Comprehensive Analysis of Apple's Supply Chain Management Strategies

This report provides a detailed analysis of Apple's supply chain management, examining its structure, transportation segments, and operational performance. It identifies key issues such as inadequate product supply, delivery delays, and strict quality control affecting production efficiency. The report explores transportation-related challenges, including rising fuel costs, and evaluates the impact of Apple's current strategies. It proposes solutions such as promoting cost-effective transportation methods, optimizing product design for reduced weight and volume, and improving supply chain forecasting. The report assesses the expected benefits of these changes using value indexing methods, considering economic, business, and financial factors. The report also touches on the duration and cost of implementing the proposed changes, assesses potential risks, and outlines an action plan to improve Apple's supply chain efficiency and reduce costs.

Supply Chain
Management

Contents
INTRODUCTION...........................................................................................................................1
Overview to overall supply chain of the company and its transportation segment.........................1
Issues affecting current operational performance............................................................................3
Supply Chain management issues related to transportation............................................................4
Expected benefits associated with the change.................................................................................4
Appraising the change with value indexing methods......................................................................5
Duration and cost of change............................................................................................................5
Assessing risk register.....................................................................................................................6
Action Plan......................................................................................................................................8
CONCLUDING REMARKS...........................................................................................................9
REFERENCES..............................................................................................................................10

Table of Figures
Figure 1Internal Production process................................................................................................2

INTRODUCTION
Supply chain management is an important function that is required to be taken care of
especially when a company is involved in offering goods to its customers (Stadtler, 2015). Apple
have been involved in offerings software and hardware products to its consumers through
various types of distribution channel, such as, direct distribution, third party distribution or
through online stores. The report will help in analysing various issues that are faced by Apple in
its supply chain function. It will also help in ascertaining various risks involved in its function
and action plan that can help in dealing with the ongoing issues in the organization.
Overview to overall supply chain of the company and its transportation
segment
Apple is an American multinational technology company which is headquartered in
Cupertino, California that is involved in designing, developing and selling consumer electronics,
software for computer and other online services. The hardware products of company include,
iPhone smart phone, mac personal computers, iPad tablet computers, etc. The products are
generally assembled in China and then assemblers send these products to consumer’s online
stores. After life of a particular product is over, item can be sent back to some stores of Apple so
that they can be recycled (Ahi, and Searcy, 2013). The internal production process of Apple
includes 7 steps which are like:
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Procurement and Acquisition
Transport and Storage
Production
Transport
Storage
Transport and Storage

There are five steps involved in supply chain management function of Apple. These are
sourcing, manufacturing, warehousing, distribution and return. These activities take place at
different locations. For instance, sourcing takes place in United States, China, Europe and other
Asian countries. However, manufacturing and assembling are done in China. Distribution aspect
is related to transferring manufactured goods and services to online and retail stores, direct sales
force and other wholesales as well as retailers, for selling purposes. Return can be due to
warranty, return of recycle and reuse program of Apple (Brandenburg and et.al., 2014.)
The distribution transportation aspect includes all iPhones manufactured in China from
where all assembled goods are transported to main headquarter of Apple which are United
States, Japan, Singapore, etc. FedEx services are generally used by company to transfer goods
from one place to another as they are involved in charter Boeing 777 for transportation purposes.
It costs them from China to US $ 242000 and have the capacity to carry 450,000 iPhone in a
given point of time.
There are various types of supply chain models that help in making Apple products available
to the customers (Green Jr and et.al., 2012). People can directly purchase their products from its
website and can get shipping of the same at their door step also. The other method is that,
distinguished building is allotted so as to sell the products at brick and mortar store from which a
consumer can directly purchase its products by visiting it. It also distributes products to large
electronic firms. For instance, Amazon and Ebay, where they are able to serve their customers
with an adding segment in supply chain. Hence, it can be stated that distribution strategy of
Apple has four main methods, through which a product can directly be sold to the customers.
These are online and retail stores, direct sales force and third-party wholesaler (Waller and
Fawcett, 2013).
In order to serve purpose of customers, suppliers tend to maintain little inventory so that
demand of the product can be served as soon as it arises. One of the oldest warehouse of Apple is
2
Use
Figure 1Internal Production process

