Apple's Global Supply Chain

Global Supply Chain Management [Christos Papanagnou]

[Dilipsinh Jadeja] | [International Business] | @00509412]

Contents

1. Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .03 2. Apple's Global Supply Chain. Chain. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Characteristics. Characteristics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Barriers Barriers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Integration and Collaboration Collaboration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Advance Technology used by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Introduction:

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It is nearly 30 years since the term "Supply Chain Management" first appeared. Since then there has been a revolution has been in the way that organisations view their upstream supply process and their downstream routes to marketplace. marketplace. Still there are major gaps between the philosophy and the real scenario of supply chain management management but there is no doubt that it is an important essential in most compan companies ies today (Mangan et al., 2002). Global Supply Chain is a network which comprises a firm's relations with other  business units like raw material material suppliers, financial, financial, manufacturing manufacturing faculty, sales sales and market, market, logistics and other units which takes part in flow of materials. However, inputs can be in different modes like data or information, finances, raw inventory and services regarding materials. Inputs in supply chain continuously flows around whole network in forward and reverse flow from the original producer to fi nal customer to increase profitability through efficiencies and utmost the customer satisfaction.

This report contents how Gartner's top ranked supply chain since 2007 and tech giant company Apple leads their sectors and build supply chains that are closely aligned with their business objectives.

Apple's Global Supply Chain Characteristics: One of the significant changes in Apple's supply chain management management is to focus was  primarily on cost cost reduction and is now appear that, that, properly managed, managed, these these ideas, can can deliver to enhanced enhanced consumer consumer delight.

(Source: - SlideShare)

There are two flows of Global supply chain. One is Information flow and other is Material flow. Information flow comes from the customer to manufactu manufacturer rer and material flow goes from manufacturer to customer. Apple works with its strategica strategicall global supply chain and its characterised as below1. Asset Management: -

Apple's essential character in global supply chain is the asset management. Tim Cook's (Apple's CEO) doctrine was from the beginning is to slash inventory, decrease the number of warehouses and let suppliers compete with each other. Thus, Apple's responsibilities towards production minimizes and it can

emphasis focus upon other flows of supply chain. In 2012, Apple Inc. was said to turn inventory every Five days, Half of turnover in compare to other business organizations (Clara Lu,2013).

2.

Information Management Management and Continuous Data Analysis: Data analysis is process which determines customers' customers' response and suppliers' details.

Apple collects vast amount of information from 'end-to-end' sources and it helps company to its supply chain to meet the customer's requirement and reduced the cost (Merc.e.u-tokyo.ac.jp, 2017) . 1. Understanding demand and supply requiremen requirements. ts. 2. Analyzing cost 3. Achieve operational excellence 4. Improving decision making 5. Forecasting chain supply 6.maintain sustainable inventory

3. Procureme Procurement: nt: -

Procurement (Apple.com,2017) (Apple.com,2017) is  is the key aspect for each company to represent itself in front of its suppliers, customers and stake holders. It's always been a mojo for Apple to  procure delight to customers and suppliers through its excellence. Apple' Inc stated in its website that the goal is to obtain stellar products and services within short timeframes, at a reduced cost and in a way, that values its customers and shareholders. Apple being the largest producers of electronic gadgets has its flagship supplier Foxconn, a Taiwanese company, is one of its strategic supply partners that churn out 10,000 of Apple's  products every day. It is very important that relationship is mutually beneficial. It is a fine example of  procurement playing a lead role in supply chains. chains.

4. Supply chain Planning: -

Supply chain planning contains all of the information regarding all departments, flow of materials and data, research rese arch and analysis regarding the future, present and the past products, analyzing cost and scopes of respective work-forces in supply chain of Apple.

It also concludes below components as well, Customer Focus: Customer focus is the main character of supply chain and Apple invest more time to provide customer-oriented product, gives after sale services and collect feedbacks. fe edbacks. That is the reason Apple has the most loyal customers in its market and vice versa. Order Processing: Order processing shows how customers wants our products and how company building the product. It is the method of making the product customer friendly with efficient ti me and effort. Sales Forecasting: Sales forecasting enables business organisation to interpret the demand and which particular type of product customer wants. Unlike others, Apple launches its devices once in a year for enabling company to find accuracy of customer's demand.

