BUS 499 Assignment 2 – Inventory Management

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Inventory management

BUS 499 Assignment 2

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Adidas and Netflix inventory management

Introduction

It is the process where organizations order, store as well as use company inventory. It involves managing raw materials, finished products, processing as well as warehousing these items. There are companies whose supply chain as well as the manufacturing process is complicated, therefore, they need to balance the risk of inventory mismanagement or shortages that could also be difficult. There are two main methods of managing inventory including JIT (just-in-time) as well as MRP (materials requirement planning). Inventory is a valuable asset in all companies since it includes all the inputs as well as finished products that are fundamental aspects of any business. However, it could be a liability because there are so many risks that could affect it, including spoilage, damage, theft, varying demand for the products, that is why it should always be insured. In case these products do not move in time, then they have to be disposed of at clearance prices. Small businesses may manually manage their inventory or use excel formulas, but for large businesses, enterprise resource planning software is used or they could customize their software applications. This paper will therefore investigate how Adidas and Netflix manage their inventory.  

Adidas

Every company aims to sell its products within the shortest period. Therefore, inventory needs to be accurately counted before the information is drafted on the balance sheet. For large companies such as Adidas, they prefer to have real-time inventory management. Their accounts consist of raw materials, pending work, finished goods as well as merchandise. Adidas has relocated its inventory to e-commerce to ensure that they meet consumer demands. Previously, inventory would be set aside for wholesalers, but more companies are moving to the digital space. The coronavirus has affected most business operations, but Adidas is prioritizing maintaining its supply chain to maintain healthy inventory by shifting most of its operations to digital business. 

It aims to maintain its supply chain by managing its retail operations, attaining financial viability as well as the security as well as the health of their employees. They manage their inventory through canceling, postponing as well as holding the stock for some of their outlets (Wild, 2017). For instance, they canceled purchase orders from Asia to ensure that they adjust their incoming inventory. Adidas has about 1100 outlets globally, and moving their business online is a prudent strategy. It ensures that they can outsource their employees to work on their online platforms as well as have convenient ways to deliver their products to their consumers. Besides, social media is an effective marketing platform where they could announce sales to clear their stock. Also, it allows them to get real-time feedback on how they can improve their business by meeting the needs of these consumers (Holtbrügge, 2017). 

One of the objectives of Adidas is to meet and exceed consumer expectations by innovating the digital market space. Launching and expanding their business stores has allowed their consumers to have diverse products that they can purchase. Their Reebok brands have concepts such as FitHub or Vector Style for scalability, and since it benefits the company through boosting sales. Their products have a comfortable sole that is printed using a 3D printer that can be custom made to the preference of any consumer (Guo, 2018). Their website Adidas.com as well as their app allows maximum consumer engagement by providing information about the arrival of new products as well as sales discounts to maximize profits. 

Inventory acts as a guide to decision making since it includes information about demand and supply as well as guides their stock spending plan (Radasanu, 2016). It encourages productivity since Adidas aims to satisfy its consumers by enhancing their buying strategies, boost operation efficiency by using platforms that are inexpensive as well as displaying products that are available for purchase. Adidas evaluates its supply chain through qualitative as well as quantitative measures. For instance, value-creating quality products and has been crucial in maintaining the brand. Customer satisfaction has been prudent in managing inventory since goods are produced to match the demand. However, if the supply is low then effective marketing strategies are used to encourage consumers to purchase these products.

Qualitative measures include effectiveness in product delivery to the supplier as well as consumers, management of supply chain, adaptability, or effective utilization of the available resources. I would suggest that Adidas collaborates with more creatives or influencers since it will boost design and consumer feedback. Prioritizing cybersecurity will minimize the risk on the online platforms. Besides, it will ensure that the supply chain is effectively managed since it has opted to digitize its inventory and services.     

