Apple – Supply Chain Man-agement

Aurora sheleSun di

jaeyeon lee

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Apple overview

■ Apple Inc. was founded by Steve Jobs and Steve Wozniak in 1976.

■ Apple Computer, Inc., is an American multinational corporation with a focus on designing and manufacturing consumer electronics and closely related software products

■ As of September 2007, the company operates 194 retail stores in the United States, and more in the United Kingdom, Japan, Canada, and Italy

■ For a variety of reasons, ranging from its philosophy of comprehensive aesthetic design to their advertising campaigns, Apple has engendered a distinct reputation in the consumer electronics industry and has cultivated a customer base that is unusually devoted to the company and its brand

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Problems in the supply chain

■ Delays in production, distribution etc.

■ Expensive inventories

■ Lack of partners’ coordination

■ Uncertainties in deliveries

■ Poor demand forecast

■ Interference with production

■ Poor quality

Supplier of materialsSupplier of services

Tier 1

Tier 3

Tier 2

Legend

Customer Customer Customer Customer

Distribution center

Distribution center

Manufacturer

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Supply Chain Management

Supply Chain Mgmt

Supply Chain

Strategy

Logistics Mgmt

Procure-ment

Information Mgmt

Supply Chain Plan-

ning

Assets Mgmt

Suppliers

Manufacturers

Warehouses

Stores

Customers

■ Main components

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Apple’s problems in Supply Chain Management

■ The outsourcing and offshoring of manufacturing to emerging and developing countries has resulted in challenges– environmental and – social standards in these countries– direct reputational and financial impacts

■ The biggest supply chain challenge is volatility caused by increased market dynamics related to demand. This requires – advanced planning capabilities– early insights and guidance on effective responses – that maximize the profitability of a company’s portfolio

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Apple’s supply chain judged best in world again

■ Best supply chain practices– A report by AMR Research has named Apple as the company with best supply chain practices in the world

■ Apple beats competitors at inventory turn over

Company Days of inventoryApple 5 daysDell 7 daysLenovo 15 daysHP 32 daysIntel 89 daysD-Link 131 days

Source: Gartner Inc.

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Apple’s Supply Chain secret?

■ Unified strategy– Every part of their business is aligned around that strategy.

■ Production– More than $80 billion in cash and investments.

■ Apple supplier’s life– Lucrative - high volumes– Painful - the strings attached.

■ Many key suppliers – They keep two weeks of inventory within a mile of Apple’s assembly plants in Asia.

■ Factories work overtime and they are being watched– To track efficiency and ensure pre-launch secrecy, Apple places electronic monitors in

some boxes of parts that allow observers in Cupertino to track them through Chinese factories, to discourage leaks.

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Technology in SC

■ The internet can be very effective communication enhancers

■ Software– Demand forecasting tools– Planning tools– Allow all SC members to coordinate their activities and adjust their production levels• Review past performance • Monitor current performance • Predict future production levels of products

■ The secret behind Apple’s success– Company’s ability to bring together two sides of the supply chain (digital and physical)

efficiently and at increasingly low cost

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Digital supply chain

■ Definition – A new media term that encompasses the process of the delivery of digital media, be it

music or video, by electronic means from the point of origin (content provider) to des-tination (consumer)

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Digital supply chain

■ Main processes– The main processes of a digital supply chain are as follows

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Bottom line

 Apple plans to double spending on its supply chain, to $7.1 billion, continuing its focus on streamlining and controlling manufacturing.