5. Supply Chain Strategy: -

Supply chain strategy comprises the way of dealing the things, what would be the company'ss approach in certain levels and building some criteria for being responsive company' r esponsive against the undesirable situation.

6. Logistic management and reliable sources: Global supply chain can only complete after logistic management. It shows how reliable suppliers company has and how company maintains the relationships with all of its transport and logistic modes. Apple's key characteristics characteristics of supply chain is its trusted suppliers across the globe. Apple r esearche esearchess and designs their product in USA but for resourcing it goes abroad in many countries and for that Apple has collaborated with its trustworthy suppliers and uses prepaid facilities to negotiate raw materials, pricing terms, and guarantee high volumes of production. It also helps Apple to maintain competitive market for its - competitors (Aicd.companydirectors.co (Aicd.compa nydirectors.com.au,2015). m.au,2015).

Barriers: -

Barriers in forms, not in levels:  - There are many factors which reduces the Apple's global supply chain in various forms. It can be distinguished in each level but as Apple is focusing on Designing and Developing product,  below barriers described described in particular form which is affecting affecting Apple's global supply supply chain.

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Supplier's Risk: Suppliers' Risk is a major concern for Apple as it does not manufac manufacture ture its own

 products. Apple's Apple's key product iPhone, iPhone, which is having more than a half of company's company's total revenue, manufacture manufacturess in China. This is big risk to rely upon other suppliers and also it resulted into overall performance performance of the Apple Inc.

(Slideshare.net, 2017). 

Trends: Trends has a huge influence on every leading incorporations' supply chain and so it has

on Apple. New innovations lead to divert consumers and suppliers to other way.

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Competitiveness: Apple is lone device maker of its i ts own operating system and other major brands like Samsung,

Sony, Google and Nokia uses Android operating system. It’s reasonable that Apple has its own monopoly in  products and designs designs with standard standard rate iOS products products but customers customers also prefers prefers cheap cheap rate gadgets. gadgets. That is the reason competitors are battling it out in medium range gadgets gadgets

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Geographicall Environme Geographica Environment: nt: -

Every country is following its own traditions and for that particular r eason Apple needs to adapt countries' culture. One of the mai n service Apple provides in its product is Facetime and its video calling facilities that allows apple users to do video calling but i n UAE it is disabled.FaceTime disabled.FaceTime is a data-based service that would, the carriers argue, reduce their revenues. Both Du and Etisalat prohibit users from calling via VoIP services such as viber and WhatsApp. This includes FaceTime FaceTime which  which is disabled on all iPhones bought in the UAE UAE in  in the software itself. It reduces customer's interest for not availing all the services.

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Language Barrier: it is difficult to deal with different languages in different countries. Language barrier barrier is

major issue to interact with the suppliers and customers and it affects all the companies for not responding in JIT approach.

Challenges: -

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Sustainability: -

Sustainability means a supply chain who maintain the three key factors which is Social, Environmental and Economical. Being a largest company on its sector, Apple has to focus these factors for future generations and eco-friendly environment and also it has to maintain its economic value.

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Transparency: -

Few supply chains are scrutinized quite like Apple’s. As the technology obtained from some Asian suppliers, a new profession has emerged in a supply chain analyst, whereas industry analysts of the past previous scoured quarterly earnings, now they delve deep into the opaque world of supply chains (Forbes.com, 2017).

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Globalisation:

Globalization comprises change in politics, economics, social and technology around the world. It does affect Apple Inc. and it is beyond its control to manage it but to adjust. There is no doubt apple is globally accepted by their loyal customers but in some countries people prefers cheaper  products apart from standard and luxurious product. product. If US's relations with another county is not good then it directly affects the demand of united state of America's products. Tax and Tariffs might be the challenge for the company to deal with as varies country by country.