Elk Grove CA. The company is quite renowned for having strict supplier code of conduct in
industry. Suppliers are hold accountable for standards and are provided with all the facilities that
can initiate effective processing to operate properly. Strict terms are applicable on them and they
are disposed easily as and when any type of breach in the contract is noticed (Ashby, Leat and
Hudson-Smith, 2012). The main suppliers of Apple are, Samsung for various components, such
as, mobile DRAM, flash memory and application processors. Gyroscopic devices are taken from
STMicroelectronics. It also has some amount of dependence on the supplies of Qualcomm as
well.
Issues affecting current operational performance
Due to Apple’s current supply chain management functions adopted by it, various glitches
can be faced by the company in serving requirements of customers. Common issues faced by
them are financial trouble, disrupted operations, miscommunication and expensive oversights.
The main issue that is faced by it is related to inadequate number of products so as to serve the
requirements of customers. Hence, the supply is not adequate so that arising demand of Apple
products can be fulfilled. It reflects that there is a requirement to alter its supply chain in a
manner so that demand of the customers can be satisfied to a great extent (Ross, 2013). Delivery
issue is another problem faced by organization as it is not delivered on time and customers have
to wait for many days so as to attain their delivery. Strict quality control over the production
function is also another major issue that delays production line in such a manner that produced
products are not delivered to the distribution channel on time. Researchers have stated that
putting increased pressure on production line workers ultimately reduce their efficiency and they
are not able to meet the requirements of production. They are forced to work under unhealthy
conditions that affect their output to the maximum extent (Winter and Knemeyer, 2013).
It has become important for Apple to come up with effective Supply China management
functions so that management can keep a record of all operations and ensure optimal
performance with limited liabilities. It has been evidenced that Apple has been criticised due to
not being able to fulfil the demands and requirements of iPhone. It is due to its ineffective
production and distribution network. People need to wait for long for ultimately receiving their
delivery. Ineffective forecasting of demand hinders the supply chain process where it is not able
to manage its catalogue and ascertain how much demand of the product will come up to the
company before its launch.
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It also struggles in managing effective relationships with the supplier which hinders process
of production to a high extent. It has generated requirement of bringing production of some items
in-house so that this delay can be eliminated from supply chain and operation functions.
Supply Chain management issues related to transportation
A constant increase in the overall rates of fuel has been leading to increase the overall cost
of transportation for the organization. It ultimately leads to increase in the overall price of the
product as well that is provided to the ultimate customers.
company are provided incentives to use biking, public transport and reduce single
occupancy vehicles. The company has also involved in funding a $35 million Transportation
Demand Management (TDM) program that helps in encouraging employees to use corporate
shuttles and carpools to deliver products to the customers. Even though the company is putting
these efforts, there are approximately 9000 people from Apple who tend to drive alone resulting
in increase of emissions and clogged roadways (Wisner, Tan and Leong, 2014).
Although TDM has been able to mitigate worst outcomes and it is commendable for Apple
that it has been able to adopt and fund this approach. However, it is not able to completely cope
up with the issues that are generally faced by company due to increased cost of transportation of
products from one place to another. It is still the desire to come up with the strategies that can
help in implementing effective existing transportation structure for the company that can reduce
overall cost of transportation to the minimum (Beske and Seuring, 2014).
The company has been involved in organizing seminars and debates that can help in finding
out better transportation options where it can be initiated at low prices. Some suggestions that
have come up to the company includes, public transportation, carpooling, vanpooling, walking.
In this manner, employee’s commutation pattern can be shifted and can be made more viable
option with respect to cost for the company.
Expected benefits associated with the change
Transportation is an important activity conducted by the organization and hence it is difficult
for the organization to eliminate its activity from its functions.. Hence, bringing certain change in
the transportation function can to be beneficial for the organization (Priem and Swink, 2012).
Further, engaging people in better transportation activity can prove to effective as people
attract towards adoption of cost cut transportation methods. It has been able to reduce the cost
production function that could have affected the overall price of the products being offered by
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Apple. Moreover, it has adopted development of smaller, thinner and lighter product that can
help in reducing weight of the products. Moreover, its manufacturing also tends to become
effective enough in comparison to the thicker ones. It also helps in compromising substantial
