INVENTORY MANAGEMENT

Inventory Management: Apple Inc. and Hewlett Packard (HP) Inc.

Introduction

From the onset, it would be prudent to note that the relevance of effective inventory management cannot be overstated. This is more so the case given that the ability of a business enterprise to satisfy customer needs is largely founded on the effective flow of the various products it offers for sale into and out of stock. For this reason, in addition to being capable of forecasting demand, an enterprise must also be able to track its inventory and be aware of both variability and lead times. This text concerns itself with inventory management in relation to two of Americas greatest manufacturing enterprises. The said enterprises are; Apple Inc. and HP Inc.

Types and Characteristics of Inventory

To begin with, Apple Inc. concerns itself with not only the design, but also the manufacture of a wide range of computing and communication devices. These are inclusive of, but they are not limited to; mobile phones, personal computers, tablets, etc. Its flagship products are the Mac PC, iPhone, and the iPad. In essence, all of the companys computing as well as communication devices run on its own in-house operating system christened the iOS. The company also manufactures a variety of accessories and wearables (such as the Apple watch). It is important to note that as has been indicated above, the various items that this particular company offers for sale are technology-based products. This is to say that owing to the fast-changing nature of technology, the said products become obsolete swiftly. Thus, the companys various products cannot be held as inventory for a long period of time. Also, the fact that the company is a multinational or global enterprise effectively means that at any given time, it holds a large amount of inventory.

On the other hand, when it comes to HP, it should be noted that the company manufactures and offers for sale a wide range of computing and electronic devices including, but not limited to; personal and desktop computers, point-of-sale systems, printers, etc. Like Apple, HP happens to be a manufacturer of products and systems firmly rooted in current technological capabilities. For this reason, its products are also prone to obsolescence if, and when, they are not sold fast enough. Further, being a multinational that operates in multiple locations across the world, the company often holds a large amount of inventory so as to effectively meet and satisfy demand.

Apple sources most of its product components from Asia. More specifically, according...

However, it should also be noted that the company still sources for parts and components from other companies including the United States (Ivanov, Tsipoulandis, and Schonberger, 2021). Unlike most companies, Apple releases an annual report indicating the nature and extent of its suppliant engagement as well as relationships.

The various parts and components used in the manufacture of HP products are also sourced from diverse locations from across the world. As assessment of the companys supplier list indicates that most parts and components are sourced from China, Singapore, and Taiwan (Hewlett Packard - HP, 2022).

The Integration of Design Concepts

Both companies seek to ensure that they are able to meet and exceed customer needs in a market that is increasingly competitive. One was of doing this is by ensuring that customers are able to access quality products where and when they need them. In as far as quality is concerned, both companies appear to be...

…replaces inventory within a given time period, i.e. 1 fiscal year in this case. The authors further indicate that this is an instrumental ratio for businesses in efforts to ensure sound decision making in as far as manufacturing and pricing are concerned.

Suggestions

On the basis of the data presented above, there are a number of suggestions that could be made in an attempt to further promote better inventory management in both companies. To begin with, when it comes to Apple and HP, it is important to note that both companies have a negative cash conversion cycle. In essence, this indicates that the time that both Apple and HP need to offer for sale their inventories and receive cash happens to be less than amount of time they need to settle their suppliers. This is good news for both companies as it largely means that a significant portion of their operations are financed by suppliers. This means that they can attain a higher growth trajectory without necessarily relying on operating cash. The present arrangement should, thus, be maintained.

On the other hand, when it comes to the inventory turnover ratio, it is clear that Apple has a significantly higher ratio than HP. This could either mean that in comparison to HP, Apple does not have sufficient inventory or that it has stronger sales than HP. Towards this end, in addition to deploying strategies to enhance sales, HP ought to rein in excess inventory. Thus, HP could amongst other things seek to further adapt its supply chain, improve its forecasting methodologies, and ensure that it better tracks inventory.

Conclusion

In the final analysis, it is clear from the discussion above that superior inventory management approaches are key to the success of a business enterprise. For this reason, businesses like HP and Apple should seek to ensure that…