Supply and Demand Chain Management of Apple Inc
Discuss About The Global Supply Demand Chain Management.
The Apple Inc. is a global American technology company whose head offices are found in Cupertino, California. The company is involved in the designing, developing and selling computers software, consumer electronics and various international online services. The company’s computer hardware consists of the Mac personal computer, the iPhone smartphone, tablet computer, the HomePod smart speaker, the iPod portable media player, the iPad, the Apple TV digital, and the Apple Watch smart watch (Renz, & Herman, 2016). The software products offered by the company include the famous iOS and macOS operating systems, the Safari web browser, the Xcode, iTunes media player, and iWork and iLife productivity and creativity suits such as the Logic Pro and Final Cut Pro. The online services offered by the company include the iOS App Store, iTunes Store, iCloud, Apple Music and Mac App Store.
Steve Jobs, Ronald Wayne and Steve Wozniak are the individuals who founded the Apple Inc. company in the month of April in 1976 with the initial aim of selling the Wozniak’s Apple I personal computer. In January 1977 the company was incorporated as Apple Computer, Inc. and the sales of the company’s computers, the Apple II included, had a significant revenue growth and momentum. A few years later the company hired several computer designers and they established a production line with the staff they had. The company became more public in 1980 and gained instant financial success. The company has been involved in the design and production of computers with innovative and creative user interfaces for so long up to date. However, the company has experienced some problems that are caused by the limited software titles and the high price tag charged for it services and products. The power struggle between the executives of the company also became a challenge and led to the resignation of Jobs who went and started his company named neXT. In I997, Gil Amelio who was the company CEO bought neXT and Job came back to Apple and served as the CEO and initiated so many developments including the opening of retail stores for the company in 2011. Currently, the company is ranked as the largest information technology company globally and the second largest manufacturer of mobile phones following Samsung. The company has around 499 retail stores and 123,000 full-time employees operating across 22 countries.
US Trade Policy and its Implications on Apple’s Supply
The company faces competition from various large international organizations such as the Microsoft Windows which offers similar products and services in the market. The Microsoft Windows Company, for instance, offers low-priced products in the computer marketing and this led to the decrease in the sales of Apple’s personal computers. For the 2017 fiscal year, the Apple Inc. company recorded worldwide annual revenue of $229 billion. The Apple Inc company enjoys a level of brand loyalty and for several years it has been ranked as the most valuable brand in the world.
There has always been a discussion on the macroeconomic dynamics and how that affects the success of the Apple Inc. company. The Apple Supply chain management (SCM) practice has raised so many conflicting views concerning the success of the company (Dellana & West, 2016). Many people believe that the secret weapons that make the company be at the top of the world’s leaderboard include the sophisticated software systems, the extraordinary inventory control as well as the company’s supply chain model.
The company has been criticized by the American public since it has not located is operation activities in America and also about the working conditions of the Apple employees working abroad. The issues of concerns that have been brought out on the working conditions include the low pay, the 12-hour shifts for 6 days per week and the life in dormitories. The fact that the company has changed the world using its innovative consumer electronics is not just enough; Apple has to also reconstruct the American manufacturing especially to comply with the culture of having a norm of high wages and reasonable working hours. The company has been ranked to be having the best supply chain system for several years as shown in the table below.
Apple provides a perfect avenue and a framework for us to discuss the significant change occurring across the global economy in the past few years and they affect the operations of global business organizations. Several questions have been asked concerning why the manufacturing of the Apple Company is located in Asia but this has to do with the supply chain strategy of the company.
Most of the Apple Company products are assembled in large plant complexes located in China and the factory complexes are run by Foxconn. Foxconn does not only handle the production of Apple’s products but it also handles the electronics consumer product production for so many large firms participating in this sector.
The factory has a staff of 230 000 employees and most of them work in 12-hours shifts for six days per week. About a quarter of the total workforce lives in the Foxconn company barracks and a majority of the workers make less than $ 17 in a daily work shift (Fan, 2016). The Foxconn has employed around three hundred guards to man foot traffics and avoid the workers from being crushed in doorway blockages. The facility has a central kitchen that cooks 13 tons of rice and 3 tons of pork on an average daily basis (Marshall & Harrigan, 2016). The environment around the factory is very clean but the nearby teahouses are characterized by hazy air and stench of cigarettes. The Foxconn Technology assembles almost 40 percent of the consumer electronics in the world in dozens of factory complexes located in Asia, Brazil, Mexico and Eastern Europe.
