JIT at Arnold Palmer Hospital Case Study Questions
What do you recommend be done when an error is found in a pack as it is opened for an operation?
How might the procedure for custom surgical packs described here be improved?
When discussing JIT in services, the text notes that suppliers, inventory, and scheduling are all used. Provide an example of each of these at Arnold Palmer Hospital.
Stockbrokers drive inventory down to nearly zero every day. Most sell and buy orders occur on an immediate basis because an unexecuted sell or buy order is not acceptable to the client. A broker may be in serious trouble if left holding an unexecuted trade. Similarly, McDonald’s reduces inventory waste by maintaining a time-stamped finished-goods inventory of only a few minutes; after that, it is thrown away. Hospitals, such as Arnold Palmer (described in this chapter’s Video Case Study), manage JIT inventory and low safety stocks for many items. Even critical supplies such as pharmaceuticals may be held to low levels by developing community networks as backup systems. In this manner, if one pharmacy runs out of a needed drug, another member of the network can supply it until the next day’s shipment arrives.
Lean operations take on an unusual form in an operating room. McKesson-General, Baxter International, and many other hospital suppliers provide surgical supplies for hospitals on a JIT basis. (1) They deliver prepackaged surgical supplies based on hospital operating schedules, and (2) the surgical packages themselves are prepared so supplies are available in the sequence in which they will be used during surgery.
At airline ticket counters, the focus is on adjusting to customer demand. But rather than being accommodated by inventory availability, demand is satisfied by personnel availability. Through elaborate scheduling, personnel show up just in time to cover peaks in customer demand. In other words, rather than “things” being inventoried, personnel are scheduled. At a salon, the focus is only slightly different: both the customer and the staff are scheduled to assure prompt service. At McDonald’s and Walmart, scheduling of personnel is down to 15-minute increments, based on precise forecasting of demand. In short, both personnel and production are scheduled to meet specific demand. Notice that in these lean organizations scheduling is a key ingredient. Excellent forecasts drive those schedules. Those forecasts may be very elaborate, with seasonal, daily, and even hourly components in the case of the airline ticket counter (holiday sales, flight time, etc.), seasonal and weekly components at the salon (holidays and Fridays create special problems), and down to a few minutes (to respond to the daily meal cycle) at McDonald’s.
To deliver goods and services to customers under continuously changing demand, suppliers need to be reliable, inventories lean, cycle times short, and schedules nimble. A lean focus engages and empowers employees to create and deliver the customer’s perception of value, eliminating whatever does not contribute to this goal. Lean techniques are widely used in both goods-producing and service-producing firms; they just look different.
JIT, TPS, and lean operations are philosophies of continuous improvement. Lean operations focus on customer desires, TPS focuses on respect for people and standard work practices, and JIT focuses on driving out waste by reducing inventory. But all three approaches reduce waste in the production process. And because waste is found in anything that does not add value, organizations that implement these techniques are adding value more efficiently than other firms. The expectation of these systems is that empowered employees work with committed management to build systems that respond to customers with ever-lower cost and higher quality.
In this lean operations world, in an effort to lower handling costs, speed delivery, and reduce inventory, retailers are forcing their suppliers to do more and more in the way of preparing their merchandise for their cross-docking warehouses, shipment to specific stores, and shelf presentation. Your company, a small manufacturer of aquarium decorations, is in a tough position. First, Mega-Mart wanted you to develop bar-code technology, then special packaging, then small individual shipments bar coded for each store. (This way when the merchandise hits the warehouse it is cross-docked immediately to the correct truck and store and is ready for shelf placement.) And now Mega-Mart wants you to develop RFID—immediately. Mega-Mart has made it clear that suppliers that cannot keep up with the technology will be dropped.
Earlier, when you didn’t have the expertise for bar codes, you had to borrow money and hire an outside firm to do the development, purchase the technology, and train your shipping clerk. Then, meeting the special packaging requirement drove you into a loss for several months, resulting in a loss for last year. Now it appears that the RFID request is impossible. Your business, under the best of conditions, is marginally profitable, and the bank may not be willing to bail you out again. Over the years, Mega-Mart has slowly become your major customer and without them, you are probably out of business. What are the ethical issues and what do you do?
Case Study paper is to consist of the following components:
Title page and two written pages with no more than 500 words.
Answers to individual questions (as assigned) Each assignment will have specific questions you need to address. You should create a sub-headed section for each one