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Apple Inc Managing A Global Supply Chain

Solution Id Length Case Author Case Publisher
2287 1017 Words (5 Pages) Fraser P. Johnson, Ken Mark Ivey Publishing : W14161
This solution includes: A Word File A Word File

The iPhone’s supply chain starts from the product development stage, which consists of various stakeholders from the industrial design team to the hardware, software, and production team. Rather than outsourcing the manufacturing process, which was the practice of Apple’s competitor Samsung, the former preferred to control the supply chain internally. Creative design and engineering processes were also managed internally. In order to streamline its supply chain processes, Apple’s products were available in a limited number of configurations, unlike its competitors. Apple procured its components from a single manufacturer and purchased suppliers’ production capacity in advance in order to counteract the issue of low stock. Forecasts for product demand were made 150 days in advance, and the information was passed on to suppliers for them to streamline their production schedules. Furthermore, Apple’s procurement team was very agile and reacted quickly to changes in forecasts, and its suppliers had to meet sudden spikes in demand no matter what the time or situation was. Therefore, due to these close relations with suppliers, Apple was able to negotiate large discounts, hence saving costs. Product assembly occurred in China, at Apple’s subcontractor Foxconn. Lastly, Apple delivered its products to stores through intermediate warehouses at UPS and Fedex, along with its own warehouse in California. 

Following questions are answered in this case study solution:

  1. Review Apple’s supply chain for its iPhone product. What differences set it apart from competitors?

  2. What are Apple’s key advantages in how it manages its supply chain operations? Support your analysis with data from the case.

  3. What are the challenges that Apple faces in the future, and what are the implications for its supply chain?

  4. As Jessica Grant, what recommendations would you make to the company’s vice-president, Phillip Duchene, and why?

  5. How does Apple’s supply chain compare with Wal-Mart’s supply chain? How are they different and how are they similar?

Case Study Questions Answers

2. What are Apple’s key advantages in how it manages its supply chain operations? Support your analysis with data from the case.

Apple’s major advantage in managing its supply chain operations was its close contact and relationships with its suppliers. As mentioned in the case, suppliers were bound to work overnight and round the clock in order to meet a sudden spike in demand. Apple ordered components in large quantities from its suppliers, meaning that Apple could negotiate its terms and ensure cost savings. Apple offered to invest in the capital equipment of its suppliers, an initiative that was rarely taken by its competitors. The second advantage that the company enjoyed in its supply chain operations was its integrated and controlled process of the end-to-end supply chain. Unlike its competitors, Apple did not outsource its manufacturing and tried to control as many parts of the supply chain as possible. Rather than having different departments and business units for each product segment, the internal team worked in a centralized manner. Lastly, Apple’s global supply chain meant that it could enjoy major cost savings in the form of cheap labor, faster operations, and its just-in-time supply chain meant that Apple did not have to hold additional inventory and thus save on inventory costs. 

3. What are the challenges that Apple faces in the future, and what are the implications for its supply chain?

One of the major challenges that Apple is likely to face in the future is increased competition. Although Apple’s product designs are unique and highly differentiated, competitors are expected to catch up and produce similar products. Secondly, Apple’s focus on research and development and innovative products means that it will price its products higher, giving room to low-cost leaders to create their market for affordable smartphones. Due to its global supply chain, it is highly likely that some of Apple’s ideas and technologies are leaked and imitated by competitors. Implications for its supply chain would be to incorporate more automated processes, both in the internal and external processes. For critical components, Apple can look towards backward integration and start manufacturing key components in order to sustain its competitive advantage. Lastly, another challenge faced by Apple maybe its reliance on labor-intensive assembly operations, especially for testing and assembly. Manually working on such tasks may not ensure high quality at all times, and Apple must alter its supply chain processes to automate such tasks by investing in new technologies.

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