Strategic Supply Chain Management Analysis: Apple Inc. Case Study

This report provides a detailed analysis of Apple Inc.'s strategic supply chain management. It begins with an executive summary highlighting the importance of supply chain management in achieving competitive advantage. The report then delves into the strengths of Apple's supply chain, such as its single central warehouse, outsourcing strategy, manageable number of vendors, and the strategic advantage of its assembling plant in China. It also examines the variety of distribution channels employed by the company. Following this, the report discusses the weaknesses of Apple's supply chain, particularly the reliance on China for its assembling plant and over-dependence on various countries for sourcing raw materials. The report also analyzes the impact of these strengths and weaknesses on the overall organization, supported by insights from various scholars. Ultimately, the report concludes with recommendations for Apple to further enhance its strategic supply chain management. The analysis is structured around a supply chain map to provide a visual representation of Apple's supply chain activities.

Strategic Supply Chain Management 1
Strategic Supply Chain Management
Student’s Name
Course’s Title
Tutor’s Name
University’s Name
Street
Date

Strategic Supply Chain Management Alaric 2
Executive Summary
Supply chain management is a way of enhancing organizational performance as well as
securing competitive advantage because competition is nowadays among supply chains and
not between organizations. The nature of a company’s supply chain communicates
something significant to the public. The primary purpose of this paper is to analyse the
strengths and weaknesses of Apple’s supply chain using the company’s supply chain map.
More so, the impact of the strengths and weaknesses on the overall organisation are also
going to be discussed in the paper. Accordingly, the different activities portrayed on the
supply chain map have both positive and negative impacts on the organization. Using
support from various scholars it is seen that the strengths of Apple’s supply chain overweigh
the weaknesses. As such, the company has to work on its weaknesses for strategic supply
chain management.
Keywords: Supply chain management, supply chain, strengths, weaknesses, strategy, Apple
Inc

Strategic Supply Chain Management Alaric 3
Table of Contents
Contents
Introduction................................................................................................................................4
Apple Inc. Supply Chain Map....................................................................................................5
Strengths of Apple’s Supply Chain and its Impact on the Organization...................................6
Weaknesses of Apple’s Supply Chain and its Impact on the Organization...............................9
Conclusions…………………………………………………………………………………..11
Recommendations…..………………………………………………………………………..12
Bibliography.............................................................................................................................14
Appendices...............................................................................................................................15

Strategic Supply Chain Management Alaric 4
Strategic Supply Chain Management
Introduction
Even though various factors contribute to the success of a given business, but supply
chain management plays a vital role. According to Diaconu and Alpopi (2014, p. 1165),
supply chain management is a strategy through which organizations attain competitive
advantage. The authors further explain that the process entails designing, planning,
controlling, monitoring, and executing of supply chain activities. More so, the primary
objective of supply chain management is generating net value, leveraging global logistics,
establishing a competitive infrastructure, coordinating supply and demand as well as
assessing performance worldwide. Griffin (2018, par 2) also notes that supply chains differ
from one organization to another, since they have different spend categories. As such, for the
effectiveness of this paper, the supply chain of Apple Inc is going to be analyzed.
Apple Inc is well known as one of the most innovative and creative companies in the
world, and this has made people overlook other activities at the company, such as supply
chains. Hettiarachchi (2016, p.3) stipulates that the way the company handles its inventory
has played a crucial role in its success. In fact, Apple's supply chain was recognized as the
best from 2010 up to 2013, according to the author. Apple Inc is one of the companies, which
believe that a lot of time ought to be dedicated to supply chain management to avoid various
problems. For example, after the production of different products, Apple assigns a team of
experienced employees who take their time to work on an effective supply strategy. The
company ensures that its products are supplied in the best way possible. Apple started as a
very small company in California, but currently has stores in over 22 countries. All of its

Strategic Supply Chain Management Alaric 5
branches adopt the most effective supply chain to meet the needs of not only their consumers
but also those of the retailers.
Apple Inc. Supply Chain Map
In the bid to understand how Apple Inc runs its supply chain activities, a supply chain
map was developed. A supply chain map is described as a visual representation of products,
processes, money flows, and information that takes place in a supply chain both downstream
and upstream (Tripathi 2018, p.174).
Figure 1: A Representation of Apple’s supply chain activities
Source:
https://www.supplychain247.com/article/is_apples_supply_chain_really_the_no._1_a_case_s
tudy

