Introduction
General Motors and Zero Foxtrot are among the leading manufacturing companies in the United States. General Motors majorly engages in the production of automobiles under four different brands, including GMC, Cadillac, Buick and Chevrolet. On the hand, Zero Foxtrot specializes in producing unique vintage military fashion. General Motors sell its vehicles through its designated dealers all over the world. Zero Foxtrot supplies its products through retail stores and uses salespeople to distribute them to different parts of the country. Additionally, Zero Foxtrot employ e-commerce to reach the online market that has been on the rise in recent decades. This paper analyzes how these companies use different types of inventories to manage their production process, including sourcing raw materials and selling products.
Raw Materials and Finished Goods Inventories
The Raw material inventory is majorly used by manufacturers who source raw materials from different suppliers to make their products. General motors relies on this type of inventory to ensure that the quality and quantity of the raw materials necessary for the production process are available. Furthermore, the company uses this type of inventory to manage the cost of acquiring raw materials (Singh & Verma, 2018). On the contrary, finished goods inventory is a common inventory owned by the manufacturers and companies that handle ready products for sale. This type of inventory accounts for goods that have undergone manufacturing levels and are ready for consumer consumption. General Motors manages its finished inventory to calculate the number of vehicles available for the consumers to purchase (Singh & Verma, 2018). Zero Foxtrot company finished goods inventory majorly consists of the number of products available in the store for consumers.
Characteristics of Finished Goods Inventory
Manufacturing companies rely on finished goods inventory for revenue generation. The finished goods inventory is majorly introduced during wholesaling and retailing to account for product sales. This type of inventory enables these companies to ensure that the products have undergone all the production processes before making them available for consumer consumption. Recording the finished goods value inventory requires subtracting the cost of the products sold from the cost of the goods produced (Singh & Verma, 2018). The resultant figure is then added to the value of the previous inventory.
Characteristics of Raw Materials Inventory
In this case, this type of inventory is only operated by General Motors. It is mainly operated by manufacturing companies that use various components to produce finished products. This inventory indicates the total cost of raw materials in stock that have not been used or are being used in the work-in-progress stage. The Raw material inventory consists of two major categories of items, including direct materials and indirect materials. The direct materials consist of the primary raw materials, while indirect materials involve secondary components used during manufacturing.
Integration of Design Concepts
General Motors and Zero Foxtrot are companies that operate in different industries. However, they both aim to achieve customers’ loyalty and satisfaction by producing goods that meet the market specification. General Motors uses certified dealers to reach different markets as a large corporation. The company’s main business strategy is market penetration which focuses on increasing the size of the dealership in different target markets to popularize its brand. On the other hand, the Zero Foxtrot majorly uses the internet for marketing its products and accessing the target market for its products. This business model has been on the rise in recent decades due to the advancement of the internet. However, the company has partnered with different brands to increase its sales. However, online marketing has been a successful strategy that has enabled the company to sell most of its products at a favorable price, thus attracting customers’ loyalty and satisfaction.
Role of the Inventory in Companies’ Performance
The inventories employed by General Motors and Zero Foxtrot play a significant role in the success of the companies. Effective management of inventories has a substantial impact on the performance and operational efficiency of the companies. Furthermore, inventory management is necessary for achieving customer satisfaction. The raw materials inventory enables General Motors to determine the cost of raw materials needed to manufacture the targeted number of vehicles. Additionally, these inventories allow the company to accurately determine the number of raw materials in stock and the value of the materials needed. Availability of the necessary manufacturing components makes the production a continuous process (Atnafu & Balda, 2018). When the employees are actively engaged, the wasted time is significantly reduced, thus increasing the production rate and increasing the company’s performance.
Finished goods inventory improves the performance of the companies by enabling them to make decisions based on their economic value. Additionally, the finished goods inventory allows the companies to understand the kind of target that they need to set based on the gap between the consumer demand and the available products (Atnafu & Balda, 2018). The inventories promote efficiency in the companies by enabling them to optimize their stock levels and achieve their targets of meeting consumer demand without straining the workforce. Additionally, inventories promote efficiency by ensuring that all products go through the production requirements necessary to meet consumer expectations.
