Introduction

Businesses exist to serve clients and meeting the mission and goals specified in the mission statement.When attending to these goals, they utilise resources from suppliers that are transformed into products channelled to clients. Management of inventories plays a crucial role in the flow of raw materials from the supplier to the firm and the finished products from the firm to the client. Inventory management is the proper management of all goods, buildings, materials, and property that the firm owns or is currently holding and the materials are in the process of moving to the next step. In manufacturing companies, inventory management is the process of managing the available raw materials from suppliers and finished goods that are ready to be released to the market. This paper analyzes the types of inventories in two companies, Apple and Wal-Mart.

Types of Inventories that Each Company Manages

Apple Inc. is a global company dealing in manufacturing and distribution of premium iPhones. Apple is said to be one of the companies with the best inventory management systems in the world.The focus on Apple’s inventory management is to provide an opportunity for other company to learn from this giant that is said to have the best inventory management system in the world. According to Nasqaq (2018), Apple manages three main types of inventories.The raw materials inventory constitutes all the materials that the firm sources from suppliers with the goal of transforming them into finished products. When Tim Cook took over the company in 1981, he wanted to make sure that he minimizes the cost of production. He decided to have a single store in the United States to reduce the cost of inventory management. This has helped reduce the cost of inventory management when focusing on raw materials.

Work in progress (WIP) is another type of inventory that Apple Inc. manages. WIP inventory keeps a record of goods that are currently in development in the manufacturing line. Apple sells premium iPhones under vendor-managed inventories, WIP always has the phones that have been ordered by customers. This ensures that the company reduces the cost of managing inventories and wastes.

The third type of inventory is the finished goods inventory. In this category, Apple keeps the record of all phones that have been manufactured and ready for distribution. Since Apple is a premium company, its finished goods inventory is indirectly managed by suppliers and its retail stores at the global level. Once the phones have been manufactured, the company uses vendor-managed inventory (VMI) to monitor the progress of sales. According to Shariff, VMI is an inventory management strategy where vendors manage the inventory on behalf of the manufacturer. The vendor stays in touch with the manufacturer for immediate replenishment whenever there is a gap. Apple has reaped the benefits of this inventory by saving on space and cost of managing inventories.

Wal-Mart Inc. is the second company for consideration in the analysis in this paper. Considering the size of the company, Wal-Mart had to develop an inventory management system that resonates with its size while at the same time considering service delivery and costs of managing inventories.According to Greenspan (2017), the company four types of inventories. In the raw materials inventory, one will find a list of all raw materials from suppliers. The second category is the finished goods inventory. Since the company operates as a chain of stores and hypermarkets, goods in the finished products category are replenished regularly by suppliers.

Wal-Mart Inc. also maintains a buffer type of inventory. This is a record of goods awaiting an unanticipated increase in demand. Fast-moving goods are kept in stores to wait for a shift in the mar demand and are replenished accordingly to maximize customer experience and service.Buffer inventories involve products in reserve for seasonal variations such as Christmas and black Friday when sales surge.

How Goods and Services are Integrated

Technology has played a crucial role in simplifying management of inventories. Both Wal-Mart Inc. and Apple have taken advantage of technology to streamline their operations using radio frequency identifiers (RFIDs) in their inventory management.RFIDs play a crucial role in managing the movement of goods from the production point to the point where the product is delivered to the client. Each product is given a barcode that tracks its progress in the supply chain (Ninbus, 2018). The RFID tag helps in monitoring the product, security control, and minimizing overstocking. Once the client has bought the product, the tag is automatically disabled, and a notification of the remaining stock is sent to the firm. This ensures a continuous supply. Additionally, the company can quickly know the fast-moving items and prepare accordingly.

The Role of Inventories

Inventories play a crucial role in the performance of the company. One of the main of inventories roles is to keep the firm focused on its missions as it streamlines its performance. For Apple Inc. and Wal-MartInc., raw materials inventories help the firm to stay focused on its operations. Both companies use inventories to maintain day-to-day activities, understand the different needs and preferences of clients, and ensure a consistent supply of goods and services to clients. Additionally, inventories are always included in financial statements.Shareholders in the company develop confident in the firm when they learn that the firm is maximizing their welfare.Apple’s vendor-managed inventories help reduce the cost of keeping inventories by shifting the role to its retail stores. The companies use inventories for performance efficiency. They make sure that they have enough supply in stock while at the same time maximizing the available space and resources.

