The practice of pushing the product through the creation of reserves in anticipation of demand has fallen out of favor in recent years. Many companies prefer to build the product only in response to actual demand. This allows companies to avoid costly supply and demand do not match. Given how successful product on the basis of the firm were to this approach, it is natural to wonder how it will be applied to service firms. Some argue that the services can not be inventory. However, this view is based on an extremely narrow definition of finished goods awaiting customers. In practice, the authors say, inventory also functions as a storage operation, which functions as a "service inventory." As a physical inventory, maintenance reserves allow firms to buffer their resources on the variability of demand and to reap the benefits of economies of scale while benefiting customers. Use the correct form of service tools, companies are able to offer higher quality, faster response time and more competitive prices. Using examples from the travel, hospitality and insurance companies, discusses how service firms can use the inventory as a strategic lever in the design and management of services. "Hide
by Sunil Chopra, Martin A. Lariviere Source: MIT Sloan Management Review 10 pages. Publication Date: September 1, 2005. Prod. #: SMR187-PDF-ENG
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