IKEA supply chain

1)Inventory management Inventory management has proven to be an important part of the supply chain of any organization. This applies to both small and large companies. In particular it is a concept that improves the associated process control of a companys stock. For this research therefore an analysis of IKEA warehouse management systems and Apple will be conducted as these are exceptional manufacturing entities that have used the system. The concept is particularly important for the above manufacturers because it helped them avoid breakdowns of products and overstock problems. Many questions are often put behind leaders secrets efficient operations and effective processes associated with the IKEA supply chain. As the largest retailer of home furnishings in the world IKEA has two hundred and ninety to eight stores in thirty-seven countries worldwide. Also it is classified in a higher position as number forty and one of the most valuable brands in the world Forbes besides having achieved a record of 35 billion in sales last year. The company strongly not only impresses customers with high-quality furniture affordable but it produces but also its competitors and other organizations with which it does business worldwide. These particularly unique inventory management techniques it uses and its supply chain. The inventory of raw materials is important because it helps determine the types of furniture that would be produced by IKEA. The company has set up an appropriate system that ensures adequate visibility of raw materials thus evaluating what can be produced over a period such as a year. Work in progress meanwhile consists of furniture manufactured in the factory of IKEA. The company has set up an all products tracking system including during production for accurate monitoring of benefits and assistance in future purchases of raw materials. Design concepts IKEA products are designed to be functional and useful for the general public (Asllani et al 2014). Credit policies A lenient or strict credit policy can be followed by a company. For each potential customers credit a credit application form must be completed. The application must contain the necessary customer data supported by appropriate official documentation. This approach is vital for the company to protect itself against potential losses from bad loans. The customer must provide references from at least two other suppliers for which it has credit facilities. All team members must work together to deliver a message consistent customer on the companys credit policies. Each team member should discuss credit conditions with the client at the beginning of the business relationship. Credit analysis is the process of determining the likelihood of repayment and ultimately informed decision. The recovery policy is a process to get borrowers to pay. Yes the current policy has three factors that influence the management of business credit but it should be revised due to the increased percentage of bad loans. It tends to match the debt to provide adequate cash flow while a liberal policy is a high risk with the probability of major losses of receivables the danger of such survival of banks can be real because they are generally subject to thin capitalization and sometimes liquidity problems (Fry 1978). References Asllani A. Culler E. and Ettkin L. 2014. A simulation-based apheresis platelet inventory management model. Transfusion 54(10pt2) pp.2730-2735. Fry M. 1978. Sectoral Investment and Credit Policies. The Pakistan Development Review 17(1) pp.66-88. Regards Vivek Koriginja 2)Harsha Macherla Cash budget will estimate the projected sources and it uses the cash based on the future period. This will ensure that the budget is used towards the company operations and other activities which will give the sufficient amount of the cash which will be necessary to meet the requirements. If the company doesn’t meet this requirement then it will have to find additional sources of income. The inputs to the cash budget come from different budges in a company they are used in the cash budget which is used in finance and will split investments interest income and interest expense (Kieschnick 2018). There are two different areas in the cash budget one is Uses of cash and the other one is Sources of Cash. The Sources of Cash will have the cash beginning cash receipts and also the cash balances from the sales which come from the sale collections from accounts and also the asset sales. The Uses of the Cash section will have all the planned cash expenditures that come from the budget which are direct materials direct labor selling and administrative expense budget. This will also contain the purchases of the fixed assets and dividends (Supramono 2019). In an organization if there are any large differences in cash balances in the budget which are in the balances and are dealt with the financing where investments are made according to their needs and are indicated for them. In the same way if there are any balances that are negative in the cash budget the financing budget will show the timing and the amount of the debt or equity which are needed for these balances. There are some Cash Budget issues such as fluctuations considering the single accounting period which will make the cash shortfalls due to this the company may be closed (Agbada 2020). References: Chen C. & Kieschnick R. (2018). Bank credit and corporate working capital management. Journal of Corporate Finance 48 579-596. Nastiti P. K. Y. Atahau A. D. R. & Supramono S. (2019). Working capital management and its influence on profitability and sustainable growth. Business: Theory and Practice 20 61-68. Osuji C. C. & Agbada A. O. (2020). Imperatives of Effective Working Capital Management and Profitability in the Banking Industry in Nigeria. International Journal of Financial Research 11(2). 3)Pavani Mekala The cash conversion cycle The cash conversion cycle takes place as a metric that represents the time it requires for an organization to change the investments in inventory and multiple resources into cash flows from sales. It is also known as the Net Operating Cycle and Cash Cycle. It helps to gauge how long every means input dollar is unavailable in the manufacturing process and sales procedure before the conversion of it into the cash received. This metric helps to understand the time that a company requires to sell its inventory gather receivables and clear the payments in the absence of any penalty (Hull. 2011). According to the experts the CCC takes place as one of the measures assisting the evaluation of the competence of the functions and management of an organization. A sign of reducing or stable CCC values over different times is considered a positive indication while the increasing ones must be examined and analyzed more. The calculation of the CCC is done by following the formula given below. CCC=DIO+DSO−DPO Where DIO stands for the Days of inventory outstanding DSO stands for the Days sales outstanding And DPO stands for the Days payables outstanding. As this measurement needs the net aggregate time related to the procedures that are responsible for the cash conversion lifecycle the formula is structured as above. In the decision-making process the Cash Conversion Cycle plays a vital role. It helps the decision-makers to understand the time that is required to determine how long the business operations can last without cash to fund any purchase. It is related to the liquidity that is important for the business procedures. The Cash Conversion Cycle is important because it affects the decision-making process by persuading an organization to modify the decisions to focus on profitable products. Inventory management Inventory management takes place as the process of ing preserving and utilizing the inventory of an organization. This process consists of the administration of raw elements parts and completed products. Not only that but also it includes warehousing and processing those elements. Different organizations have complicated supply chains as well as the production procedure. They have to maintain the risks of inventory gluts and deficiencies which is a difficult process. To obtain these maintenances the organizations have created two important techniques for inventory management. They are just-in-time or JIT and materials requirement planning for MRP ( Helden & Reichard 2018). The inventory of a company is considered one of the most important assets. Every process like production and supply depends on the inventory and that is why any deficiency in an inventory of an organization can be highly detrimental. On the other hand a big inventory is the possibility of spoilage theft damage and shifts in demand. That is why inventory management is necessary for companies to make the businesses alive. Inventory management is highly efficient in the case of the decision-making process. It helps organizations to understand their customers. It is the key to a successful business. It is because every customer and their perspective are not the same. Inventory management plays a vital role to understand different aspects of different customers. Inventory management helps in problem-solving (Parkinson 2017). It helps to deal with any issues related to the inventory. It offers more efficient management and transparency over the quantity of production and sales. Inventory management is very important if an organization wants to increase the efficiency of its business. It is because most of the labor-intensive tasks can be performed with more perfection. Inventory management helps to obtain the optimal utilization of resources that ultimately leads the organizations to focus on growth.

References Hull R. (2011). Introduction to Managerial Finances special issue on capital structure. Managerial Finance 37(8).

https://doi.org/10.1108/mf.2011.00937haa.001

Parkinson A. (2017). Managerial Finance. Routledge. Van Helden J. & Reichard C. (2018). Cash or accruals for budgeting? Why some governments in Europe changed their budgeting mode and others not. OECD Journal On Budgeting 18(1) 91-113.

https://doi.org/10.1787/budget-18-5j8l804pq0g8

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