Do you need this or any other assignment done for you from scratch?
We have qualified writers to help you.
We assure you a quality paper that is 100% free from plagiarism and AI.
You can choose either format of your choice ( Apa, Mla, Havard, Chicago, or any other)
NB: We do not resell your papers. Upon ordering, we do an original paper exclusively for you.
NB: All your data is kept safe from the public.
Having an impressively long history and being accessible to the point where they have become household names, Nestle and Johnson and Johnson are the two companies that do not seem to become any less relevant now that they were several decades before (Collier & Evans, 2013). The organizations under analysis owe a significant part of their success to the specific method of inventory management, which they have adjusted for the rapidly changing economic environment of the global market in the 21st century.
Both organizations have a similar set of inventories, which include raw materials, work in progress, or goods in process, and finished goods (Iwu et al., 2014). The specified set of inventories can be viewed as a standard one and does not incorporate any components that are uncharacteristic of other organizations and can be attributed to Nestle or Johnson & Johnson solely (Demeter & Matyusz, 2011). It should be noted, though, that each company keeps its inventory characteristics unique.
Nestle, being the company that works in the food industry, can define its raw material inventory as perishable in arrange of cases; the same can be said about the items that are characterized as work-in-progress (WIP) ones, as well as finished goods. Therefore, time is of the essence of the company.
Johnson & Johnson, in its turn, may identify its raw materials as those acquired from natural resources (such as palm oil) and, therefore, requiring a sustainable approach in their use. Also, the company produces medical devices and diagnostic segment, which allows for defining the organization’s inventory as technologically advanced and diverse (Jha, 2015). The technological devices mentioned above can be classified as finished goods, whereas the parts, which they are assembled from, are the WIP inventory.
As it has been stressed above, Johnson & Johnson has its services and goods integrated and connected closely. However, instead of catering to the needs of their target population, i.e., individuals, who use Johnson & Johnson’s brand products, the organization caters to the needs of other firms and entrepreneurs, who may find interest in “access to a broad array of products, including personal lines, commercial lines, and premium financing” and the related facilities (Johnson & Johnson Agency to Acquire Sunbelt General Agency From American Modern Insurance Group, 2010).
To be more specific, the organization provides services that help the company expand and become more influential in the global economic environment. While the approach in question may be viewed as efficient from the perspective of an expansion strategy, the organization may need to consider the design of the services that will be related directly to its products (e.g., opening a chain of beauty parlors).
Nestle, in its turn, also seems to be deviating from the standard pattern of linking services closely to products. Specifically, the organization aims at providing the services that have seemingly few links with the products that the organization sells to its target audience. Specifically, the company aims at offering its services to not only customers but primarily retailers and partners, according to the official statement issued by the organization: “Putting our customers, our retailers and our wholesalers first really is our top priority” (Customer services, 2015, par. 1). Therefore, though both companies must have put a lot of effort into the means of integrating the design of their services and products, the apparent differences between the two components shine through.
Based on the fact that both companies integrate their inventories as the tools for improving their production process and at the same time enhance the promotion of new services, it can be assumed that the catalog plays a significant role in the design of both organizations’ supply chains. Nestle, for instance, uses its inventory to create shared value in the supply chain so that the concept of the shared value could be incorporated into the organization’s design and set of values.
The specified approach aligns with the goals that the firm has set recently as a means to shape its relationships with its target population and, therefore, enhance the communication process between the company and the communities that it provides its services to: “Our people are learning more about the contribution Nestlé foods and beverages can make at every stage of life” (Creating shared value, 2015).
Johnson & Johnson, in its turn, also utilizes its inventories as the means of reconsidering the current relationships with its customers and, thus, incorporate the concept of customer satisfaction into its framework. Moreover, the organization seems to have started accepting the importance of creating shared value since recently. It is quite peculiar that, though providing strikingly different services, the two organizations (i.e., Nestle and Johnson & Johnson) used to share a similarly “hard-nose” (Porter & Kramer, 2011, par. 6) approach towards the concept of shared value; it was not so long ago that Nestle refused from accepting the idea of creating a shared value.
However, in the light of the factors, which the environment of the global market has exposed the two organizations to, the importance of adopting the approach of shared value increased significantly, which made the companies succumb to the new pattern of building relationships with customers, suppliers, and other stakeholders.
Evaluating the critical production processes within Nestle, one must admit that the company’s operational framework can be defined as product layout. Indeed, the company produces a range of similar products in vast quantities (e.g., chocolate bars), which means that the process of production must involve a conveyor-belt approach. As a result, every single piece of equipment is located in assembly order, and the production process consists in carrying out a sequence of specific tasks. The product layout in Nestle is quite similar to that one in Johnson & Johnson, as the latter also produces large amounts of related goods (e.g., shampoos).