Both Apple Inc. and Wal-Mart Company use inventories to serve their customers. Finished goods inventories make sure that there is a consistent supply of goods for consumers in the market. When dealing with customers and retailers, inventories help the company to strike a balance between supply and demand. For instance, Wal-Mart relies on buffer inventories to make sure that goods are always available on its shelves during the peak season. Inventories are also crucial in building and maintaining relationships with other external stakeholders such as suppliers and distributors. Both companies use inventories to pay their supplies (Esper& Waller, 2014). This is an essential service as it makes sure that the firm does not enter legal battles with its suppliers.

Comparison of Four Types of Layouts

Even though the two companies from different industries, all manufacturing companies operate on four different types of layouts.Layouts refer to the configuring of the plant site, buildings, and operational sites.Different layouts have their unique advantages for the success of the firm. In process layout, similar machines and services are placed in a single category. The advantage of process layout is that it increases job specialization for employees working in specialized locations.Chances of maximizing the resources in the firm also improve with this layout. The primary limitation of this layout is in how it increases the work-in-process. Unless the firm keeps a record of inventories, chances of overproduction are high and may increase the cost of inventories.This process also increases production lines in manufacturing companies.

In product layouts, product and services are located in proximity to the flow shops. Interconnected workstations are arranged in lines to allow continuous flow of the product in production lines. This layout minimizes the cost of moving the product, reduces manufacturing processes, and increases efficiency. It is also cheaper for the firm to keep and monitor and manage inventories as it can easily access the product lines.Product layouts increase utilization of resources and workers, minimizes movements, and ensures a continuous supply of products to the market (Murray, 2018).Some of its limitations include less utilization of machines, stoppage of work in case one machine in the line breaks down, and less flexibility due to the specialization of machines.

In the fixed location layout, the machine is located in a different geographical layout, and raw materials are only transferred to that location. This layout increases pride as the manufacturer takes the responsibility of producing the material. The disadvantage is that it increases movement in the production process. Some businesses opt for combination type of layouts in their production lines. Combination layouts increase flexibility as they allow the firm to choose the most suitable layout for its operations.

Metrics to Evaluate Supply Chain Performance

Both Apple Inc. and Wal-Mart use metrics to measure their supply chain performances. One of the parameters used by both companies is delivery. On-time deliveries indicate that the supply chain is working effectively. When a person places an order,the firm measures how long it takes for the product to reach the customer. Cost metric is used to determine whether the production process falls in the estimated cost of production. All companies are sensitive to the costs of production. Apple Inc. and Wal-Mart Inc. use cost metrics to decide on their production lines. Apple and Wal-Mart are sensitive to quality and customer satisfaction. The quality metric is derived from positive reviews from customer satisfaction. The companies make sure that they produce quality products to meet the expectations of their clients.

Conclusion and Recommendations on Improving Inventory Management

After analyzing the inventories of Apple Inc. and Wal-Mart Inc., I think that no business is immune to changes. Even though their inventories have helped them maintain a competitive advantage in the market, I believe that regular management and evaluation of inventories will help the firm realize areas that need improvement. Regular auditing of inventories will help the firm realize areas with weakness and make necessary adjustments to succeed in the market.Another area of concern should be on the utilization of the latest technologies in inventory management.Technology has simplified the cost of producing and managing productivity. The two firms can use data from the market to forecast future changes and prepare adequately for any imminent moves. The technology of RFIDs should help the firm in tracking the movement of goods and services.

I also think that inventories should be used depending on the manufacturing layout used by each company. If Apple Inc. decides to use the fixed layout as it does today, then it should allow some flexibilities in its lines of production to cater for changes. Even though fixed layouts make the firm to operate from the premium level, I think that the company can work better when it introduces combined arrangements. The rapid changes in the market should guide the firm in making informed decisions. Nevertheless, inventories remain essential practices in managing the flow of goods and services in the production lines.

References

Apple Inc. (2018). Nasdaq Report. Retrieved from https://www.nasdaq.com/symbol/aapl/stock-report

Esper, L., T. & Waller, A., M. (2014).  Introduction to inventory management: principles and strategies for the efficient flow of inventory across the supply chain. Informit.Retrieved from http://www.informit.com/articles/article.aspx?p=2192703&seqNum=2

Greenspan, R. (2017).Walmart: inventory management.Panmore Institute. Retrieved from http://panmore.com/walmart-inventory-management

Murray, M. (2018).Supply chain performance metrics.The Balance.Retrieved from https://www.thebalancesmb.com/supply-chain-performance-metrics-2221392

Nimbus, C. (2018). Stock control and inventory using RFID for inventory control, stock security and quality management.NIBUSINESS Info.Retrieved from https://www.nibusinessinfo.co.uk/content/using-rfid-inventory-control-stock-security-and-quality-management

 
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