Apple’s Global Coordination
Explain about the Report for Global Supply Chain Management at Apple.
The trio that included Steve Jobs, Ronald Wayne, and Steve Wozniak in 1976 created Apple, Inc. The primary business at the time of its founding was to sell the Apple I PC, a computer assembled and built by the ideologies of the three, though Steve Wozniak was the major contributor (Blanchard, 2010). Markedly, the business was launched into a market that was already largely dominated by Microsoft, an enterprise that was founded by Bill Gates. Through to the 80s, the enterprise enjoyed relative success especially with the inventions of the Apple II and the Macintosh computers (Ray, 2010). However, in the last decade of the previous millennium, the enterprise lost its productivity as its strategy for a low-cost consumer model compromised its abilities to sustain the productions and profitable sales of the expensive gadgets (Wisner, Tan, & Leong, 2016). According to D’heur (2015), the company was suffering from the loss of Steve Jobs who had left to found NeXT. These factors define the company’s foundation.
Apple’s path to global growth, high profitability, and dominion over its rivals started in 1997 when Steve Jobs returned (Kotabe & Mol, 2005). The innovative ideologies and the company’s plunge into the phone market, as were engineered by Jobs, catapulted the enterprise to unimaginable realms as it overtook established companies like Sony, Samsung, and even (Bach, 2007). Though most persons, critics, and researchers have always commended the company’s use of innovation as its primary motivator of success, it is significant to note that its global positioning was enhanced by its application of productive Global Supply Chain Management precepts (Kersten & Hasin, 2010). One of the most notable aspects of the company’s novel global supply practices is the manner in which it has turned its launching of stores into something that bears the semblance of a ‘cult’. Most of the clients sacrifice comfort, time, and money to ensure that they are initiated as the persons who fast bought from the enterprise’s new and ever-expanding stores (Lüsted, 2012). This critical analysis covers the definitive elements in the company’s Global Supply Chain Management (Drake & Business Expert Press, 2012).
For companies, global growth and development is a primary key to success. However, a daunting task can threaten to negate a company’s productivity. Among the challenges is the fact that production costs vary in nations (Ray, 2010). As such, a nation that seeks to sell its products on a global scale may lose profitability if it is attempting to sell products produced at high costs in a market that require low costs. For instance, Apple would go at a loss if it attempts to compete against other companies in the markets of South Africa if its produces its products using American labor and resources because the standards of living in the US are high, a factor that makes labor more expensive (D’heur, 2015). Other than that, various trading regulations affect importing companies in other countries. For instance, they may levy high taxes on imports (Wisner, Tan, & Leong, 2016). This may consequently affect the cost of the imports. To overcome such challenges, Apple applied various mechanics, which include:
- Offshoring
Location-Specific Advantages
Apple moved to create and establish assemblies and processing companies in nations with cheap labor and resources to trade successfully on the markets that demand for low costs. Such countries include China in which it operates an assembly and processing plant and India in which opened a Development Office in 2016 (Wisner, Tan, & Leong, 2016). Through offshoring, the company has managed to exploit the cheap labor of the nations. Besides, it has managed to eliminate exportation costs as accessing the rest of the Asian market and even Africa from China is relatively cheap and easier. This factor has helped the company to maximize profitability and even to employ marketing strategies such as low costs (Ray, 2010). Notably, China is also one of the company’s fastest growing and most profitable markets. Creating a base in China was, therefore, important in creating an identity with the locals (Blanchard, 2010). This has consequently served the company in gaining a competitive advantage over companies like Samsung that are based in Japan. Essentially, offshoring has enabled the company to utilize more resources for the expansion of its supply chains (Boyer & Verma, 2010).
Location-Specific Advantages
Apple has also bolstered its supply chain precepts by targeting specific locations. According to Kersten and Hasin (2010), the company clearly targets malls and structures that would attract many people, or that already have scouts visiting through on daily on a basis. The offshoring strategy also bolsters the realization of this objective. This approach ensures that it is based on the markets either so that it understands its advantages and disadvantages, or that it can compensate for the costs of acquiring the specific locations by elimination production and transportation costs as well as taxation levies (Ray, 2010). Though the company’s loyal client base is defined by the notoriety to spend money on the business’s products, the ease of access to the stores, as is always intended by the company, often makes it easier to use more money on the company’s products (D’heur, 2015).
As of January 2016, Apple, Inc. was hoarding volumes of cash ($200 million) that was not only the largest in the history of industrialization in the US, but that also served in attracting the attention of the Feds who doubted if the company was paying its taxes (Wisner, Tan, & Leong, 2016). The ongoing debate among the company’s shareholders was whether to release that money in the form of dividends or whether to continue in the already established tradition of investing in research and development (Manzini, 2012). In the end, the decision was heavily inclined on investing in research and development to maintain the dominion that the enterprise has already established over its rivals (Ray, 2010).