Also, both companies adopt a cellular layout as a tool for grouping the critical mechanisms by their functions in the production process (Dixit & Gupta, 2013). As far as the fixed-position layout is concerned, Nestle traditionally does not resort to the approach in question, as most products that are provided by the company are small enough to carry without the help of other tools or machinery. The specified path, in fact, sets Nestle and Johnson & Johnson apart from a range of organizations, which use the exact method regularly. According to a recent study, the fixed position layout enjoys wide popularity among a variety of organizations: “Fixed position layout or project layout was also found to be dominant type layout in 7 companies, and only one company was using both fixed position and cellular layout” (Dixit & Gupta, 2013, p. 351).
Johnson & Johnson uses the fixed-position layout only when the goods produced have to be arranged into groups and stacked. Finally, the two organizations incorporate the mixed design into the framework of their operations, as both nestle and Johnson & Johnson need to utilize several approaches at the same time on a range of occasions in the course of the production process.
The evaluation of the supply chain performance for both organizations will require a detailed analysis of several performance indicators. Individually, the characteristics of the organizations’ performance, such as the customer satisfaction rates, the quality, and speed of customer feedback analysis, the overall profitability of the company, the use of the resources available, the financial statement of the company and its budget (Gopal & Thakkar, 2012) must be assessed carefully.
The specified approach is suitable for both nestle and Johnson & Johnson since the factors mentioned above allow for a generic evaluation, which will lead to obtaining essential data. In addition, the communication process must be assessed so that the cohesion between the departments of each company could be tested. The issue in question can be defined as knowledge management. Though not related to the concept of supply chain management directly, it represents the accuracy of the data transferred from one department to another rand, thus, predetermines the quality of the final product, which, in turn, affects customer satisfaction rates.
It should be noted that the metrics in question may also involve the analysis of the behavior of buyers, as well as buyers’ attitude towards the companies and the products that they have to offer in general: “Performance measures and metrics are not just measuring the performance objectively; they are also embedded with politics, emotions and several other behavioral issues” (Gopal & Thakkar, 2012, p. 519). As the recommendations provided above show, Nestle and Johnson & Johnson must incorporate the tools that evaluate not only the effects of the external factors on the organization’s success (or the lack thereof) but also integrate the analysis of internal factors, which may impact the organization’s efficacy.
When it comes to defining the tools that will possibly allow Nestle and Johnson & Johnson succeed in the environment of global economy and promote their products and services to a broader range of customers by enhancing their inventory management, one may suggest that the companies should focus on the fixed position layout as one of the critical inventory layouts. Thus, Nestle and Johnson & Johnson will be capable of enhancing the use of their equipment and raw materials without altering the production process.
In addition, both organizations should incorporate the shared value approach into their frameworks as soon as possible. Although nestle seems to have already announced its transfer to the shared value strategy, it still needs enhancing the speed of the assignment, most global organizations have already accepted the shared value principle, and Nestle is under a threat of being left behind. The same concerns Johnson & Johnson; not having considered the possibility of adopting the shared values approach yet, the company may face significant impediments in the process of developing and managing its supply chain. As soon as Johnson & Johnson’s leaders set the company’s priorities straight, though, the firm will be open to a plethora of opportunities for enhancing its supply chain management by reconsidering the use of inventory.
Reference List
Collier, D. A., & Evans, J. R. (2013). OM: 2013 custom edition (4th ed.). Mason, OH: South-Western Cengage Learning. Web.
Creating shared value. (2015). Nestle. Web.
Customer services. (2015). Nestle. Web.
Demeter, K. & Matyusz, Z. (2011). The impact of lean practices on inventory turnover. International Journal of Production Economics, 133(1), 154–163. Web.
Dixit, A. R. & Gupta, M. (2013). Current status, enablers & barriers of implementing cellular manufacturing system in Indian industries. Advanced Manufacturing 1, 346–356. Web.
Gopal, R. P. C. & Thakkar, J. (2012). A review on supply chain performance measures and metrics: 2000-2011. International Journal of Productivity and Performance Management, 61(5), 518–547. Web.
Iwu, H. C., Ogbonna, C. J., Jude, O. & Onuma, K. G. (2014). Application of inventory model in determining stock control in an organization. AJAMS, 2(5), 307–317. Web.
Jha, S. K. (2015). Inventory audit: Ascertainment of the liquidity position. Global Academic Research Journal, 3(1), 21–25. Web.
Johnson & Johnson agency to acquire Sunbelt General Agency from American Modern Insurance Group. (2010). Business Wire. Web.
Porter, M. E. & Kramer, M. A. (2011). The big idea: Creating shared value. Huffington Post. Web.
Do you need this or any other assignment done for you from scratch?
We have qualified writers to help you.
We assure you a quality paper that is 100% free from plagiarism and AI.
You can choose either format of your choice ( Apa, Mla, Havard, Chicago, or any other)
NB: We do not resell your papers. Upon ordering, we do an original paper exclusively for you.
NB: All your data is kept safe from the public.