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Section A:
Learner Number: 215105052 Centre: Namibian Germany center for Logistics
Level: 5 Unit Title: Inventory
Assignment No: 2 Reference: AO/QUA/0250
Date submitted: 10/06/2021 Word 2598
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1st Submission √ 2nd Submission 3rd Submission

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Table of Contents

Introduction.................................................................................................................... 3

Several inventory level of the products in the computer & communication supply
chain network................................................................................................................. 4

Risks correlated with the supply chain and the costs incurred in holding the stock
– a comparison...............................................................................................................5

Inventory policies that supports the overall companys financial objectives and
the performance of the company..................................................................................7

Conclusion......................................................................................................................8

References....................................................................................................................10

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Introduction
The consumer electronics business has become one of the most competitive industries
in the world as a result of rising and continuous improvement-based innovation as well
as dynamic market dynamics. Inventory is seen as a safety net, lubricating supply chain
components and ensuring smooth operation. They show how electronics are made, as
well as how much money they make around the world, as well as how much they're
expected to grow in the future.

A significant misalignment between consumer electronics and product equilibrium, a

complex multi-tier and multi-sourced supply chain network, and growing customer and
supplier expectations at the supply chain's extremities are only a few of the additional
challenges. Supply network management aims to promote cooperation and coordination
between the flow of information, raw materials, and goods, as well as information and
monetary financials, across network-based, functional, and companywide boundaries in
a way that benefits all parties involved in the consumer electronics supply chain, as it
does in any business. In the consumer electronics industry, the same things are always
changing.

Several inventory level of the products in the computer & communication supply
chain network
Every stage of the supply chain must make a major investment in inventory. To make
the supply chain lucrative, supply chain management is structured so that each stage
functions independently. As a result, it's crucial for each supply chain section to
collaborate and create inventory policies.
Inventory management is the process of managing parts or stocks of materials of any
kind within a facility and ensuring that the flow of items is stable while allowing for
demand unpredictability. It's vital that the inventory campaign is set up to accommodate
volatility in demand, especially if the company sells a variety of products. Inventory
control starts with the purchase of raw materials and continues until the consumer
receives the finished product. Inside the plant, even stocked finished goods and
uncooked ingredients must be handled. As a result, developing a thorough approach
that considers all of the materials that will be stored inside the facility is crucial.
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Inventory management strategies aid businesses in categorizing the components that
make up a complete product and determining how much inventory to keep on hand for
each. Inventory management also includes procedures that allow an organization to
compute raw material and final part release and order intake dates based on demand
for the product and the quantity of storage space available inside the facility.

The relevance of a thorough inventory management technique in a supply chain can

help lower inventory holding costs at various levels of the supply chain. Baganha and
Cohen (1996) suggested a supply chain inventory management stabilization model.
Supply chain materials management solutions might be difficult to use when dealing
with a multi-product scenario and discontinuous supply networks.
As a result, the models developed should take into consideration a wide variety of
supply chain changes. The inventory management model developed by Lee and
Billington (1993) stresses scattered supply chains.
The consumer electronics industry's computer and hardware segments, as well as
networking goods, are among the most active and essential segments. As a result,
computer manufacturers need a wide range of specialized components and must have
an appropriate inventory level with OEMs.
In the computer electronics supply chain, the inventory turnover ratio for
telecommunication providers has a minimum inventory turnover ratio. The majority of
their assets are held by their supply chain partners, which explains this trend. Because
the bulk of networking equipment vendors outsource their supply, their inventory costs
are significantly lower. According to industry analysts, the initiative toward a higher level
of outsourcing supply chain activities will be financially sustainable as the computer
electronics supply chain's telecom partners seek to remain competitive by improving
overall supply chain efficiency and increasing inventory turnover ratios.

The provider of printed circuit boards is another level of inventory in the consumer
electronics supply chain (PCB). The printed circuit board manufacturing portion of the
supply chain, in contrast to the OEM end-market, has the lowest gross profit margins
and ROIC. This is characteristic of the components category as a whole, and can be

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explained by the significant contribution of mature goods or low-margin commodities. In
addition, the following supply chain partner's inventory turnover rate is low.

In general, this means that PCB manufacturing partners in consumer electronics supply
chains are confronted with cyclical demand-supply issues in the semiconductor industry.
PCB suppliers' inventory levels and, as a result, their own ROIC are affected by this
supply and demand imbalance.
According to a Gartner Research report, by improving demand planning and eliminating
the multi-echelon and all-important inventory optimization, consumer electronics and
original equipment manufacturers may considerably enhance their ROI at the short-lived
product moment of truth. In a variety of ways, improvements in these supply chain
disciplines will benefit and improve the consumer electronics supply chain. According to
Gartner, companies that accurately forecast product demand spend 15% less on
inventory, have a 17% higher order fulfillment rate, and have a 35% faster cash-to-cash
cycle time across the chain. According to studies, a 5% increase in prediction accuracy
leads to a 10% increase in supply orders and demand fulfillment, and as a result, every
3% increase in giving ideal orders has the ability to enhance profit margin by 1%.