Investment in Research and Development
Among the most notable products that the enterprise has created by investing in research and development since 2007, include the iPhone phone series, the iPods, the MacBook Air, and the iPads. Ideally, its use of innovation and its successes in the production of novel and superior products have led to its ranking as the most innovative company (D’heur, 2015). It has also improved its PC technology, and its Mac computers are rated as some of the best in the market. Such improvements and innovation were realized through the extensive funding of the projects in their primary stages, then subsequent investments in the marketing and sales stages. According to Boyer and Verma (2010), these investments have been justified as they position the company to overcome the marketing myopia that considers businesses as the sale of products. Essentially, by being innovative, Apple has managed to address the clients’ needs by addressing their problems. That is why it has continually maintained its dominion (Shah, 2009).
However, the company has not only been researching on products. Bidgoli (2010) noted that it is also credited for the use of some of the most successful marketing and growth strategies. An example is the earlier noted strategy in which it acquires prime trading spots to enhance its outreach. It has also used finances to fund the research on the use of a tradition that makes clients elated to participate in its launching ceremonies. Notably, during launching, the company’s stores always have practices such as countdowns, cheering, and competition on who becomes the first client to enter and make a purchase (Waters & Chartered Institute of Logistics and Transport, 2007). These practices always attract clients globally, and some even spend days without shelter as they sleep at the stores’ doorsteps hoping to be the first to enter when it is launched (Wisner, Tan, & Leong, 2016).
Apple also recognizes that it cannot dominate in every field through innovation. As such, it always allocates funds for the acquisition of innovative enterprises that can further its growth and dominion in various fields (Shah, 2009). A notable instance is the acquisition of the SMS, a company that was innovatively producing headphones and other musical gadgets. The company’s acquisition helped Apple to extend its dominion in the markets as its clients considered that it offers a combination of superior phone and headphone technology (D’heur, 2015). This is not the only successful instance of the company also acquired the services of the Kevin Lynch, an innovative individual who was tasked to the idea of the creation of a gadget that would ‘take people off their phones.’ From this, there resulted in the creation of the Apple Watch which, as of today, is produced and marketed by Apple (Ray, 2010). Essentially, investments in these accords also promote diversification that consequently facilitates the realization of stability. This is a proposition based on the fact that Apple has always benefited from the success sales of particular products when other products’ sales have declined (Kersten & Hasin, 2010).
Based on its large markets, Apple is one of the enterprises with the largest supply chains. Notably, it has to reach out to markets in the US, Latin America, Europe, and Asia (Skjott-Larsen & Schary, 2007). It has also extended to Africa. Such large supply chains, as Blanchard (2010) opined, always have numerous risks that can affect productivity and profitability. Such threats may be defined in the challenges that come with the shifts in geographic terrains, ethical misconducts, natural disasters, changing regulations, and diversity in the revenue base among others. Ideally, the bigger the supply chain, the more the risks (Mentzer, Myers, & Stank, 2007). That factor defines the need for efficient risk mitigation strategies. Among the risk, mitigation strategies employed by Apple include:
- Supply Chain Assessments
The enterprise continually assesses its supply chains. Such assessments are often targeted at identifying lapses, fortification measures, and possible improvements to evaluate the performances of its supply chains and to ensure that they are not faced with any significant risks, t (D’heur, 2015). The assessments are also targeted at the testing of the supply chain’s ability to withstand crises or any unexpected demands that would call for increased supplies. Through assessments, the enterprise has managed to ensure that it is positioned to avoid or overcome risk factors that may hamper its operations (Boyer & Verma, 2010).
- Supply Chain Segmentation
Apple, Inc. does not supply its products in single units. Rather, it relies on the subdivision of its supply chains to ensure that every product is supplied independently (Blanchard, 2010). For instance, the iPods are supplied in consignments/segments that are different from the other segments. Different measures are used in overseeing the supply of the different products (D’heur, 2015). This is a measure that ensures that the company can limit the risks that it faces in its supply chains by ensuring that not only products that are supplied are affected in entirety in cases that there are eminent risks (Shah, 2009).
