Inventory Management: Types Of Inventories

Inventory Management Student Name Institutional Affiliation Inventory Management Two manufacturing companies that manage inventory are Apple and General Motors (GM). Apple manufactures a wide range of products like iPhone, iPad, Apple TV, and Mac. In addition to these products, Apple has a portfolio of consumer and professional software applications like iOS, ICloud and Apple Pay. GM is one of the largest manufacturers of vehicles and vehicle parts in the world. Some of the popular brands GM manufactures include Chevrolet, Buick, GMC, and Cadillac. Both Apple and GM have inventory management systems that allow their products to reach the final consumers. Types of inventories Both Apple and GM have the three major types of inventories which include raw materials, work-in-progress and finished goods. Raw materials include items that the manufacturers use in the conversion process to produce components or finished products (Akindipe, 2014). A majority of the raw materials for the two companies are items they have purchased from outside. For instance, Apple requires minerals to produce various electronics. Similarly, GM acquires seats, bolts, wheels and other raw materials required in the manufacture of cars. Work-in-progress consists of components and subassemblies that are undergoing processing or are waiting to be processed within the system (Al Barrak, Al Meriouh & Zniber El Mouhabbis, 2017). Included here are all the raw materials that have been released for processing and those materials that have been processed and are awaiting inspection. The last category of inventory is the finished goods. These are products that are ready for customer order. Finished goods have passed the inspection and can be sold directly the final customers. In the case with Apple, finished goods will include iPhones which are ready for shipping to the clients. For GM, it could be Chevrolet cars that are ready for the market. How goods design concepts are integrated In both Apple and GM avoid overstocking of products because it leads to degradation and obsolescence of inventory. On the other hand, under-stocking has adverse implications on the companies since clients are forced to look for the products from competitors. In order to avoid the two extremes, the companies have put measures to ensure that they produce what the market requires. The move ensures that there is no over-production or under-production of commodities. The manufacture of the products depends largely on the demand in the market. Integrating the production process with the demand for the products in the market has served to ensure that clients get products more efficiently and at lower prices. The role of inventory For Apple, effective management of inventory began in 1998 when Tim Cook became the Chief Operating Officer. Mr. Cook cleaned up the mess-prone supply chain and revolutionized the manner in which Apple manages its inventory (Heracleous, 2013). He went ahead to reduce the number of warehouses and implemented the outsourcing of production which made the company leaner. GM implemented has a centralized, web-based system that tracks the parts that utilized each day in the dealer’s inventory. The system notifies the parts manager if the parts fall below the acceptable number and forwards the order to one of the parts distribution centers. Inventory management increases customer service and satisfaction (Eckert, 2007). Customers for both companies can enquire about particular items and the company can quickly identify availability. The move enables fast response time to queries which give clients a good impression of the companies. The knowledge of the inventory available enables the businesses to know exactly the stock that is available which then facilitates customer service. Furthermore, accurate management of inventory in both companies increases overall operational efficiency (Amachree et al., 2017). Employees can spend their time on other activities instead of for instance trying to locate a particular piece of stock. Sound management of inventory is critical in enabling workers to focus on other parts of the manufacturing process which ultimately impacts their bottom lines. As a result of increased efficiency and customer service, the two companies have increased their performance. Apple has been a leading manufacturer of mobile phones in the market. The sales of the iPhone have been critical in the profitability of the company. Similarly, GM has experienced increased sales due to the efficient managem...