Netflix

Netflix was founded in 1997 as an online platform that provides videos through streaming, initially they provide DVDs through the mail. The success of the service provider is directly linked to its inventory management that guides its expansion to new markets. Since more people are indoors, then content consumption has been on the rise during this pandemic. But how will Netflix ensure that it retains its subscribers? Is there any other platform that poses a threat to Netflix in terms of content delivery? Netflix has about 200million subscribers and it has been preferred by many consumers because of the content they have. It has adopted technology to boost the algorithm of content consumers prefer to see. Also, it has a user-friendly interface that allows consumers to watch content that is on-demand at a relatively low price. Their supply chain is made effective by using real-time content for data collection, to analyze big data, for efficient machine learning and easier engagement. It has proven effective in mitigating potential risks, has boosted efficiency, and has a clear outline overview of the supply chain (Singh, 2018). It has also allowed Netflix management to understand their consumer needs or demands, and this has guided the way their algorithm provides content to consumers. 

Netflix uses serialize inventory to manage its data. This type of inventory is effective for such a service industry since it ensures that all movies have unique codes or serial numbers. Once these numbers are analyzed, they use artificial intelligence to ensure that movies are provided according to consumer demands. The just-in-time inventory was also used since it was cost-effective especially on the inventory. It was the preferred inventory since it would record on order, and shipping would commence after the videos were recorded. Besides, since this inventory had organizational efficiency, it was easy to monitor it. Since movies lose their values fast, Netflix needs to be very keen on updating their inventory. It ensures that provide their users with the latest movies or content that they prefer to watch. 

If the users do not see anything interesting on the platform, they may opt for other platforms that provide interesting content at lower rates. Therefore, to retain their consumers, they need to collaborate with licensed media to curate the content that consumers prefer. Since it allows its consumers to access content from anywhere, they are kept on logistics to ensure that they manage the data in real-time. They give their users a platform to stream and have unlimited access to the content that they can consume. Therefore, streaming is used in supply chain management since they have the data on the location of all their consumers and the content they are consuming. It optimizes the operations of the supply chain since the data collected can be used to improve supply and demand. 

Netflix tries to localize its products by increasing the attention on local celebrities and content (Lobato, 2019). It provides quality, relevant, and relatable content for its users to ensure that it maintains its supply chain. Also, to guarantee that it has high standards and that they prefer it is as their main platform for streaming movies and series. The Netflix team is empowered to ensure that it prioritizes the needs of the consumer and is motivated by their flexible schedules. It also collaborates with content creators to ensure that the services delivered to users maintain the same standards. 

Inventory management needs to be regularly revised to keep up with consumer needs and market trends. If consumers can access trending videos from Netflix, then they are likely to prefer it compared to other streaming platforms. Operation efficiency depends on effective data analysis and market research. Inventory performance is measured by the costs incurred to maintain its inventory, its ability to keep the inventory active, through having an active supply chain, and how effectively they can deliver accurate videos or content. Besides, its inventory is managed by ABC analysis that includes it’s the DVD’s and movies that are streamed online, the packaging materials and supplies used in their offices. It also has an IT system that manages to keep the inventory updated.

The metrics used to evaluate the supply chain on Netflix include the growth of subscribers, its cash flow, revenue growth, and its efficiency in new markets (Ahmed, 2020). Qualitative and Quantitative metrics ensure an effective supply chain since they are a reflection of consumer satisfaction. I would suggest that Netflix adopts a consumer-driven network since the consumers know what genres of videos they want to stream from them. It could affect the supply chain since subscribers could opt for other platforms that offer the same quality of videos with better content. The inventory could also be managed better by using artificial intelligence to improve the content delivered to consumers. It will boost consumer satisfaction since they will have a platform rich in preferred content they unwinding from daily activities. 

References

Ahmed, H. M., & Nobanee, H. (2020). Financial Statement Analyses of Netflix. Available at SSRN 3647452.

Guo, S., Choi, T. M., Shen, B., & Jung, S. (2018). Inventory management in mass customization operations: A review. IEEE Transactions on Engineering Management66(3), 412-428.

Holtbrügge, D., & Schuster, T. (2017). The Internationalization Strategy of Adidas. The Internationalization of Firms. Case Studies from the Nürnberg Metropolitan Region, 19.

Lobato, R. (2019). Netflix nations: The geography of digital distribution. NYU Press.

Radasanu, A. C. (2016). Inventory management, service level and safety stock. Journal of Public Administration, Finance and Law, (09), 145-153.

Singh, D., & Verma, A. (2018). Inventory management in supply chain. Materials Today: Proceedings5(2), 3867-3872.

Wild, T. (2017). Best practice in inventory management. Routledge.




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