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Gronroos, C. (1983), ``Innovative marketing
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and Upah, G.D. (Eds), Emerging Perspectives
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