Global Supply Chain: Apple Inc. Essay

Question:

Discuss about the case study Global Supply Chain for Apple Inc.

Answer:

Introduction

Apple is the leading mobile company which presents all over the world. F The global supply chain has the network of relationships with internal and external partners and how these partners operate under political, economic and physical environments will be determined.

Operating function of Apple:

The company has used to enunciate sufficient production volume by having a lot of orders with the suppliers. This helps to create an impact of preventing competitors from the gaining access. Apple has advantages through outsourcing, and it has provided without risk. The outsourcing may lead to some risks in the case of a natural disaster that can cause in the international trade agreements (Agus 2011). Apple is moving towards manufacturing partners for the Apple products to minimize the risks of shortages and other vendor issues which makes the company involves in slower production. They have used GT advanced technologies in the provider for Sapphire displays (Rodrigue 2012). Apple minimizes the risk of accompanying on the company and extend the number of enterprises across the world. This makes the company relieves from production stalls and businesses fails.

The lower cost will be the advantage for the cost and number of companies compete for the further business with Apple (Bag 2016). They are broadening the companies by making iPhone 6 and Apple Watch. Apple is known for its design and innovation. The handling inventory also makes Apple led to success. According to research firms, Apple’s Supply chains has been awarded as the best supply chain in the world.

Offshoring and specific location of Apple:

The term offshoring defines that company planned to relocate for the business process from one country to another country. The company offshore the products to various nations such as China, Mexico, and India due to its lower wages and operating costs. There are several reasons beyond offshoring decisions such as low-cost labor, rapidly growing local market and global economy (Cox 2013). The decision taken from the location for the offshoring productions and manufacturing should be influenced by certain factors like transportation system, education of the local workforce and natural resources.

To rethink of offshoring, there are some aspects to be considered. They are wages, raw materials and logistics charge (Wible, Mervis, and Wigginton 2014). However, the offshoring manufacturing does not achieve cost savings in the companies. Due to the Japanese earthquake and tsunami on the global supply chain, many companies rethinking of the offshoring manufacturing (Craze, Dallari, and Melacini 2013).

Apple Supply chain process:

Apple supply chain process is the best example of the new development process in the product. The supply chain is a process of marketing, R & D and various functions which operate under the phenomenon of supply chain management. Apple acquires a license and third party business for the introduction of new product. The same process accelerates to other industries, but in Apple used to make prepayments to the suppliers to protect strategic raw materials (Fine 2013). The supply chain map can be used to define the consumptions process of large systems which makes to understand easier.

Apple Company buys raw materials from various sources and ship the products to China. From there, the assembler shipped the products to the consumers. There are some distribution channels which used to sell and buy the products and accessories. The distribution channels are retail stores, direct stores, etc. (Flynn 2010). Apple has recycling facilities.

Company’s supply chain challenges:

Apple has many problems to overcome in the process of supply chain management.

  • The company gets affected by the global economy
  • The products can distribute from competing manufacturers by the reseller
  • The inventories become exceed anticipated demand
  • The limited sources only provide some components
  • Some elements in the sufficient quantities are significant
  • They depend on logistical services rendered by outsourcing partners
  • The company induces the partners to follow a supplier code of conduct (Peck 2006).

How complex it is:

One of the most complex supply chain management are followed by Apple. For supply chain process the two major aspect to take care are inventory turnover and suppliers. The inventory turnover is the tool, which determines and evaluates how the company is utilizing its financial resources to develop sales and increase the numbers. However Apple, has no manufacturing facility nor they are treated as distributor. Apple is treated as a marketing company. The strongest part which is played by Apple is global supply chain management, which includes, maintaining relationships between the trading partners. In global supply chain process for Apple the important roles are played by the suppliers. Apple, for competent supply chain management has almost 156 key vendors across the globe (Glegor 2016).

R & D investment:

Apple has invested about $1.6 million in research and development for the production development. This year about 36 percent of revenue has been invested in the research and development. The R & D activities include share-based compensation costs, material costs and maximization in related and headcount expenses. The analyst noted that the company spending in R & D to keep continues its track well ahead of the company’s revenue growth (Qazi, and Gaudenzi 2016). Apple is creating core foundational; technologies with the help of research and development and former company might have outsourced. Apple is also investing some amount in the future products and development should carry out considerable costs.

R & D is considered as the core of the company and innovation is the part of it. Apple has spent $1.9 billion in the December quarter and $1.1 billion during the six-month span in 2014. For the development of lightning headphones, the company has spent $2.5 billion. Apple has focused on R $ D to involve in the development of more innovative products. Apple understands that the sales can be compensated by the innovation of existing products. The innovation is the core of the company which makes the customer feel wow experience when using their products with a unique style (Maltz 2012). The company put some efforts in developing the product such as ipods and iPhones. To acquire intellectual property of other business and make involvement in third-party business, the research and development can be used.

Supply chain risk and mitigation:

Most consumers are not aware of the supply chains and their significance. It is defined as the process of logistics and creating the aspects of moving the raw materials to the finished goods to customer delivery. In some circumstances, the supply chain may add value to this logistic processor may destroy it. The issues in the supply chain of Apple seemed to cut off after Tim Cook took the responsibility of operating the products and services. As he became the vice president of Apple Company, he cut off the lag from month to days (Maltz 2012).

Apple supply chains issues are under the visionary product line. There is some problem with the revolutionary products that the raw materials and inventory processes should be updated. This seemed to be unsustainable supply chains has a negative reputation and financial implications. The sustainability of supply chains has become important in all organizations. The supply chains become sustainable only if the organizations stop with meeting baseline compliance. The purchasers should follow sustainable procurement guidelines which contain expectations of suppliers.

