Successful inventory management is the secret behind the success of some multinational companies around. Some managers and economic icons tend to believe that innovation and incorporation of sleek designs are the causes of the successful triumph in the market. However, inventory management tactics also matter a big deal. Scholarly references depict that inventory management is an economic term regarding the overseeing and controlling of the storage, ordering and utilization of the components a company uses for production, as well as, sale (Stevenson & Sum, 2009).
Therefore, the success of any inventory management incorporates the establishment of a particular purchasing plan. The program ought to ensure that these items avail. Finally, it is one that facilitates appropriate inventory management. Most companies that utilize the inventory management strategy effectively tend to use two core strategies (Stevenson & Sum, 2009). These strategies include the Just in Time approach and the material requirement planning approach. The initial approach (JIT) gets used where the company makes its plans to receive the items in times of demand and rather than maintaining high amounts of inventory. The second approach is that of the material requirement planning or cash to cash approach. The deliveries base on the sales forecasts. Thus, this paper aims at establishing the inventory management practices by two multinational corporations in the manufacturing industry. They include the Toyota Company and the Apple Inc. company.
Types of inventory managed
Inventory managed by Toyota Company
Toyota company uses the just in time inventory management strategy. It is in these management strategies that the companies tend to utilize a number of inventory management types. Arguably, Toyota is managing to go global because the inventory management strategy does not give room for further misappropriation of funds (Dyer & Nobeoka, 2012). Therefore, the company stands a position to either manage the property directly or use the agency channel to distribute the products that it manufactures. Toyota Company observes and manages two types of inventory. The first type of inventory is the vendor- managed type of inventory.
Vendor-managed type of management
The vendor-managed type of management is a subsequent of the Just in type approach to inventory management. The company makes sure that it takes responsibility for the inventory levels as by the distributors. The vendor managed inventory, from a scholar point of approach observes to distinct forms of models. The models under discussion respect the fact that the manufacturer possesses the mandate to maintain or sustain the distributor levels of inventory. Therefore, the manufacturer has the access to any form of inventory data regardless of the data. In addition, the manufacturer has the responsibility to observe and heed the needs for another order for purchases within the supply network. The perception of embracing two models comes in respect of the typical business model, and the vendor managed inventory model.
The Toyota company sells its motor products through own and enterprising channels of supply. Therefore, it embraces the fact that the supplies can reach the market on any defined method. However, the company makes sure that all the sales made reach the statistical records of inventory. It is a strategy to monitor the rate of movement of the products within and internationally (Dyer & Nobeoka, 2012). Toyota, a Japanese corporation now manages to know the manner in which the inventory rates in every quarter of the fiscal year. For instance, it sells a certain brand at a rate related to the one that the suppliers or distributors will ask for it. For example, the Toyota Company utilizes the first model for the typical business. For example, the distributors of Toyota Company first demand the locomotives manufactured at Toyota (Dyer & Nobeoka, 2012). The second course of action is that they place an order against the manufacturing company, Toyota. Thus, the distributors take utter control of timing and responding to any respective order. Therefore, the manufacturer, Toyota Company takes absolute control of the inventory demands. On the other side, the distributors in the supply chain play the role of maintaining the inventory plan. The approach ensures that the manufacturing company does not loose custody of the inventory ownership.
Customer managed inventory
The next alternative the company uses in some market structures is the customer managed inventory. Arguably, this approach gives the customer some benefit of responsibility for the vendors. The responsibility deviates towards the inventory decisions. It supports the Just in Time approach to inventory management. The Toyota Company also makes specific demands through the vendors (Dyer & Nobeoka, 2012). Therefore, they decide on what products to ask for and the values of the products they demand. In fact, most of the replenishments that the Toyota Company observe originate from the customers propositions. The Toyota Company, therefore, applies the Just in Time approach to ensure that any unwanted inventory does not submerge in the market devoid of demand.
Inventory managed by Apple Inc. Company
The products the information technology companies are producing are highly perishable. Therefore, the company has a responsibility that its manufacturing efforts do not get wasted. The waste of such products may result from the lowering demand for the products due to rapid technology development. The best approach that such companies as Apple Companies are looking forward to is the Just-in-Time approach (Satariano & Burrows, 2011). The just in time approach also inhibits the vendor managed inventory, and the customer managed inventory. The approach of just in time operations respects the kinds of inventory that the company operates.
Vendor managed inventory
The company manages the finished goods inventory and the raw material in a manner that all the statistics become well recorded in the company’s records. The works of the vendors to supply the computers, IPad among another product fall under strict monitoring of the stock flow in the market. The rate at which the orders placed get responded to by the manufacturing company is similar to the rate at which it seeks raw material (Satariano & Burrows, 2011). Therefore, the company ensures that it does not entertain any form of overflow with regards to the stock. Arguably, Apple Company is one of the companies that are managing the inventory on order basis.
The customer managed inventory
The already manufactured products at the Apple Inc. also respect the discretion of the customers. The market assumes that the customers can make the decisions on what they need through the vendors. Therefore, such form of inventory depends on the customer’s specifications.