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Competitors:

Competitors(slideshare.net,2015) might discover better supply chain than Apple's. Japanese giant, Sony is a key competitor which is coll aborated with Apple's key supplier, Foxconn and competitors like Sony may be challenge for Apple. Other Information Technology giants like Google, Samsung and Microsoft is top contender in customer's list apart from Apple's product. There is no other different thing or technology which is in Apple's devices and not in competitors' devices. However, Apple's competitors have low price gadgets than Apple's iPhones, MacBook and iPads.

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INTEGRATION OF INTER ORGANIZATIONAL RELATIONSHIPS REINFORCEMENT : Definition of Supply Chain Integrat Integration(SCI): ion(SCI): -

SCI is a term that concretize different communications channels and knots with a supply networks. It is the alignment and interl inking of organisational process and it should not be mystified with collaboration. Collaboration means a relationship between supply chain partners grown over a business duration. Collaboration is not possible without integration but Integration is possib le in the absence of collaboration (Mangan et al., 2002).

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Internal integration: -

Above Graphs suggests (Merc.e.u-tokyo.ac.jp.,2015) (Merc.e.u-tokyo.ac.jp.,2015) how Apple take care of its privacy privac y through highly secured internal supply chain integration. It is customer -centred chain that inspects the market needs and then further processes regarding product's designing.it also responds new customer's hidden demand and requirements. planning is starts after researching the marketing, sales department and maintenance service department's information. All of apple's departments are virtually integrated so perfect product will be the outcome of its private process. After the visualization of design information, confirmed design has been done and its ready for the external collaborative suppliers. Internal integration processes of Apple enable:

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(1) Frontend Development: - deriving product concept; (2) Design information by Product Design visualizing; (3) Design information by Procurement and Manufacturing M anufacturing through media choices; (4) Design information through appealing customers by Sales and Marketing; (5) maintenance activities managing design information as process routines and (6) it also helps to supervise maintenance activities as routine process. 

externall supply chain. Apple internal integration supply chain then linked with externa

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Apple's Collaboration with Global Organisations: -

Sharing information beyond the firm's boundaries can be critical. Therefore, it is very important for Apple Inc. to select their suppliers and business partners very cautiously. It sounds strange but the fact is Apple does not acquire any manufacturing plants of iPhones in its country of origin America. Apple outsources its product in China.Apple esta blish alliance with the global electronics manufacturing services (EMS) leading firm, Foxconn.Apple Inc., which has maintained No.1  position in achieving supply chain effectiveness. It is the number one customer of Foxconn. Through Foxconn's effective logistical configurations, Apple fascinated the worldwide customers by its innovative  products like iPhones and iPads. There are three main reasons behind this strategic alliance

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(Umguiangacollege.files.wordpress.com, 2017).

1.Cost - Apple avail cost advantage through minimising administrative, maintenance and inventor y costs 2.Manufacturing - Apple can easily focus on demand fluctuations and changing their requirements through setting aside production 3.Responsiveness -manufacturing locations are easy to reach thei r customers. Where EMS plays crucial part for essential supply chain in emerging markets.

Multiple Global Suppliers: -

(Source: - Internet)

Apple secured its supply chain by making multiple alliances with each products' components so if one supplier, by any means, stopped the production or the supplying of components company can rely on the other one. Apart from competitiveness Apple managed to collaborate with other IT organizations like Microsoft, Samsung, LG, Toshiba and Intel. Below tables shows how Apple collaborated with its rivals and reinforced integrated global supply chain for components of iPad 2 (slideshare.net,2015)

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Advanced Technology utilised by Apple within the sector to maintain the its competitive advantage: -

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Data Analytics:

Apple Inc., Being the most profitable technology company, found itself using Big Data Analytics for staying the leading form the front. It helps Apple to produce systems that customers would like to use. Apple and its competitors entered in t he race with strong stride. Apple (Use of Technology, 2017) already 2017)  already announced partnership with monitoring and sharing partners like IBM and Beats. Which helps Apple to builds the Applications which provides health-related apps, air travels apps and brings the analytical potentials to users of its devices in those fields.

