In this assignment, there will be two manufacturing companies’ analysing. On the one hand, it is Taiwan Semiconductor Manufacturing Company (TSMC), which produces semiconductors. On the other hand, 3M-Minnesota Mining and Manufacturing is known for its diversity of production possibilities. The most important parts of the analysis are their inventory characteristics and the goods and services design concepts they invented due to the most significant impact of both factors on the company’s revenue.
Both companies have a great diversity of their inventories on the stocks. For example, TSMC has raw wafers, chemicals, photoresist, and gases in their inventory structure. All these materials take part in producing semiconductors for a wide variety of industries, such as car-producing and mobile telephones producing. Moreover, the semiconductors themselves are the object of inventory, and it was not a good sign of considerable inventories of the company. However, this year it was the crucial note because the corporation increased its days payable from 10 to 83 days owing to the deficit of semiconductors in the world.
On the other hand, 3M has a much more sophisticated inventory structure. For instance, there are no direct 3M inventories; they are sorted by considerable industries, such as automotive, commercial solutions, consumer markets, design and construction, electronics, energy, government, health care, manufacturing, safety, and transportation. In these industries, many products are involved in inventory structure. Tools and equipment, tapes, advanced materials, automotive parts & hardware — examples of concrete objects in the 3M’s diversified inventory structure. To sum up, TSMC has an excellent inventory structure, but it is not such significant as 3M’s one. However, this factor is caused by the company industry and specialization.
Goods and Services Design Concept
TSMC is known for its excellent designing possibility. Undoubtedly, in some way, this is caused by the clients’ brand image, which is associated with a perfect design of their goods. For instance, TSMC is Apple’s long-term processor supplier, and the last one they made is considered one of the greatest in the world by considering its power possibilities and the design and size. Moreover, the dimension of the product and its model is so crucial because they are the most manufacturer’s influential tools.
In contrast, 3M has made the design power of the products by itself. This company is known for its R&D expenses and its efficiency during the whole period of functionality. To be more specific, it is crucial to consider the most recognizable 3M’s products: scotch tape, post-it notes, and medical respirator. Even if the markets are full of such products, 3M is an absolute leader in developing a wide economic moat, enabling it to create a higher markup. This is because 3M is a genuine in producing catch-eye and significantly comfortable in the process of using products. Overall, both companies are known for their designing possibilities and efficiency, which creates an optional competitive advantage within the industry.
Inventory and Role in Performance
Inventory management plays a pivotal role in the overall company’s performance due to the economic theory of supply and demand power and the liquidity of resources at some moment. TSMC is considered to have unstable inventories, so that the most critical factor for the company’s management is the right demand conformity. Following this, inventories should be significantly increased before the boom of need. However, this year, when the significant rise of need occurred, TSMC was experiencing tough times because of the substantial deficit of raw materials and inventories to meet such demand. TSMC had a significant decrease in customer satisfaction and operational efficiency, but the overall result was favorable.
As in the past, the customers will be delighted with the TSMC’s performance as a supplier because they will increase the investments in this sphere so that the company’s management will improve its possibility to make products exactly when they are needed. In this case, 3M has a competitive advantage due to the effective inventory management strategies. First and foremost, they have many licenses and other documents, that force supplier and other production chain participants to keep up with deadlines. After that, they have a sophisticated transporting network that enables managing the inventory located in real-time. Following this, the company accomplished producing more than 50 million of its widely known respirators per month (3M). The products’ design, efficiency, and brand image force buyers to choose 3M in most cases, positively affecting consumer satisfaction and operational efficiency.
Layouts for Each Company
Firstly, TSMC significantly developed its occupational health and safety by analyzing capabilities hazards in laboratories. This helped to decrease the amount of risk for employees and the company during manufacturing and researching ICs. Moreover, the corporation aimed to make the quality culture in the company’s local supply chain, which increased its brand image and forced suppliers to meet the management’s demand (TSMC, b).
On the other hand, the most legendary 3M layouts are the massive increase in automation process and decreased costs of goods sold (Trefis Team, Great Speculations). Firstly, the automation increase aimed the workers to give more qualitative service while receiving the same salary. Secondly, the large economization was provided when a company unprecedentedly increased its scales of production, which decreased the COGS, and increased a free space for markups at the same time.
Metrics Used in Evaluating Performance
There are two principal metrics in evaluating TSMC’s performance, which relate to quality capability improvement strategy. First, the average ESH audit score for local suppliers should be analyzed because all the suppliers participate in semiconductors manufacturing. Nowadays, the rate is 78%, but the plan is to increase it to 100% in the future. Moreover, they trace the status of sustainability management in supply chains (TSMC, a). In 2020, they accomplished to reach the rate of completion to 100%.
On the other hand, 3M uses two of the most exciting metrics. First is the internal dashboard assigns service data—one of the most critical metrics in 3M. It evaluates the equality of focus on providing service and taking measures to develop shareholder equity (Bowman). The other important metric in 3M is the customer survey database, which traces the level of satisfaction in every stage of manufacturing (Bowman). This enables 3M to compare the suppliers and control their efficiency.
Despite the companies’ efficiency, some possible approaches improve the overall corporations’ ability to gain stable revenue. TSMC should take care of the business cycles and the company’s possibilities to satisfy the demand. This may be accomplished by constantly negotiating customer’s plans and tracing the industries’ tendencies. On the other hand, TSMC should increase its situation with suppliers by taking an example from 3M: more licenses, documents, and requirements will increase the overall efficiency. Turning to 3M, a corporation needs to continue its practical functionality in all specializing industries. However, to increase productivity, the company’s management should invest more resources in R&D processes because of the market’s competitiveness nowadays.
Finally, both manufacturing companies introduced effectiveness in all the analyzed aspects. While TSMC is a cutting-edge company with a cyclical business strategy, 3M is considered a stable corporation in improving its performance. Companies have many similarities in design effectiveness, even though 3M is working with its products and TSMC produces most of the production to the other companies. Moreover, they both are leaders in the industries in producing and improving their efficiency evaluation metrics and establishing layouts within the organization.
- Trefis Team, Great Speculations. (2018). How Has 3M Managed To Consistently Improve Its Margins Over The Past Five Years?. Web.
- Robert J. Bowman. (2017). For 3M, Technology Was the Key to a New Supply-Chain Mindset. Web.
- TSMC, a. (2019). Corporate Social Responsibility Report. Web.
- TSMC, b. (2020). Strategies, Targets & Achievements. Web.
- 3M. Supply Chain: Industries and Products. n. d. Web.