Inventories are essential in meeting the consumers’ expectations, which is vital in achieving consumer satisfaction. General Motors has presented itself as one of the leading vehicle brands in the world. The company earned its reputation because of its ability to meet the consumers’ expectations, thus achieving their satisfaction (Atnafu & Balda, 2018). Customer satisfaction is developed when the production process is coordinated to produce high-quality products. Inventories are significant in coordinating the production process by ensuring that the requirements necessary at all the production levels are available. Additionally, customer satisfaction is generated when the company meets the consumer demand by producing enough products for its target market. Zero Foxtrot relies on the finished goods inventory to ensure that it has enough products for both online consumers and retailers.
Types of Layouts
Four major layouts are employed during the production process, including the product layout, process layout, fixed position layout, and combined layout. General Motors is a company whose production process is categorized into different departments that deal with different raw materials and operations (Reid & Sanders, 2019). The company, therefore, employs the process layout, which involves an adequate workforce to guide the production process and ensure that the final product meets the set conditions (Reid & Sanders, 2019). Additionally, Zero Foxtrot uses the process layout to produce its fashion products. Zero Foxtrot products are labor extensive to ensure that they adequately attract the customers making the process layout ideal for its operations.
Metrics to evaluate Supply Chains Performance
There are various ways of evaluating the supply chain performance related to time, cost and quality metrics. General Motors rely on cost metrics to assess its supply chain performance, while Zero Foxtrot uses quality metrics to evaluate its performance. Cost metrics determine the company’s progress by measuring the revenue generated from sales of the vehicles compared to the cost of production. When the company makes a lot of revenue from the sales, its supply chain is generally doing better than when the sales are low (Mishra et al., 2018). Zero Foxtrot uses customer satisfaction to evaluate the supply chain performance based on quality metrics. When the customers leave many positive reviews about the company’s products, its supply chain is doing better than when there is negative customer feedback.
General Motors can improve its supply chain performance based on cost metrics by ensuring that it increases its sales by expanding its market base. Additionally, the company needs to reduce its cost of production by sourcing affordable raw materials. Zero Foxtrot needs to increase its products’ quality to attract more positive customer reviews. The company should produce its goods based on consumer expectations and preferences. Furthermore, the company can create consumer satisfaction by meeting consumer demand.
Ways to Improve Inventory Management
General Motors should adopt technology to manage its raw materials and finished goods inventories effectively. The company should use a tracking system to ensure that all its inventories are effectively managed, and the items are supplied adequately. Zero Foxtrot should manage its inventory by establishing a product turnaround system that tracks the fast selling products and identify the sallow mooting one. This system enables the company to ensure that highly demanded products are always available. These suggestions are effective because when the companies use technology, they reduce the costs related to hiring inventory managers, which can be expensive.
Conclusion
In conclusion, inventory management is an essential factor in managing production. Inventory management guides manufacturers in ensuring that the final product has undergone all the vital requirements before reaching the consumer. Additionally, effective inventory management increases the company’s performance and customer satisfaction. Using technology is a practical way of improving inventory management. Technology makes it easier for large corporations such as General Motors and online stores such as Zero Foxtrot to track their sales and determine the number of goods available.
References
Atnafu, D., & Balda, A. (2018). The impact of inventory management practice on firms’ competitiveness and organizational performance: Empirical evidence from micro and small enterprises in Ethiopia. Cogent Business & Management, 5(1), 1503219.
Mishra, D., Gunasekaran, A., Papadopoulos, T., & Dubey, R. (2018). Supply chain performance measures and metrics: a bibliometric study. Benchmarking: An International Journal.
Reid, R. D., & Sanders, N. R. (2019). Operations management: an integrated approach. John Wiley & Sons.
Singh, D., & Verma, A. (2018). Inventory management in the supply chain. Materials Today: Proceedings, 5(2), 3867-3872.