Running head: INVENTORY MANAGEMENT

Inventory management
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INVENTORY MANAGEMENT

Procter and Gamble and Pepsi Company have been chosen as the companies of choice for
the paper. Procter and Gamble and Pepsi Company are two major companies that have been
considered as leaders in their respective industries that they operate in. Procter and Gamble
produces household goods meant for beauty while Pepsi Company is a leading company that
produces beverages for its customers globally. Analysis of both companies will provide an
insight on inventory management, thereby providing important information on inventory
decisions that similar organizations need to make in order to attain their goals and objectives.
Characteristics of the different types of inventories
Pepsi and Proctor and Gamble use coherent frameworks in making their inventory
decisions, which reduces their inventory surpluses. In analysis of Pepsi Company, the company
has been able to introduce the Economic order (EOQ) in order management. Through this
structure in inventory management, it has been possible for the company to reduce its costs in
ordering. Analysis of the company has also shown that Pepsi Company uses ABC inventory
control system. Through this system, the company has been able to maintain its inventories by
prioritizing the goods that have the highest value.
Proctor and Gamble has also created an inventory control system that is based on a
spreadsheet. Through this system, the company is in a position to track and organize data, which
enables the company to control its inventory and manage the supply chains. Proctor and Gamble
uses Consumer-Driven Supply Network (CDSN) in being able to generate its sales. However,
Pepsi uses just-in-time (JIT) in being able to synchronize the deliveries that it makes (Visconti,
2012).

INVENTORY MANAGEMENT

In evaluating the features of the inventories for both Pespsi and Proctor and Gamble
companies, the main similarity is the large stocks especially during manufacturing, selling
period, work-in-process inventories during manufacturing and the goods along the line to the
point of sale. In Pepsi Company, operations surrounding inventory include documenting the
amount of the raw products in the balance sheet, data that is used in manufacturing and
production phases (Stoddard, 2002). From 2011 to 2013, there has been a decline in the raw
materials that were documented in the balance sheet and the merchandise date. Analysis of the
features of the inventory system at Pepsi has also shown that there is a decline in the amount if
goods that the company is holding and are available for sale (Visconti, 2012).
The features of the inventory management system were different at Proctor and Gamble.
The amount of raw material in the company were considered low in as from 2011 to 2013 but
increased as from 2013 to 2014. Analysis of the work in process for the company showed that
both companies were similar as from 2011 to 2013 but it later reduced in 2013 to 2014 for
Proctor and Gamble. The finished goods were able to increase as from 2012 to 2013 but there
was a slight decrease 2013 to 2014 (Visconti, 2012).
Analysis of design concepts integration for products and services
Procter and Gamble provides branded household products to its consumers globally. The
company uses membership club stores, among other stores within the neighborhood of the
consumers. There are different specifications for products of the company. When observing its
products such as Mountain Dew Color, Slice Color Aquafina, Miranda, 7up, and Pepsi, it is
possible to observe that all these products are different. This design involves recruitment process

INVENTORY MANAGEMENT

that identifies the different tastes and preferences by customers. Through such a process, there is
more production, which means that there will be more profits (Stoddard, 2002).
The role that inventory plays in the companys performance, operational efficiency, and
customer satisfaction
There are a number of roles that management of inventory plays in the performance,
customer satisfaction, and operational efficiency within a business organization. Through
inventory management, it is possible to predict the process due to the need of manning raw
materials, before making a decision on scheduling during procession stage. Inventory can be
considered as a shock absorber that exists between planning, scheduling, and processing (Muller,
2003). IT is also important to note the importance of the inventory list in estimating the
fluctuations in demand for the products that have been manufactured. Even when the inventory
manager does not have knowledge on the stock needed at some point in time, it is important to
note that the customer has always been satisfied. Such times occur when resources are scarce,
which means that the production process is usually slowed.
Inventory is an important feature in protection of pricing strategies. This is mainly
because, the purchase of the needed material in time is important in reducing the effects caused
by inflation. That therefore means that buying material in advance at reasonable prices helps in
maintaining prices for goods. The use of inventories by business organizations ensures that a
large scale buyer benefits from discounts that have been made available. This is effective since it
saves on costs of ordering cost since buying goods in large quantities attracts low prices as
compared to buying goods in low quantities.

INVENTORY MANAGEMENT

Different types of layouts and their importance to the enterprise manufacturing or service
operations
Both Proctor and Gamble can be considered to display similar layouts in production
cycles. These layouts have been identified as Depth of the product line and Product mix WIDTH.
In both layouts, there is variety of aspects such as color taste, consistency, among others that are
considered. The importance of these layouts is the improvement in efficiency of space needed in
manufacturing, cutting on production delays and general improvement of the quality of products
(Muller, 2003).
Metrics to evaluate supply chain performance and improvements to the design and
operations of the supply chains
The first metric used is the categorical system where the buyer is at will to make a choice
on the favorable qualities. The categorical system is effective in the aspect that the buyer can
assign a rating of their choice based on their experience. This helps in determining the vendor
that has highest ratings. Supplier measurement is usually subjective, which creates a big need for
independent customers to assign ratings in attaining quantity data (Lambert, 2001).
The other used is the evaluation involves being able to select and assign the weight of the
attributes due to their importance performance of the company. This is followed by decision
from the administration of the company where the weight attained is multiplied by the score of
performance and the products totaled. Such calculations reduce subjectivity and are used in
making important decisions affecting the company`s operations (Decker, 1999).
Improving the inventory management

INVENTORY MANAGEMENT

One of the ways used in improving inventory management is the consideration of the
optimization tools used in inventory, which enables easy evaluation of the current network in the
inventory practices. . The other that can be used in improving inventory management is the
employment of business solutions that are based on real-time analytics. This is better as
compared to the use of spreadsheet, which means that all operations could be made under one
platform. This involves gathering similar data and being able to conduct financial analysis and
supply chain decisions that lead to immediate results. The third strategy would be integration of
current technology that identifies the use of mobile devices. Mobile devices allow being able to
get instant data on inventory management, which helps in making better inventory decisions.
Through such improvements, it will be possible to attain the goals and objectives of the
organization (Bose, 2006).

References

INVENTORY MANAGEMENT

Bose, D. C. (2006). Inventory management. New Delhi: Prentice Hall of India.