reduction in overall cost involved and saving 747 flights for every 371,250 products it ships. The
packaging has also reduced by 42% through its latest version in comparison to what it was in the
first model of iPhone. The packaging boxes have become smaller and are able to fit in pane and
boat in the maximum possible quantity. It also results in less delivery rounds as maximum
number of products can be delivered in minimum possible rounds (Dyckhoff, Lackes and Reese,
2013).
Adoption of these methods will also enhance the bond between organization and consumers
as they will be able to drive more trust towards Apple as it is involved in providing products to
its customers at minimum possible prices. The performance parameters can be reduced rounds of
plane and boat from one location to the other, energy saving prospects and enhanced use of
socially acceptable products.
Appraising the change with value indexing methods
Value indexing method help in analysing the solution given to a specific problem based on
economic, business and financial analysis. The method that have been suggested to Apple are
effective enough and hence can be adapted based on these three factors of analysis.
The first solution that has been given to Apple is to promote production and transportation
strategies that can reduce cost to the minimum. In such cases, making the delivery boys to opt for
public transport for delivery purposes so that use of vehicle can be reduced in the one solution
that has been given to the organization. In such case, the method can be economically viable as
majority of the petrol vehicles are costlier than the one which move with battery (Beske, Land
and Seuring, 2014). Moreover, encouraging them to use public transport will help in saving their
money and availability of adequate amount of transport services in the campus as well. It will
also be viable in sense of business and financial analysis as well.
Another method that has been suggested is related to opting for production method that
helps in saving energy to the maximum and producing a kind of product that are slim and lighter
as well. It will help in transporting maximum number of products in one go. It will also reduce
the delivery cost of the company as well. Hence, this method is economically and financially
viable for Apple.
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Duration and cost of change
Implementation of new rules and regulations is a lengthy procedure and hence require to
have appropriate amount of time and cost to be devoted so that the change can be brought in the
organization. The top management must be involved in communicating the change to all the
stakeholders and ensure that the changes are properly followed in such a manner that effective
implementation of the same can be initiated. In such cases, budget is required to be prepared by
the top-level management that what new resources will be required by the company to bring
changes. Listing them up will help in assessing the total requirements of funds in the new
activity. It also helps in ensuring that adequate amount of funds is available with the company to
practice the new type of function in the organization (Janvier-James, 2012). It is basically known
to the feasibility study of the new launch. The minimum duration that will be required for
implementing this change is minimum of 1 year so that all the resources can be arranged by the
company and is then properly implemented.
Assessing risk register
Potential Risk Likelihood Rank Reason
Operational risks Very Likely 5
It can only be assessed when it
has actually occurred. Further, it
can occur more than once in the
overall tenure of the project.
Technological risks Likely 4
Modernised machinery and
vehicles require high amount of
funds and their likelihood of
being obsolete is quite higher.
Financial risks Unlikely 2
Enhancements in duration or
developing change economic
activities of the economy can
lead to overrun of the overall
cost involved in it.
Environmental risk Very Unlikely 1 Any environmental issue can
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affect the planning done for
adoption of sustainable site.
Eruption of this risk can harmful
for the company.
Potential Risk Impact Rank Potential Consequences
Operational risks Severe 5 It can lead to increase in cost and
duration of Apple.
Technological risks
Significant 3 It direct impact can be noticed on cost.
Moreover, it can also hinder the current
production process of the company as
well.
Financial risks
Minor 2 The organization is not able to arrange
adequate amount of finance for the
company in such a manner that new
activities are not funded appropriately
due to monetary crunch.
Environmental risk
Negligible 1 Any change that occurs in the
environment can affect overall
planning and strategy of the
organization and in this manner, top
level management is required to frame
a new one.
Potential Risk Likelihood
Rank (A)
Impact Rank
(B)
Risk ( A * B ) Type of risk
Operational risks 5 5 25
Technological risks 4 3 12
Financial risks 2 2 4
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Environmental risk 1 1 1
IMPACT
Negligence Minor Moderate Significant Severe
1 2 3 4 5
LIKELIHOOD
Very Likely 5 5 10 15 20 25
Likely 4 4 8 12 16 20
Possible 3 3 6 9 12 15
Unlikely 2 2 4 6 8 10
Very
Unlikely 1 1 2 3 4 5
15-25 High Urgent corrective actions required
8-14 Moderate Requires actions in next 2 months
1-7 Low Doesn’t require any corrective actions
Action Plan
It is important for Apple to adopt for the methods that can help in reducing the risk of failure
to the minimum. In such cases, following methods can be adopted by the company:
 Market research: One of the issue faced by the organization is inability to cope up with the