Jennifer Rigoni who was the global supply-demand manager of the Apple Company once said that Foxconn can hire more than 3000 people overnight. She did not discuss her work specifics but she said, “What U.S. plant can find 3,000 people overnight and convince them to live in dorms?” The demand for the Apple products is very high and therefore the supply and demand chain strategy of the company should be able to meet this high demand for goods and services.
Most of the components used to manufacture the iPhone are assembled in Asia and the glass manufacturing of the phone revitalized a Corning factory in Kentucky as most of the glass is made there. Corning received a huge amount of orders from other companies in the electronic consumer product sector after the sales of the iPhones flourished. This led to the glass sales to be strengthened and grow to over $700 million in a year and as a result around 1000 Americans have been hired to sustain the emerging market. Most of the customers of the iPhone products are in China, Japan, Korea, and Taiwan so if the Corning could decide to make the glass in America they will have to ship by boat and this would take about 35 days. They can opt to ship by air but this will be ten times more expensive therefore the best option is the company to build the glass factories near to the assembly factories located overseas.
The existing US trade policy has a very large impact on Apple’s supply chain in terms of its suppliers with regards to pricing, materials as well as demands. The trade policy has raised some concerns on the environmental impacts as well as the social impact of the company operations. The trade policy in US gives certain standards to be met concerning the proper working conditions for employees, the number of working hours per shift, the rate of wages as well as the proper living standards. The trade policy will impact the company supply chain by increasing the price of the products due to the high operation costs, the materials required will be sufficient. Increasing the prices due to the trade policy in US will eventually lead to a reduction in the demand of goods and services the company offers. The US trade policy has made the company to opt relocating most of the operations of the company overseas due to the supply chain advantages brought by this shift.
There are several advantages that result from the company having assembly firms located abroad compared to having them locally in America. Even though the Americans have complained that this has robbed them of employment opportunities, the Apple Company considered several the supply and demand chain advantages associated with this strategy. Fast and for most, it cuts on the transportation costs and this makes the company realize its target revenue. Very high transport cost will interfere with the supply chain system of the company. Time is also an important resource and having the assembling factory next to the chief raw materials makes saves a lot of time that could have been wasted in logistics operations.
The Asian governments have dogged manufacturing and the process is highly subsidized in these countries and they also offer good exchange rates for foreign investors. The cheap labor offered in these countries also ensures that the company maximizes on its profit. The other advantage is about the flexible land use and the favorable environmental regulations in Asia. The supply of necessary skills is also found in Asia since China produces so many engineers with the basic technical proficiency.
The mentioned advantages above may have caused the Apple company to consider Asia as their assembling centre but there is also more to this. Within the global economy having several stable equilibria there is are self-reinforcing factors. The development and integration of Asia made it become very attractive for more manufacturers to relocate there. And this implies that the Job opportunities that would have been available in America are shifted to Asia by the international companies basing their operations overseas. Just reducing the production cost in America will not attract the international firms to invest there, the convenience of the entire supply chain has to be guaranteed and this is a costly enterprise for the US government.
Most of the raw materials and components required for Apple products are acquired from various suppliers than they as shipped to assembling plants in China through the air to ensure time is saved. The products are then manufactured and once they are ready they are directly shipped to the target end consumers who purchase the products in the retail stores (Christopher, 2016). Other distribution channels such as the retail stores they will store the products in the warehouse and distribute them from there. Below is a supply chain map for the company.
The company supply chain has been evolving year after year ensuring the process is streamlined to improve service and generate huge cost savings (Snell, Morris, and Bohlander, 2015). There are several factors that have made the Apple company supply chain to be successful for so many years. These factors include; supplying products that are not seasonal, extraordinary inventory management, reducing the number of sku’s to approximately 26000 to simply and develop demand forecasts that are more accurate, asking suppliers to shift next to Apple’s factories and requesting price reduction, outsourcing manufacturing that has a result of reducing the manufacturing cycle, data synchronization between the customers and the central warehouse thus promoting cost effective and efficient operations, reducing the number of warehouses to one centralized location in California and focusing on using ground breaking innovation to make great products.
The global governments’ response to the US trade policy poses several risks to the company’s supply chain, operations and the demand chain. There are several risks that can be highlighted by analyzing the supply chain of the Apple Company (Esmaeili, 2016). The challenges and risks they phase include; the company relies on its partners to adhere to supplier code of conduct, the company depends outsourcing partners to provide logistical services, man-made and natural disasters may disrupt the supply chain, the ability to obtain the crucial components in sufficient quantities, some of the custom components are rare to the rest of the industries, the inventory may exceed the anticipated demand or become obsolete, some of the re-sellers can distribute competing manufactures products and also the company can be affected by the global economy.
