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First World Hotel is one of the leading firms in the hospitality industry in the United States. With about 7,351 rooms for visitors, it is one of the busiest hotels that attract both local and international visitors. The operations management at this firm is not only time consuming but very complex given the nature of the goods it offers to the clients. Food products are perishable and many hotels always run at huge losses if they fail to plan on how to deliver these products on time.
Overproduction would mean that excess food will have to be disposed hence the profits of the firm will be affected. Underproduction would mean that some clients may go without food. As Muller (2011) says, hotels do not have any options but to ensure that they deliver the right quality and quantity of food at the right time in order to remain efficient. They must understand the expected number of clients and plan for them appropriately. Under this delicate operational system, Just-in-Time manufacturing is one of the best practices that can be developed to help reduce the expenses and increase revenue to the firm.
This methodology emphasizes on the reduction of flow time within the production unit, from the time the raw materials are obtained from the suppliers to the time the finished products are delivered to the clients. When using this tool, speed is of great essence. The production manager must minimize the time that products take before they reach the warehouses of the firm from the suppliers’ stores. Once the raw materials are sourced, the production manager must ensure that they take the shortest time in the warehouses before they are converted into finished products.
The sales department then takes over by ensuring that the finished products reach the clients within the shortest time possible. That is what is needed at the First World Hotel to help it improve efficiency in its operations. The firm stands to gain a lot with this strategy because the costs associated with warehousing are slashed by over 65% (Bruijn & Heuvelhof, 2010). This means that if the original cost of warehousing, including the cost of property destruction due to constant handling was $ 8000 per month, then the new cost will be calculated as follows:
8000*45/100 = 3,600
It means that when this tool is used, this firm will be saving $ 4400 every month. This is a saving made at the warehousing unit alone. According to Nykiel (2012), Just-in-Time methodology is also very popular when it comes to reducing the cost of labor, especially in the hospitality sector. Unlike many other industries, the hospitality industry has seasons. During the holidays, especially the December holidays, the number of tourists coming for holidays always create huge demands for the hotels.
However, in months such as January where people report back to work, this number drops considerably. When using this methodology, a firm will need to hire just a few people on a permanent basis. The other employees would be hired only when their services are needed. The company must be specific on the activity that every employee has to engage in at the time of recruitment. This eliminates redundancy and inefficiency among the employees. If used properly, this tool can help a firm reduce the overall cost of human resource by 15% or more. It means that if the original cost of human resource was $ 950,000, the new cost will be calculated as follows:
950,000*85/100 = 807,500
It is important to note that other than reducing the cost of production, Just-in-Time method also increases the quality of the products delivered to the customers. This tool is, therefore, very useful to First World Hotel. Clients at these high-end hotels are very sensitive. They want food that is fresh. If it is vegetables, it must have been taken from the farm few hours before it is presented in the table. Any leftover food cannot be presented to these customers because they will easily detect it even if the best preservation methods are used. The emphasis on the speed of production process and the precision employed in terms of determining the quantity demanded is of critical importance in meeting the needs of customers. High level of customer satisfaction at this firm will attract more customers and this will translate to higher profitability at the firm.
The overall cost of production is always reduced by over 25% if Just-in-Time production method is used appropriately (Kerzner, 2013). If the overall cost of production, excluding the cost of human resources, was estimated to be $ 650,000 per month, then the new cost of production will be as follows:
650,000* 75/100 = 487,500
As shown in the analysis above, Just-in-Time method will be of great benefit to First World Hotel. It will improve the operations’ efficiency and slash the cost of production by a wide margin. This will, in turn, increase its profitability in the current competitive hospitality industry if it is applied correctly.
Bruijn, H. & Heuvelhof, E. (2010). Process management: why project management fails in complex decision making processes. New York: Springer Science & Business Media.
Kerzner, H. R. (2013). Project management: a systems approach to planning, scheduling, and controlling. New York: John Wiley & Sons.
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Muller, M. (2011). Essentials of inventory management (2nd ed.). New York, NY: AMACOM.
Nykiel, R. (2012). Marketing in the Hospitality Industry. New York: Prentice Hall PTR.