Inventory Management of Toyota Motor Corporation and Dell Inc. (Essay Sample)

Inventory management
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Inventory management
Every business has a mandate of ensuring that its inventory is flawless besides being delivered on time. Inventory can be defined as goods that are obtained and held by a business organization to be used at one stage of production or distributed to the market. Whether such goods are kept by the business in-house or outsource the storage facilities, the fact remains that the goods or materials should be made available when needed in right quality, quantity, and condition. Inventory management is an important function undertaken by manufacturing companies since it involves a balancing of the costs and meeting the necessary requirements all done simultaneously. The way a particular company manages the inventory determines the overall performance both internally and externally justifying the role of inventory in the sustainability of the business. This paper examines the inventory management of two companies is the manufacturing sector and how that influences their overall performance in the market.
Company 1: Toyota Motor Corporation
Toyota Motor Corporation is one of the leading car manufacturers in the world. The Japanese company has an international presence in over 170 countries across the globe with a well-established position in the market. The company manufactures various types and models of automobiles ranging from salon cars, pickup trucks to SUVs and full-sized trucks. It has a solid financial base for sale reaching to more than $ 130 billion annually. Other than having a strong brand, continuous innovation, and remarkable product development, another key factor in Toyota's success is its inventory management. Its inventory management is a unique model known as the lean manufacturing or Toyota Production System (TPS). It pioneered this system and so far many companies have adopted the same. This system is much quicker, convenient, and cost-effective compared to other traditional inventory management techniques in manufacturing. It is with no doubt that the TPS is an excellent method of eliminating inconsistencies that may arise as a result of delays in handling and delivery of components as well as wastages that normally occur after a usual production process.
Toyota's inventory management is one of the most efficient in the car manufacturing sector due to its ability to prevent overproduction, reducing waiting time, correction possibilities especially when the inventory is needed at a particular time and a given workstation. The TPS works on the basic principle of small-lot production. This means that production is only undertaken when it is meant to satisfy a given demand in the market using shorter and inexpensive processes. This explains why Toyota has the capabilities of production a large variety of small quantities at one given time depending on how the forces of demand and supply interact in the global car market. The TPS technique works closely with another process referred to as the pull production where that primary target is to minimize the inventory holding costs as much as possible as well as reduce the lead time. The development of these two superb inventory management in the past few decades made Toyota become one of the most profitable manufacturer in the 20th and 21st century. These methods of reducing inventory employed by Toyota evolved to become an important inventory management concept known as Just-in-Time (JIT) system. In Japanese, the system is referred to as Kanban.
Toyota uses Kanban to manage the whole process of inventory management. Here, the supplier has the mandate to deliver the components such as engines, tires, or mirrors to the production line only when asked to do so. Thus, there is no need for storage to incur holding costs. Usually, the company sends a card and an empty container indicating the number of components needed for the scheduled production. Should one supplier fail to meet the strict timelines, he is asked to provide only a single component while the others as sourced from other suppliers until the container is full as required on the card (Womack and Jones 2010). Kanban concept at Toyota requires that production of a given product starts only when there is a ready market. This makes it cost effective when it comes to storing the production until a buyer is found.
The inventory management at Toyota works in a way that each stage of production or development is determined strictly by the demand for the materials that are necessary for the following stage to take place. Kanban is a tool that has over the years assisted Toyota not only to maintain an efficient flow of inventory but also decrease the workforce, eliminate defective productive and safeguard the production line from frequent breakdowns. For instance, the Toyota Corolla model works based on a specific plan where a certain number of units have to be produced on a monthly basis so that no demand goes unfulfilled. The total number of cars needed for a particular month is usually calculated and then divided by the number of working days. This specifies the actual day on which the production of a given product is to be conducted. In this case, the company can respond to each of its customer orders in a systematic and timely manner. Kanban enhances the productivity of Toyota in the sense that goods are only manufactured to complete the orders that have been placed by various customers thereby eliminating the possibility of overproduction.
Four layouts found at Toyota
When attempting to arrange how work combination is going to be carried out, the question of layout normally emerges from production. Toyota has been trying to avoid some of the layouts in its operations to increase efficiency. Some of the layouts that are found at Toyota production lines include; isolated island, bird cage, linear, and functional layout. Isolated island layout refers to the arrangement of the machines in order to match the sequential order to the processing a part. This helps in avoiding the possibility of having excess intermediate inventories jamming at the particular machine thereby reducing the speed of producing a finished product. Isolated island is similar to bird cage layout that requires each worker to be assigned to work on one type of machine at a time and hence preventing him or her from helping another worker (Monden 2011). One biggest disadvantage of this layout is the fact that the waiting time for every worker is long because one has to idle as the machine takes part in processing.
Linear layout on the other hand is where different machines performing different tasks are laid out in a liners form thus workers are forced to walk in between the machines. This layout is common in Toyota factories because of its capability to eliminate unnecessary stocking of intermediate outputs in between different processes as witnessed in the isolated island layout. In the functional layout, the machines or equipment are arranged according to their nature of their operations and not the sequence of operations. This layout is rare at Toyota due to the presence of repetitive jobs because of the slow flow of materials as well as the cost of handling materials at each machine.
Company 2: Dell Inc.
Dell is a one of the leading computer technology company based in Texas, USA. It manufactures personal computers and related products for its global market. It is undoubtedly one of the most successful electronic component manufacturers with a solid market in all continents. Over decades of computer production, the company realized that a significant percentage of its products were deteriorating in quality as well as depreciating when they were being kept in warehouses waiting to be dispatched to the market. Borrowing from working examples of Toyota and Caterpillar, the company decided to work on an inventory management mechanism that would help