Strategic Supply Chain Management Alaric 6
Further, for distribution channels like direct sales, network carriers, wholesalers,
retailers, and retail stores, the company keeps the products at EIK Grove in California. EIK
Grove is where Apple's central warehouse, as well as call Center, is located. It is through
these different physical and online stores that consumers of Apple products buy them.
However, in case of any problem identified after purchasing of the product, the consumer is
advised to return it to the nearest stores (Hettiarachchi 2016, p.3). Consumers can also utilize
recycling facilities for returns provided their warranties are still valid. Notably, the supply
chain map of Apple Inc has five major activities, namely; sourcing, manufacturing,
warehousing, distribution as well as return.
According to the supply chain map of Apple Inc, the company buys different raw
materials for making its products such as the iPhone smartphones, iPads, iPods, and
MacBook computers from different countries. Some of these countries entail Europe, United
States of America, and China. More so, the company has an assembling plant in China where
it ships the raw materials sourced from the different countries. From there, China ships
different products either through FedEx or UPS for the consumers who purchase from the
company’s online stores.
Strengths of Apple’s Supply Chain and its Impact on the Organization
One Central Warehouse
Apple’s supply chain map indicates that the company has only one central warehouse
where it keeps its products before shipping them to the distributors. Having one warehouse
facilities effective operations. For example, the company has to synchronize information
from the central warehouse and that from the stores plus the customers (Tripathi 2018,
p.172). With an efficient level of automation, this strategy of operations is done effectively.
Besides, one warehouse is also cost-effective as the company does not have to hire many
professionals in operations. As such, the company's supply chain has contributed to reduced

Strategic Supply Chain Management Alaric 7
costs spent on procurement and logistics. Reduction on costs has a positive impact on
revenue on every company with Apple Inc being no exception. Therefore, Apple’s supply
chain has led to increased revenue, which facilities overall growth and development.
Outsourcing
Apple Inc sources its raw materials from different countries such as the U.S., Europe,
and Asian nations. The company embraces outsourcing to enjoy its benefits such as
inexpensive and good quality services. It is evident that some of the products obtained from
these countries are of good quality. Apple is known for manufacturing good quality products
such as the MacBook laptops and iPhone smartphones. Without outsourcing the raw
materials for these products from other countries, the company will not meet its expectation
when it comes to quality (Hettiarachchi 2016, p. 3). As such, the company goes an extra mile
and looks for the right raw materials from all over the world. It is because of Apple's supply
chain that entails outsourcing that has enabled it to meet the needs of the customers
effectively.
Since the company is able to produce good quality products, consumer satisfaction is
high, and this comes with increased sales and profits. Customers love it when they achieve
total satisfaction after using the company's products, and this is what happens to Apple
clients. For this matter, outsourcing has helped the company increase its revenue through
increased sales from loyal customers.
Manageable Number of Vendors
Apple Inc has approximately 156 vendors. Accordingly, this is a small number
compared to the size of the organization, although it is easy to manage. Apple has managed to
build healthy relationships with its vendors because of their small number (Satariano and
Burrows 2011, p.3). The company is aware of the needs of its vendors, and it meets them
effectively. Notably, this has also influenced the vendors to become genuine and trustworthy

Strategic Supply Chain Management Alaric 8
to the company. The vendors ensure that they deliver the best services and goods to Apple
Inc. The manageable number of vendors has helped Apple Inc improve its supply chain. The
company's supply chain is one of the best in the world because of the few retailers. With this
said, the manageable number of vendors included in the company's supply chain is also a
strength that is not seen in supply chains of other companies.
Assembling Plant in China
Having an assembling plant in China is one of the features of Apple's supply chain
that has raised various arguments on whether or not it is good. In one's perspective, the idea is
good because it was considered following various factors like cheap labor.
Graph 1: The graph shows the cheap labour costs of manufacturing in China.
It should be noted that labor in China is cheaper compared to that in the United States
of America (Satariano and Burrows 2011, p.4). Apple having its assembling plant in China, is
a strategy of cutting production costs. The company can produce a lot at a low cost, which
would have been the opposite if the assembling plant was in the United States. Reduced

Strategic Supply Chain Management Alaric 9
production costs enable the company to produce what is enough for the market; thus,
balancing demand and supply. Given the above, having Apple's assembling plant in China
comes with reduced production cost because the country provides cheap labor.
A Variety of Distribution Channels
Unlike other companies that have few distribution channels, Apple Inc has many as
seen on its supply chain map. For example, online stores, direct stores, direct sales force,
wholesalers, retailers, and network carriers. These enable customers to access the company's
products from a place of their convenience. Those who love online shopping will access the
products from online stores, and those who feel comfortable buying from physical stores will
also do the same. (Jorgensen 2018, par 19). A variety of distribution channels has enabled
increased sales, which leads to high revenue; thus, facilitating growth and expansion. Even
though having many distribution channels in a supply chain can be seen as a weakness, but it
is beneficial and a significant strength when it comes to Apple Inc. Given the above, a variety
of distribution channels at Apple Inc has positively impacted the overall organization.
Summary of Apple’s Supply Chain Strengths
Apple's supply chain is considered the best in the world because of its various
strengths, such as the small number of vendors, which has facilitated healthy relationships.
The company has only one central warehouse where it keeps its products before shipping
them to the distributors. Having one warehouse facilities effective operations. For example,
the company has to synchronize information from the central warehouse and that from the
stores plus the customers. It is because of Apple's supply chain that entails outsourcing that
has enabled it to meet the needs of the customers effectively. Having Apple's assembling
plant in China is a strategy for cutting production costs. The company is able to produce a lot
at a low cost, which would have been the opposite if the assembling plant was in the United
States. Lastly, a variety of distribution channels as seen on the supply chain map has enabled