Analysis of the goods and service design concept integration
The two companies are multinational corporations. Therefore, the manufacturers produce products that do not have a fixed and non-circumstantial market demand. The trends in the market make the goods look highly perishable. For instance, the IPad and vehicles that Apple and Toyota manufacture change in terms of models and technological demands (Satariano & Burrows, 2011). For instance, the capacities of IPad products is advancing gradually. Therefore, the supply management services have to consider the nature of these products. It is because of this single observation that the two manufacturing companies of choice regard the Just in Time approach to inventory management (Frohlich & Westbrook, 2009). The companies, therefore, associate the nature of their products to the approach.
Role of inventory to the Toyota’s and Apple manufacturing company to the performance, operations efficiency, and customer satisfaction
The vendor managed inventory for the two companies, simultaneously, affected or stimulates the performance and operations efficiency of the same companies. Further, the customer managed inventory facilitates the affirmative progress of the companies’ capacity to satisfy the customer satisfaction, operations efficiency, and overall performance.
First, the inventory assists the company to perform economically with regards to the resource allocation. The primary objective of any company is to stabilize its market position and ensure that the costs do not overlap the revenue. Therefore, the management is responsible for allocating appropriate resources effectively (Stevenson & Sum, 2009). One of the tools towards accurate resource allocation during manufacturing of suitable number of locomotives is vendor records. In this case, both Toyota and Apple benefit from the similar condition with regards to the inventory management. The company’s control over the entire supply chain makes it easy for it to account for the possible market fluctuations. For instance, the companies get the responsibility to control the vendor’s sales. The company manages to make substantial revenue from each unit produced.
On the other side, the inventory is a source of customer satisfaction. The customer managed inventory becomes the strength of the potential customers to make decisive demand regarding the products. For instance, the power of the inventory structure shifts from the manufacturer to the customer (Stevenson & Sum, 2009). Therefore, the customers get what seems to offer them satisfaction. This criterion is beneficial to both the client and the companies. The companies get a better portfolio rating such that the future markets remain valid and stable. Inferentially, the approaches assist the companies to establish a better image in the industry globally.
Comparison and contrast of different types of layouts
Both the Apple and Toyota companies are manufacturing companies that utilize their inventory management channels to excel abundantly. The two companies share common layouts in the context of inventory management. Therefore, the layouts differ but from a common ground. For instance, the vendor managed inventory design differs from the customer managed inventory layout. Arguably, the context in which the vendor managed inventory works for Toyota Corporation is the same way that it applies to Apple. The two approaches respect the perspective of the Just in Time approach. The companies insist on ensuring that they do not over allocate the resources where inappropriate. Therefore, the manufacturing companies tend to manufacture products on the basis of the market demands and specifications. It is because of these interventions that they manage to attract high levels of innovation. Therefore, the layouts are paramount in the context of ensuring that the companies fare well in the current industry trends. They favor the fact that the products are seemingly perishable with regards to technological development trends.
However, the vendor managed inventory gives the distributors the mandate to plan the market. Thus, the vendors make order demands, especially where the demand exceeds supply. Thus, the company can respect the law and dictate the number of vehicles (products) it means to manufacture. It applies to the context where the products in the supply chain do not satisfy the market demand. On the other side, the customer managed inventory is another gives the customers a room to make some decisions regarding the products they need to consume. Therefore, the power of describing and determining the level and type of products they need to consume.
Two metrics used to evaluate supply chain performances of the companies
There are several tools used to measure the performance of any form of activity. In this case, the most common metric for evaluating the supply chain performances is the comparative inventory turnover. The revenue acquired against the costs faced by the companies before the utilization of these inventory management strategies ought to get recorded. The increase, or affirmative growth of the sales units means better performance of the supply chain (Satariano & Burrows, 2011). The second metric is the cycle time metric. It measures the rate at which the supply chain manages to distribute the products for consumption within a specified period. The metric almost resembles the inventory turnover. However, the scalar unit of time makes the difference between them. The Apple and Toyota manufacturing companies ought to establish more supply chain terminals to ensure that the products reach in easier by many other customers. The likelihood of increasing the numeral magnitude of the products becomes higher than the previous. It is unethical to tamper with the already reputable just in time approach.
Ways to improve inventory management
The first approach towards improving the inventory management is by rebranding the level of communication between the manufacturing companies and the supply chain. The standard of integration between the two is somehow questionable. A better form of integration will respect the code of operations that exists within the company’s management (Frohlich & Westbrook, 2009). Communication is paramount, especially when integration of the two functions of a corporation prevails. Both Apple and Toyota companies are icons in the technology and innovation arena. However, they need to expand the scope of the supply chain to ensure that they reach a better market range. Finally, it is the duty of the companies to condense the entire operations.
Stevenson, W. J., & Sum, C. C. (2009). Operations management (Vol. 8). Boston, MA: McGraw-Hill/Irwin.
Frohlich, M. T., & Westbrook, R. (2001). Arcs of integration: an international study of supply chain strategies. Journal of operations management, 19(2), 185-200.
Dyer, J., & Nobeoka, K. (2002). Creating and managing a high performance knowledge-sharing network: the Toyota case.
Satariano, A., & Burrows, P. (2011). Apple’s supply-chain secret? Hoard lasers. Technology, 4, 50.
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