III. Establishment of Risk Indicators
Apple has established a list of risk indicators that it uses to note when it is likely to be affected by risks to strengthen its risk mitigation strategies, (Bidgoli, 2010). For instance, it uses reduced profitability to note that the supply chain may not be performing as is required. As such, when addressing reduced profitability, it also assesses its supply chains to ensure that they are performing as they should be and that they are not facing any enigmas (Boyer & Verma, 2010). Other than that, the enterprise uses client complaints as pointers to the performances of the supply chain. This is because goods that are packed at the various assemblies are always tested for functionality and effectiveness (O’Grady, 2009). That implies malfunctions that may result in complaints or that may be identified by the employees may be indicators that the supply chain was affected either by a disaster or by mistakes during the supply processes (Wisner, Tan, & Leong, 2016).
- Regulations
Apple has also established regulations to govern its supply chain operatives (Shah, 2009). The regulations not only set out the practices that should be used in enhancing the organization’s ability to effectively supply its global stores, but also outline the limitations to which the operations should be subjected and the alternative actions that should be taken in cases of crises (Bidgoli, 2010). For instance, if it fails to use sea transport to deliver products from one continent or country to another, it has measures that would enhance the use of air transport without significantly affecting the sales (Kersten & Hasin, 2010).
Apple uses advanced technology to meet various objectives that range from enhanced production to strategic planning and development. Among the most significant advanced technologies that the enterprise uses are the Internet of Things, 3D Printing, and Big Data Analytics (D’heur, 2015).
- Internet of Things
Internet of Things (IoT) is descriptive of the network that is often constructed by enterprises to link their machinery, physical devices, automobiles, structures, and software. The IoT creates a podium from which an enterprise can monitor and control their resources. According to Shah (2009), its use should enhance organization and resource conservation. IoT should also enhance communication and performances especially as factors that affect the vital aspects are easily identified and addressed (Giermanski, 2013).
Other than that, the IoT positions an enterprise to fortify the performances of its resources by transforming them into a single unit (Boyer & Verma, 2010). These aspects define the reasons for which Apple values its use. Through IoT, Apple has managed to improve its operations by improving the efficacy of its resources and the measures that are used in monitoring their performances (Blanchard, 2010). As a result, it has been able to ensure that it can enhance its production processes (Mangan, Lalwani, & Butcher, 2008). As was noted in the 2015 CES Seminar in Las Vegas, Apple proved that it is one of the enterprises with the most effective IoTs. That factor highlights that it has been able to accrue benefits of the IoT in ways that have not been realized by its competitors.
- 3D Printing
Though 3D printing has been in use for a long time, Apple invested in research to improve its application. According to Wisner, Tan, and Leong (2016), this resulted in the creation of the color 3D printing. This has even resulted into a duel, as there are enterprises that feel that Apple should not patent the technology as it has already filed for the patent. Apple’s use of 3D printing has been significant in the development of molds for its model projects. This is a factor that has eased the realization of the objectives if its projects (Horch, 2009; Kouvelis, & Su, 2007).
III. Big Data Analytics
Big Data Analytics is the examination of large data sets so at to uncover the correlations and hidden patterns that can help in the identification of the clients’ preferences and the market trends (Shah, 2009). These can then be used for the development of mechanics that position an enterprise to strategize according to the revelations that have been made in the analytics. At Apple, Big Data Analytics has been at the center of its development. According to D’heur (2015), the enterprise has been using the data analytics to innovate technologies and products that fit the clients’ needs. Markedly, its successful use of the methodology has ensured that it can perform regardless of the kind of competition that defines the market (Flynn, Morita, & Machuca, 2011). For instance, the development of the iPod was in light with the clients’ needs to have a better system that would replace the older walkmans, which were innovated by Sony but proved inefficient at various levels (Boyer & Verma, 2010). Other than that, it developed the iPhone to answer to the demands for a smartphone technology that would position users to access multiple platforms and use various features (Kersten & Hasin, 2010; Horch, 2009).
Conclusion
Apple’s positioning through the use of technology, innovation, and management has served in ensuring that it can sustain the demands of its large supply chain (Wisner, Tan, & Leong, 2016; Shah, 2009). Considering that it is one of the enterprises with the largest markets across the world, its supply chain is also one of the largest, a factor that demands the use of various mechanics to uphold and fortify productivity. Furthermore, the enterprise’s supply chain is always faced with various risks (D’heur, 2015). To ensure that it mitigates the risks, it applies the precepts that define assessments of supply chains, segmentation, and the establishment of risk indicators to ensure that it identifies eminent risks and the appropriate fortification measures that would guarantee continued positive performances (Eyob & Tetteh, 2012; Hult, Closs, & Frayer, 2014). Apple’s continued domination of the markets in which operates is also anchored by its offshoring tactics that ensure that it can exploit the economic and strategic advantages of using cheaper labor in nations such as India and China. The combination of these factors has ensured continued growth for the company as, as Kersten and Hasin (2010) noted, it continues to grow despite the challenges that define the market.
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