demand and supply factor of the organization. They are not able to make the products
available as per the arising demand in the market. Hence in such case, it becomes important
for the organisation to analyse how much demand for a particular product can be initiated
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before its launch so that adequate number of products can be made available to them
(Monczka and Patterson, 2015).
 Constant upgradation in technology: Technological sector is quite dynamic in nature and
hence require to be taken care of effectively so that production function of Apple is not
hindered. In such cases, it is important for Apple to take decision that whether it needs to
purchase a particular product and take it on lease for some years. Decision is required to be
made based upon opportunity cost and present value factor of a particular machinery top be
installed in the organization.
 Proper channel of delivery: The main aim of any organization is to serve the requirements of
end users. Since, Apple works on technological upfront, it becomes important to assess that
whether proper delivery channel is followed by the organization or not. Moreover, the
product must be delivered to the end users within specific duration without hampering their
needs and requirements. Assessment of proper distribution strategy is the core aspect of any
product and services-based business. Hence in such cases, it becomes important to follow
proper channel of delivery which can help in delivering the products safely to end
consumers. Effective forecasting of demand: It is important that organization ascertains the demand
before launching any new product in the market. It can help in determining unforeseeable
demand that has been coming up in the market. Management can then prepare strategies that
can help in having effective demand and supply aspect of the organization (Transportation
and the Environment, 2012).
CONCLUDING REMARKS
From the above plan, it can be concluded that the products of Apple are generally assembled
in China and then the assemblers send these products to consumer’s online stores. People can
directly purchase their Apple product from its website and can directly get shipping of the same
at their door step. The other method is that distinguished building is allotted so as to sell the
products at brick and mortar store from which a consumer can directly purchase its products.
Common issues faced by the them are, financial trouble, disrupted operations,
miscommunication and expensive oversights. Strict quality control over the production function
is also another major issue that delays production line in such a manner that produced products
are not delivered to the distribution channel on time.
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REFERENCES
Books and Journals
Stadtler, H., 2015. Supply chain management: An overview. In Supply chain management and
advanced planning (pp. 3-28). Springer, Berlin, Heidelberg.
Ahi, P. and Searcy, C., 2013. A comparative literature analysis of definitions for green and
sustainable supply chain management. Journal of cleaner production. 52. pp.329-341.
Brandenburg, M. and et.al., 2014. Quantitative models for sustainable supply chain management:
Developments and directions. European Journal of Operational Research. 233(2). pp.2
Green Jr, K. W. and et.al., 2012. Green supply chain management practices: impact on
performance. Supply Chain Management: An International Journal. 17(3). pp.290-305.
Waller, M. A. and Fawcett, S. E., 2013. Data science, predictive analytics, and big data: a
revolution that will transform supply chain design and management. Journal of Business
Logistics. 4(2). pp.77-84.
Ashby, A., Leat, M. and Hudson-Smith, M., 2012. Making connections: a review of supply chain
management and sustainability literature. Supply Chain Management: An International
Journal. 17(5). pp.497-516.
Ross, D. F., 2013. Competing through supply chain management: creating market-winning
strategies through supply chain partnerships. Springer Science & Business Media.
Winter, M. and Knemeyer, A. M., 2013. Exploring the integration of sustainability and supply
chain management: Current state and opportunities for future inquiry. International
Journal of Physical Distribution & Logistics Management. 43(1). pp.18-38.
Wisner, J. D., Tan, K. C. and Leong, G. K., 2014. Principles of supply chain management: A
balanced approach. Cengage Learning.
Beske, P. and Seuring, S., 2014. Putting sustainability into supply chain management. Supply
Chain Management: an international journal. 19(3). pp.322-331.
Priem, R. L. and Swink, M., 2012. A demand‐side perspective on supply chain
management. Journal of Supply Chain Management. 48(2). pp.7-13.
Dyckhoff, H., Lackes, R. and Reese, J. eds., 2013. Supply chain management and reverse
logistics. Springer Science & Business Media.
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Beske, P., Land, A. and Seuring, S., 2014. Sustainable supply chain management practices and
dynamic capabilities in the food industry: A critical analysis of the
literature. International Journal of Production Economics. 152. pp.131-143.
Janvier-James, A. M., 2012. A new introduction to supply chains and supply chain management:
Definitions and theories perspective. International Business Research. 5(1). p.194.
Monczka, R. M. and Patterson, J. L., 2015. Purchasing and supply chain management. Cengage
Learning.
Online
Transportation and the Environment. 2012. [Online]. Available through
<http://www.appleacademicpress.com/transportation-and-the-environment-assessments-
and-sustainability/9781771884662>
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