Some limitations should be focused for critical suppliers.

  • The company should have an extensive supplier assessment in which the determination of policy, strategy and other principles should resolve sustainability issues in supply chain management. The company should check for the compliance with region specific norms and benchmarks.
  • Once the supplier sustainability performance has been dissected, the vendor and the buyer should formulate a plan to mitigate any risks to the supplier relationship whereas the collaboration with the suppliers enhance the sustainability reporting and performance.
  • In the ongoing project, the company should monitor the development of the supplier in the given organization or industry. It is significant to perform the assessments of suppliers to understand the relationship with providers in terms of operations and evaluate the risk exposure. This is used to trace out the vendor’s sustainability
  • The company should share some best sustainability practices to adopt by leading one with other suppliers. By having this practice, the company may attain a win-win situation. If the global company follows these policies in the supply chain, the firm relationship with the business supplier will be sustained (Koester 2015).

Differentiation in supply chain environments:

Apple products are not differentiated from region to region. The rise of globalization is treated as substantial growth in the global markets. In general, some companies are focused to acquire a significant market share by governments which make them enter into the world markets. The innovation and competitiveness cost may also influence on the profits. Apple moved to retail world by having sixty-five stores, so the costs also increased and maximize the efficiency. Apple is differentiated in the operating system from region to region. The product costs are differentiated and distinct from each country.

Environmental problems are also taken into the approach of Apple. These costs are included in the manufacturing of goods. The money and time spent on cleaning and cleaning operations do not add value to the product, but the impact is the amount of the cost spent on such transactions are considerable. The changes made in the risk and uncertainty of Apple products. The forecasted sales are declared when they delivered the product. This is how the product costs are differentiated. The excess inventory will adversely influence the company if the sales do not occur. By introducing the innovative product, the existing inventory will make the company retain the risk and uncertainty of the future.

Promoting the products:

Promotion is one of the techniques to attract the customer and improve the supply chain management. Different activities like road shows, installment facilities, and other related activities for pull strategies are taking place. Even though price of Apple have not touched the activities of promotion. Different offers are provided to certain segment of people who are potential buyer, through different special promotional activities at different shop point and different ways, such as accessiories and vouchers. To attract potential buyer, installments program are conducted with pointing system. For awareness of product, different road shows are been conducted at regular intervals.

In different activities, i.e push marketing strategies, to potentially useing the communication channel, different incentive program are initiated. This can maximize the utilization of communication channel. Such channel can be differentiate into different categorized such as A, B, C or can be categorized into three tiers namely golden, diamond and silver club. All three tiers have floor sales incentives. The incentive program has trained promoters to promote the product to enunciate the retail shop. It helps to gather feedback and make a better awareness.

Competitive advantage:

Mainly there are two major factors where competitive advantage should be focused. And They are cost and differentiation. In this competitive world, which made Apple stand out of such competition are for its lower cost and low wages to labor. Brand value and niche marketing strategy always keep Apple at top of mind for consumer and gain edge in this competitive market. The environment in the developed countries always act as an opportunities for their polices of open trade and new market. At the same time this also helps them to reduce product cost and supply the same product with best managed global supply chain. The growth of competitiveness and market sustainability of Apple are its investment on Research and development team, which have kept Apple to sustain well in the competitive market. Utilizing the technologies effectively has made Apple for future promotion with excellent communication and the placement of the product.

Technology used:

Apple kept both consumer and business personal in mind and kept their various technology for benefits. For competitive success, it has used big data and analytics technologies. For both consumer and business, cloud storage. For using Big Data applications R&D launched, Foundation DB, which is database architecture. To increase the market share, foundation DB is very useful as it can also be used to capture the music purchased. Foundation DB is also believed to support productivity appraisal as well movies, also helps iCloud and analytics. Apple iTune services are declined due to the popularity of streaming services and tend to be a favorite method of accessing music in online. So they planned to release a new version soon.

Apple adopts the big data and analytics technology after many rivals. However, in fact, the technology plays a vital role in the part of Apple’s future products and services. This technology found to be a regenerating model of growth that can opt to the competitors in the service markets and software. Apple proved its excellence in design and innovative products and service with the use of bug data analytics. This technology brings Apple as a world most valuable brand.

Factors consideration:

There are different for Apple, which can be considered for the opportunity in global supply chain. Political factor is one of them which acts helpful for Apple and have ahead opportunity. For Apple’s success in developed countries, political stability and improvement of free trade policies increase the opportunity. To gain opportunities in global environment Apple may use political factors and increase the performance process. The quick development of industrial countries and stable economies of developed countries are considered as an economic factor for Apple (Prasad, and Sounderpandian 2012). Apple must understand and utilize different factors such as political to exhibits the economic opportunities. To increase market share and gain growth Apple must use the global supply chain management properly. Marketing strategies are most important factor for promotion of a product for all business. In this, political instability is the leading cause of the country which affects the economy as well as demography and business culture (Gereffi, and Lee 2012). It is of high risk to understand and identify the particular country for investment for political instability.

Conclusion:

The global supply chain of Apple is the biggest assets for the company’s growth and rendering opportunities. Though the supply chain risk is found, the mitigation plan should be applied to overcome the risks. Apple uses advanced technologies to provide innovative product and services to the customers. The company may also provide better sustainability performance to the suppliers. These reasons make Apple become the best supply chain in the world.

References

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