Apple continuously tries to accelerate Data Analytics process in one way or another. Call it fancy, but reason behind launching an Apple Watch seems to be designed for wearing gadgets al l day long and collect multiple data, with its sensors.

Apple follows its traditional strength- product design and its unforthcoming part is Big Data. With collective information, Apple determines that where, when and how iPhones, iPads, MacBooks and now Apple Watches are used. Thus, Apple uses it in a fair way to increase customer satisfactions and what users are expecting from the devices they are using (Use of Technology, 2017).

One of the most popular feature of Apple devices is Siri. It is just synonym s ynonym of Big Data Analytics as the voice captured b y the device is uploaded to iClouds platforms and Apple stores this data for two years and tagged it with unique anonymous anonymous indicator. analytics performer then compares the captured voice with millions of other voices t o recognize individual voice pattern to ensuring user  privacy. Cloud Storage:

Apple (Use of Technology, 2017) also 2017) also give users a specified iCloud storage for each device which enables users to store data online for multipurpose use. This cloud-based storage helps Apple to build healthy relationships with its customers. All that glitters are not gold, Apple dominated the music library by built iTunes library to knows the listening taste of users but it asks for monetary subscriptions and even Apple users preferred Google Music, Spotify which captures more market than Apple, as of now.

As an Information Technology giant, Apple, tends to use internet widely. Whether it is supplier's network or customer's feedback platform, Apple use it all and it’s a lot of methods as we can say 'internet of things' that connects Apple to its shareholders, customers and suppliers and st ill day  by day company growing growing its mode of connect to remains the most valuable for some time to come.

Conclusion: Above report suggests how Apple see their supply chain as a vehicle for value-added delivery and as a powerful tool for increasing competitive advantage in the m arket. Apparently storing computers is like storing milk: you don’t want it on the shelf in your warehouse for too long. Apple is very good at essentially taking devices from factories and immediately selling them to customers. Future success of its supply chain depends on how well they will manage relationship with suppliers and how far they go to innovate its product and use its mojo to attract and satisfy the users. As of now Apple is leading the supply chain market for almost a decade and it is dubbed as "King of Outsourcing". In the end it is all about customer's value proposition and how Apple is achieving efficiently and profitably .

References: 

Aicd.companydirectors.com.au. (2017). A (2017).  A case study of Apple's supply chain. chain. [online] Available at: http://aicd.companydirectors.com.au/advocacy/governance-leadership-centre/governance-driving performance/a-case-study-of-apples-supply-chain [Accessed 15 Nov. 2017].

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Apple, (2017). Apple (2017).  Apple and Procurement - Apple. Apple. [online] Available at: https://www.apple.com/procurement/ [Accessed 19 Nov. 2017].

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Lu, C. (2015). [online] Tradegecko.com. Available at:  https://www.tradegecko.com/blog/apple-hadthe-best-supply-chain-in-the-world-for-the-last-four-years-here-is-what-you-can-learn-from-it [Accessed 20 Nov. 2017].

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Merc.e.u-tokyo.ac.jp. (2015). [online] Available at: http://merc.e.uat:  http://merc.e.utokyo.ac.jp/mmrc/dp/pdf/MMRC451_2013.pdf?cv=1 [Accessed 20 Nov. 2017].

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Mangan, J., Lalwani, C., Butcher, T. and Javadpour, R. (2002). Global Logistics & Supply Chain  Management . 2nd ed. pp.47-49.

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Slideshare.net. (2017). Supply chain of Apple. Apple . [online] Available at: https://www.slideshare.net/ShankarNaren/supply-chain-of-apple-63767095?qid=0c2e2c82-d17e4f4c-8e25-32b6324b8bd1&v=&b=&from_search=1 [Accessed 19 Nov. 2017].

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Umguiangacollege.files.wordpress.com. (2017). [online] Available at: https://umguiangacollege.files.wordpress.com/2015/02/interorganizational-relationships.pdf [Accessed 20 Nov. 2017].