Agree on the Fact That Inventory Is Term Paper
- Length: 6 pages
- Subject: Business - Management
- Type: Term Paper
- Paper: #85531005
Excerpt from Term Paper :
agree on the fact that inventory is essential in practically any type of business, mainly because of the necessity to balance a surplus of goods that can be sold to a deficit. A surplus will obviously mean a loss of money, as stock that doesn't sell isn't producing anything. A deficit, again, means that we cannot cover, as a business, the customers' demand.
As such, inventory management becomes one of the key components of the business. This is why JIT (Just in Time Inventory Management) has become a common practice among companies nowadays. JIT is "a means to eliminate waste of all kinds in the production process, to improve product quality, and identify inefficient processes"
. This would be the primary goal for JIT.
There are two main directions in which JIT can be applied to lower costs and improve efficiencies. First of all, excessive inventory is identified as a source of waste in a company. This comes to explain what I have mentioned in my previous point. Indeed, inventory can be regarded as investments made in stock. If this stock is not sold, then we will assume that the company has encountered a capital waste, because the respective capital could have been used to improve efficiency in other parts of the company and to increase profits elsewhere (by buying new equipment, for example).
Additionally, as many sources suggest, "tolerances for product standards or volatility in production or delivery times" are also sources of waste that JIT may handle. However, as I have previously pointed out, strictly reducing inventories may not be solving the problem, but may even constitute a new one, as growing demand will not be covered from stock.
So, a key point in applying JIT programs and practices is to be able to regulate and evaluate demand variability as it may appear. I have in mind two kinds of variability: demand and cost. On the demand side, we need to take into consideration the different variables that may influence consumer demand. These may be price, seasonality, income, etc. In terms of price, lower prices may have a direct impact on the increase of stock. This needs to be correlated with the respective level of demand at the given time.
Many sources suggest technology as a source of information that allows us to forecast and to determine, at least approximately, what level the inventory should be at.
c. JIT philosophy in Japanese companies seems to be entirely different from the way it may be applied in European firms. This comes from a different perception on the meaning and use of inventory.
For example, while Japanese and Asian companies in general see inventory as a liability, something must be done away with, Western companies see inventory as an asset for the firm. This is applicable to queues, vendors or quality. So, in my opinion, in order to be able to adapt JAT, one would have to modify either some of the Western inventory-related perceptions or to attempt a middle way between the two more radical sides.
Essay Question 4
a. In the context of globalization and increased interconnectivity between companies, supply chain management has become a function without which the company cannot do. Indeed, in order to evaluate the critical level that supply management has reached, we need to emphasize the rapidity with which decisions need to be made nowadays and assert that a decision that is not taken and performed in due time will be useless in the next moment.
In this sense, the company needs to be able to detect as soon as possible not only raw materials it needs in its production, but also the cheapest materials and those that can be delivered fastest and most reliably. An effective supply chain management will mean a comparative advantage over other companies and an asset for the firm, because the company will be able to bring its products on the market at the cheapest, most advantageous and efficient price, as well as at the most suitable time.
b. In terms of opportunity, it is clear that the global business environment has become more open and the company can operate more freely here. Faster forms of transport, the capacity of developing plants in countries rich in materials and the fact that companies can move more easily in the global market can be counted as new opportunities nowadays.
As a simple example, we should consider a certain raw material that may be used in production, something like iron ore. Exploiting iron ore in Great Britain or the United States, for example, will probably cost more than if this is done in a developing country. There are several reasons for this, including cheaper labor force and cheaper costs of transport.
On the other hand, in terms of challenges, we should mention the increasing scarcity of several resources and materials. I am considering raw materials like oil, for example, or even iron ore. Additionally, developing countries have developed in the last couple of decades different legal forms to protect their national patrimony and access for foreigners may be, at least partly, made more difficult. Additionally, if the company does not decide on founding a subordinated production facility in the country where the raw material is extracted (and here the national legal framework may be an impediment), the cost of transport may become a subsequent challenge.
c. The five steps in the supply chain are plan, source, make, deliver and return
. For the cheese pizza product, the first step, planning, would be represented by the general strategy regarding supply management, as well as a consistent metrics framework in order to evaluate costs and quality.
In terms of sourcing, we would then need to identify both the materials that are needed for cheese pizza (cheese, yeast, etc.), as well as the suppliers we will choose for each material in part. Is it better to buy cheese locally or have it delivered by a Swiss cheese-producing company? This question will be answered by deciding what type of cheese we need and to what category of consumers our pizza is addressing (consumers with a higher income level, for example, may like Swiss cheese in their pizza).
Making the pizza would bring about several additional evaluation metrics, such as workers' productivity or the quality of the production. Delivering is, in my opinion, an essential step, because it would require us to keep track of the orders that come in and satisfy customer satisfaction. Finally, the return step is considered "the problem part of the supply chain"
, mainly because it requires us to keep track of products that were refused because of their quality and to improve the overall process.
Essay Question 5:
a. The Baldridge Framework "measures both qualitative and quantitative aspects of performance and quality management systems"
. In this sense, the framework consists of seven different criteria that are generally believed to cover the spectrum of activity within an organization. These seven criteria are (1) Leadership, (2) Strategic Planning, (3) Student, Stakeholder and Market Focus, (4) Measurement, Analysis, and Knowledge Management, (5) Faculty and Staff Focus, (6) Process Management and (7) Organizational Performance Results.
These seven criteria rest on a set of core values, such as results focus and management by fact. Many of them are closely related to the criteria. For example, management by fact is in close connection with the measurement and analysis criteria. Indeed, we should acknowledge the fact that an organization relies greatly both on the facts it gathers (in this particular case, it would relate to metrics that would evaluate the quality of service, in terms of patients that have been cured or patient satisfaction, and the price of the services provided- how much is the company investing in its technological equipment and how is this proportional to the results obtained) and on the interpretation of these facts. Any form of management that does not rely strictly on facts may have the great disadvantage of losing contact with reality.
Additionally, leadership and results focus are core values that are inherent within any organization. The two provide, in my opinion, the beginning and the end of a process. Indeed, the leader defines a vision and sets a goal towards which the organization's members must work. The results obtained are the end of the process and may provide a loop to its beginning: were the results achieved? If they were not, was this because the leader imposed goals that are unattainable or do we have an efficiency problem?
b. In my opinion, the benefits of such a framework, in any organization, not necessarily the hospital, is that it provides a clear set of components that, bound together, are likely to produce viable results. This is not a management framework based on presumptions or intuition, but it is a reaction to results obtained in the field.
On the other hand, in this particular case, this may be a problem, because the nature of activity makes evaluation much more difficult.…