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Risks correlated with the supply chain and the costs incurred in holding the stock
– a comparison.
The majority of organizations are unaware of inventory management's costs. To make
informed supply chain decisions, it's critical to understand the whole cost. Improved
inventory management frees up funds for new investments, allows products to be
delivered at lower prices, makes it easier to enter new markets, and offers a range of
other benefits that boost financial performance and give you a competitive edge. In the
consumer electronics business, particularly in the computer manufacturing industry,
excess inventory has a negative influence on financial performance and inventory
management. Not only have that, but the enmity affects the other supply chained
partners as well.
To decrease or mitigate risk in the consumer electronics supply chain, logistics and
supply chain managers can take a number of steps:
(1) Consolidate inventories from multiple product lines;
(2) Produce common components and adjacent parts for a variety of product lines;
(3) Handle a wide range of product variations. Defer the deferral procedure till the final
step of manufacture to ensure that demand orders are fully manifested. Inventory
holding costs, inventory management expenses, and the risk of excess inventory are all
reduced as a result of the threat of technological obsolescence, all of which can have an
impact on business earnings.

To support worldwide component assembly sites, Nokia, for example, limits the number
of core-component production locations to a minimal number. Another example of risk
minimization and cost reduction is Nokia's multiproduct platform, which requires the
production of a wide range of electronic goods on a single platform. This dramatically
lowers costs while simultaneously keeping stockpiles under check. Another inventory
control and risk minimization strategy in the consumer electronics supply chain is
deferring production at manufacturing facilities when orders are fulfilled for separate
countries. Only the manufacture of different power plugs, instructions and instruction

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manuals, and specification-based package labels differ, all of which are multilingual and
uniform across multiple geographical areas.
The supplier's response might be used to make another comparison based on risk
reduction and inventory holding costs. Working with responsive suppliers who ensure
timely availability of components and assembly components can help OEMs and
consumer electronics manufacturers reduce inventory risk and, as a result, inventory
holding costs. Nokia, for example, has built manufacturing and assembly facilities near
its suppliers. The company's capacity planning in the unit assembly is adaptable and
flexible in the case of excess capacity.
As Nokia has demonstrated, excess capacity, especially when combined with flexibility,
can reduce finished goods inventory levels, inventory holding costs, and the risk of
product obsolescence, as Nokia has demonstrated. This reduces component inventory
levels, and manufacturing companies can use Just-in-Time concepts in partnership with
suppliers (JIT). Another important stage is the use of Enterprise Resource Planning
(ERP) software, which can examine both the cost reduction in inventory holding charges
as well as the risks associated with it. If a company's inventory manager sees that
inventory has been sitting idle for 60 days with no action taken, ERP systems like SAP
send an alert to the inventory manager, supporting management in making further
inventory planning decisions based on real-time data.

Inventory policies that support overall company’s financial objectives and the
performance of the company
Inventory policies should be in line with the company's goals. The company's finances
may be jeopardized by excess inventory. On the other hand, inventory strategies that
include deferring production until orders are received, having a single platform for many
product lines, and establishing a manufacturing site with supplier co-location can help a
company's financial performance and supply chain efficiency. The following section
discusses how inventory constraints affect a company's overall financial goals and
performance indicators:
a) Information can be shared and real-time material availability can be obtained by
combining the facilities of electronics manufacturers and suppliers. Both the retailer and
the manufacturing partners must provide information about their expansion and
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promotion plans well in advance of their adoption and execution in order to support
sustainability. This section describes the business aspects and aims of the promotion,
such as price reduction, display, feature, and coupon, to name a few.
b) The consumer electronics industry has been completely transformed into a
competitive global business sector as a result of developing and continuous
improvement-based innovation and dynamic market dynamics.
Another important stage is the use of Enterprise Resource Planning (ERP) software,
which can examine both the cost reduction in inventory holding charges as well as the
risks associated with it.

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Conclusion
As a result of growing and continual improvement-based innovation and dynamic
market dynamics, the consumer electronics sector has become a globally competitive
industry and a cornerstone of the global economy. This market is defined and
influenced by a number of factors, including mass customization, technological
advancements, gradual segmentation shrinkage, rapidly shrinking product life cycles,
and product inventory depreciation.

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