The supply chain of the company can be disrupted by natural calamities such as weather conditions that may delay the shipment of equipment and cause severe losses in the company (Sassen, 2016). The US trade policy that requires global business partners puts the company at risk since if any of their supplier partners does not follow the code of conduct the operations of the company are going to be affected directly (Cascio, 2018). The activities of so many partners such as the distributor and supplier pose the risk of disrupting the supply chain of the company.
Some risks such as the disruption caused by natural disasters cannot be avoided but the other man-made risks in the company supply can be mitigated and maximize the revenue of the company (Hofmann & Henke, 2014). The following recommendations can be implemented to mitigate the risks that arise in the supply chain of the company.
- Think comprehensively with supplier assessments
The performance of the suppliers is very critical to the operation of the company, therefore, Apple Inc should do a comprehensive analysis of the suppliers’ performance based on various parameters such as governance, social and environmental. The company should customize the assessment of every specific supplier based on the geography of operation and its industry (Fujita & Hamaguchi, 2016). This will mitigate the uncertainty risk that is associated with depending suppliers to meet certain obligations.
- Engage Suppliers to discuss gaps
The company should alleviate any potential risks associated with the supplier relationship by formulating a concrete plan between the buyer and the vendor (Schlegel & Trent, 2016). The company has to collaborate with the supplier and educate them on how they can improve sustainability reporting and performance.
- Keep tabs on progress
he company can mitigate the risk of exceeding inventory by monitoring the supplier development, the geography and its given industry on a continuous basis. Conducting periodic assessments of suppliers is very important since this can help the company trace the risks to the sustainability performance of a vendor.
- Spread the wealth
In order for the company to mitigate the risks associated with suppliers, Apple should educate their suppliers on the best sustainability practices the other leading supplier have adopted. Sharing the information wealth with their supplier will result into a stronger relationship with their suppliers and goodwill.
Conclusion
The activities of the Apple Company closely relate to the LB5230 theories that we learnt in class. The company applies innovative and creative thinking to addresses the various business issues so as to facilitate the success of the company. The company is operating in a collaborative environment dealing with people of different backgrounds and culture. In the day to day running of the company, the company employs technical skills such as numeracy for professional practice in business.
References
Cascio, W. (2018). Managing human resources. McGraw-Hill Education.
Christopher, M. (2016). Logistics & supply chain management. Pearson UK.
Dellana, S., & West, D. (2016). Survival analysis of supply chain financial risk. The Journal of Risk Finance, 17(2), 130-151.
Esmaeili, M., Allameh, G., & Tajvidi, T. (2016). Using game theory for analysing pricing models in closed-loop supply chain from short-and long-term perspectives. International Journal of Production Research, 54(7), 2152-2169.
Fan, D., Xia, J., Zhang, M. M., Zhu, C. J., & Li, Z. (2016). The paths of managing international human resources of emerging market multinationals: Reconciling strategic goal and control means. Human Resource Management Review, 26(4), 298-310.
Fujita, M., & Hamaguchi, N. (2016). Supply chain internationalization in East Asia: Inclusiveness and risks. Papers in Regional Science, 95(1), 81-100.
Hofmann, H., Busse, C., Bode, C., & Henke, M. (2014). Sustainability?related supply chain risks: conceptualization and management. Business Strategy and the Environment, 23(3), 160-172.
Marian, A. I. (2017). Some aspects of Supply Chain Risk Management Global Risks Map and Apple’s Approach to Risk Management. Quality-Access to Success, 18(160).
Marshall, D., McCarthy, L., McGrath, P., & Harrigan, F. (2016). What’s Your Strategy for Supply Chain Disclosure?. MIT Sloan Management Review, 57(2), 37.
Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2015). Purchasing and supply chain management. Cengage Learning.
Renz, D. O., & Herman, R. D. (Eds.). (2016). The Jossey-Bass handbook of nonprofit leadership and management. John Wiley & Sons.
Sassen, S. (2016). The global city: strategic site, new frontier. In Managing Urban Futures (pp. 89-104). Rutledge.
Schlegel, G. L., & Trent, R. J. (2016). Supply chain risk management: An emerging discipline. Crc Press.
Snell, S.A., Morris, S. and Bohlander, G.W., 2015. Managing human resources management. Nelson Education.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
