How to Manage Services Inventory – inventory | services | product
When most people think of inventory, they think of a physical product. Services have inventory also but it’s quite different from factory inventory. It’s a common belief that service business cannot store inventory. A restaurant, for example, would view empty tables as inventory. In a sense, that’s part of their finished product, a table, and wait staff ready to serve a customer. Empty tables at lunchtime cannot be stored and used as extra capacity during the dinner hour rush. Likewise, a barber cannot store his idle time to trim the hair of additional customers later in the day.
The push-pull boundary is the point at which a factory switches from pushing production based on a forecast of demand to pulling products to meet customer orders. Applying this to a service business, you can view inventory as any work that is done before the customer arrives. Not a finished product like a haircut or a lunch. Think of it like the process on an assembly line.
Services can push the production of some work in anticipation of the customer’s arrival and store it until needed. I’ll use the restaurant business as an example. In the restaurant industry, labor is a key resource. You have a limited number of servers, for example, and you wanna use those resources as efficiently as possible. You also want to ensure you meet the customer’s expectation of excellent service. So, you look for work that can be done before the customer arrives, like preparing napkins and silverware, setting all the tables and positioning clean menus at the hostess station. I can store this inventory as services to buffer against the variability of my customers’ arrivals.
This also allows me to provide faster service to my customers when they do arrive. You also can use information as a method of storing inventory and speeding up the process when the customer arrives. Online menus, reservation systems, and placing takeout orders in advance are all good examples of this. But not all information is inventory in this sense.
Inventory is work performed in advance that reduces the work needed when the customer arrives. The key is to determine how to store this work as opposed to determining where to store a physical product. Self-service activities can also help you manage service resources better. Restaurants have begun to use kiosks at the table allowing customers to order additional food and pay for their meal electronically.
This frees up considerable time for the staff, time that can be used to provide even better customer service during the meal. In this instance, labor is the inventory. The number of waiters and waitresses on duty. Allowing the customer to perform part of the service, the restaurant manager can store additional wait staff inventory to use as new customers arrive. To effectively manage service operations, it’s important to take a non-traditional view of inventory. The more work you can complete before the customer arrives, the better. You not only manage your inventory of resources more efficiently, you also provide even better customer service.