Inventory Management in Toyota And Coca-Cola

Answer

                                Inventory Management in Toyota And Coca-Cola

Inventory management is the process for the supervision of inventories and stock items, which are categorized as non-capitalized assets. Notably, according to Wild (2017), inventory management is a component of supply chain management that ensure the supervision of the flow of goods from the manufacturers to the areas where they are stored (warehouses), and finally to the points of sale. Companies have the role of dealing with the issues resulting from the amount of inventory that they hold in a specific duration. Holding inventory is seen as undesirable because of excess inventory leads to additional costs for organizations (Heizer, Render, & Munson, 2016). Some of the modern manufacturing companies that have the best inventory systems are Toyota and Coca-Cola. This paper provides discussion of the current management of inventories in the two companies and how they affect different aspects of the organization.

Current Inventories Managed

            Some of the inventories that these companies currently manage are the raw materials, work in progress, and finished goods. Notably, the raw material inventory consists of the various inputs that have to be put through the process system and thus ensuring their transformation and coming up with the final output (Wild, 2017). In the case of the manufacturing system of Toyota, the raw materials inventory consists of items such as the bolts, copper wires, paint, mental plates and nuts used in the manufacture of automobiles. However, in the case of Coca-Cola, raw material inventory consists of products such as sugar, concentrates, water, and food colors (Monden, 2019). The work in progress inventory consists of materials that have already undergone partial transformation and are held as inventory for the next stage in the production process. The other characteristic of this inventory is that it is normally held for the leveraging of the production system. The finished good inventory is the type of inventory held by the organizations in anticipation for demand of their products (Heizer, Render, & Munson, 2016). For Toyota, the finished good inventory is kept in the subassemblies found in its factories. Similarly, Coca-Cola holds various brands of its soft drinks in anticipation of demand from their customers.

Integration of Goods and Service Design

            The integration of the design of the products manufactured by both Toyota and Coca-Cola can be found in the layout and design of the assembly lines of the two companies. For the different products; produced in the two companies, there exists different assembly lines (Adeyemi & Salami, 2010). For instance, in Toyota, the design of the goods is integrated by ensuring that the different models of automobiles are produced in not only diverse assembly lines but also different locations. The principle used by Toyota is that of differentiation where the automobiles assembly lines for the different vehicles are differentiated. However, a majority of the car parts; except for the body, are fitted in different models in a manner that enables the body and interior of the vehicles to be the only differentiating factor (Andini & Simatupang, 2014). Additionally, Toyota uses automation to integrate its design. In so doing, it allows for each assembly line to have maximum flexibility. Coca-Cola, on the other hand, integrates its goods design by having different mass production lines used in the development of the different brands of soft drinks (Monden, 2019). In such a case, Coca-Cola ensures that the design of its products is maintained by making the concentrate for the soft drinks in the US and shipping them for bottling in different parts of the world. Making the concentrate from one location saves on costs because bottlers are only required to conduct dilution and carbonation processes.

Role of Inventory in Performance, Operational Efficiency, And Customer Satisfaction

            Both Toyota and Coca-Cola use modern inventory management techniques. For instance, in Toyota, the use of “just in time” technique determines not only the performance of the companies but also their operational efficiency and customer satisfaction. Since the storage of excess inventory is seen as costly and a major source of waste, the companies seek to reduce excess and idle inventory (Wild, 2017). However, ensuring that inventories are just in time guarantees optimal performance for the two companies. Moreover, the adoption of adept systems of inventory management ensure operational efficiency. Notably, the costs reduced through the limitation of the amount of inventory leads to a greater efficiency (Heizer, Render, & Munson, 2016). Also, the application of efficient inventory management strategies reduces the costs associated with wastes. For instance, the lean manufacturing system in Toyota enables the company to reduce wastes. Moreover, the real time monitoring of demand in different parts of the world as well as collaboration in the supply chain has led to the development of goods that match the changing tastes interests and demands of the customers (Adeyemi & Salami, 2010). As a result, the customers are satisfied due to the fact that the two companies can meet their clients’ demands and their specifications as a result of the flexibility of their inventory management systems.

Comparison of Four Different Layouts in Each Company

            The four layouts found in the two companies are the process layout, product layout, hybrid layout, and the fixed position layout. One similarity is that both companies use the process layout which includes the grouping resources pegged on similar processes and functions. The adoption of process layout is meant to ensure the attainment of competitive priorities of the companies, especially those to do with quality and flexibility (Wild, 2017). Additionally, the two companies have product layout which focuses on the workstations in the companies being organized based on the products made. For instance, in Toyota, the workstations are organized for the different functions in car manufacture. However, in Coca-Cola, the product layout focuses on the making of the concentrate while other workstations are geared towards the dilution and carbonation of the drinks and ultimately bottling them (Monden, 2019). A hybrid layout in the two companies is based on the organization of the processes into different groups. The aim of the use of hybrid system is to ensure only a minimal movement of the aspects in each of the processes. Finally, the fixed layout is used as the final stage of the products (Andini & Simatupang, 2014). However, the difference is that whereas the fixed layout is used in Coca-Cola during packing, in Toyota it is used during painting of the automobiles.

Metrics to Evaluate Supply Chain Performance of The Companies

The evaluation metrics that can be used to assess the supply chain performance of both Toyota and Coca-Cola are their efficiency and effectiveness. One of the aspects which can be checked in the evaluation of the metric of efficiency is the cost of distribution. Notably, an efficient supply chain is the one that meets the distribution requirements while at the same time reducing costs. As such, to assess the efficiency of their supply chain, both companies should establish if they are capable of fulfilling the market needs and demands (Wild, 2017). One of the ways in which the supply chain of Toyota can be improved is through the development of more distribution points into emerging markets so that the company can tap into the opportunities that exists in such markets. Remarkably, despite the global presence of Toyota, there ae still areas where the company does not have presence (Monden, 2019). Undertaking such an improvement in the supply chain will facilitate the reach of the organization’s products to a wide range of customers. In the case of Coca-Cola, the supply of the company can be enhanced through the increment in the level of cooperation and collaboration and the adoption of systematic information technology systems that will inform the parent company of the purchases made. Moreover, both companies should use technology to make accurate demand forecasts and avoid excess inventory in their supply chain.

Ways to Improve the Inventory Management for Each of The Companies

Without having any effect on the operations of the companies and the customer benefit package, the two companies should ensure that they make the right forecasts about the demand patterns of their customers and their tastes and preferences and supply goods that match such tastes. According to Monden (2019), in the case of Coca-Cola, although the organization has operated for quite some time, its methods of predicting demand patterns have not been the best and the demand for products has been higher than the supply of the same. Based on this aspect, the company should improve its inventory quantity. Such an improvement can be attained via the use of statistician inventory management tools such as the economic batch quantity and economic order quantity (Wild, 2017). In the case of Toyota, the improvement that the company can make is the refinement of its inventory system to achieve higher levels of cost reduction which result from reduced wastes.