Strategic Supply Chain Management Alaric 10
the company to make more increased profits. Despite the fact that the company's supply chain
has strengths but it also has weaknesses as analyzed below.
Weaknesses of Apple’s Supply Chain and its Impact on the Organization
Assembling Plant in China
The supply chain map of Apple shows that its assembling plant is located in China.
For example, after purchasing raw materials from different countries such as the U.S. and
Europe. Apple Company ships them to China for assembling. Currently, China is one of the
most politically stable countries in the world, and so Apple's supply chain is also safe
(Satariano and Burrows 2011, p.2). However, could something go wrong, and China gets
affected, the company's supply chain will also be in danger. The company will not
manufacture any products because its assembling plant is in China, and this will have a
negative impact on the business. The demand in the market will be high compared to supply.
Ultimately, this will benefit the competitors of Apple, such as Samsung and H.P., who will
now achieve high sales and revenues.
Over Dependence on Various Countries
On seeing Apple's supply chain, it is revealed that it over depends on various
countries. For example, it purchases its raw materials from countries like the U.S., Asian
states, China, and Europe. Besides, its assembling plant is in China, and this is where it
moves its raw materials bought from various countries. Its stores are also located in different
countries such as Australia, Sweden, Canada, and the U.K. (Griffin 2018, par 12). With this
kind of supply chain in case of any happenings in these countries, the company can be
affected hugely. It is seen that the company cannot manufacture its products using only
resources from the U.S. It has to outsource from other countries, and if this fails, poor quality
products will be manufactured. With this said, over depending on other countries is expensive
as well as brings about various uncertainties in Apple's supply chain.

Strategic Supply Chain Management Alaric 11
Re-sellers cannot be Trusted
Apple has various re-sellers, although, among them, some cannot be trusted. Some
resellers are likely to distribute products from Apple's competing manufacturers. Owing to
the fact that the company has few manufacturing points re-sellers can decide to buy from
other manufacturers instead of working with only Apple Inc. The step leads to reduced sales
of the company, which has a direct impact on revenue (Satariano and Burrows 2011, p.1).
Evidently, little revenue limits the company from not only expanding but also from growing.
The fact that the company has only one manufacturing point could be the major factor
influencing re-sellers to work with other manufacturers. For these reasons, Apple's supply
chain is faced with the risk of some re-sellers being tempted to deal with the company's
competing manufacturers.
Dependence on Logistical Services from Outsourcing Partners
Another weakness revealed about Apple's supply chain is that it depends on the
logistical services of the countries or partners the company outsources from. This means that
the company does not have the power to decide on the services they want when it comes to
logistics. It has just to follow those dictated by the outsourcing partner (Griffin 2018, par 7).
Even though failure to decide on own logistic services may seem minor but it affects
planning. For instance, in case a company does not offer transportation of its goods, then
Apple Inc has to cater to it. The outsourcing partner will not offer transport simply because it
is not among its logistics services. For this matter, depending on logistical services from
outsourcing partners comes with added costs, which affects planning at the company.
Summary of Apple’s Supply Chain Weaknesses
Apple Inc has its assembling plant in China only meaning that in case something bad
happens in the country, the company's supply chain will also be affected. As such, there will
be no more production; thus, demand exceeding supply in the market. The supply chain map

Strategic Supply Chain Management Alaric 12
of Apple Inc shows that the company fully depends on other countries, and in case of any
happenings in these countries, the company can be affected hugely. The company will not be
to meet the needs of the customers; thus, collapsing. Besides, Apple has various re-sellers,
although, among them, some cannot be trusted. Some resellers are likely to distribute
products from Apple's competing manufacturers; thus, reduced profits. Finally, Apple's
supply chain shows that the company depends on the logistical services of the countries or
partners it outsources from. As such, the company does not have the power to decide on the
services they want when it comes to logistics.
Conclusion
The strengths of Apple's supply chain overweigh its weaknesses, meaning that it has
more good points than bad ones. Unlike other companies that have many vendors, Apple Inc
has a few of them, and this has encouraged the establishment of healthy vendor-customer
relationships. According to Apple’s supply chain map, the company has only one central
warehouse where it keeps its products before shipping them to the distributors. Having one
warehouse facilities effective operations. The company has to synchronize information from
the central warehouse and that from the stores plus the customers. It is because of Apple's
supply chain that entails outsourcing that has enabled it to meet the needs of the customers
effectively. Customers know Apple products as those of excellent quality, and this has been
maintained because of outsourcing.
Some people see having Apple's assembling plant in China as a bad idea, but the
company sees it as a strategy for cutting production costs. The company is able to produce a
lot of products at a low cost, which would have been the opposite if the assembling plant was
in the United States. It should be remarked that labor in China is cheaper because of the
availability of many factories as compared to that in the United States of America where they
are few. Lastly, a variety of distribution channels as seen on the supply chain map of Apple