Case study
For the last decade, Apple has been recognized as having perhaps the best worldwide supply chains. The company led the “Gartner Global Supply Chain Top 25” ranking for eight years of the last decade. Recently, Apple has even been classified above the ranking as a “Master.” The Master status recognizes the accomplishments and capabilities of long-term global supply chain leaders in the Gartner Global Supply Chain Top 25. Companies qualify for the Master category if their score places them in the top five rankings for at least 7 out of the past 10 years (the only other company in this Master category is Procter & Gamble).Numerous accolades have also been made about Apple’s supply chain strategy, operations, and results. For example, Apple’s supply chains “best demonstrate leadership in applying demand-driven principles to drive business results.” “Apple dominates because it consistently brings both operational and innovation excellence to bear in some of the most competitive markets in the world.” Basically, Apple gets a lot of credit in the supply chain profession for being able to ramp up volumes both in hardware and software while also uniquely helping redefine the consumer electronics market (e.g., iPhone, iPad, MacBook, Watch).Apple is the world’s largest information technology company, overtaking Samsung a few years ago. In Interbrand’s Best Global Brands report, Apple is now also the most valuable brand in the world. It overtook Coca-Cola in 2013 for the number 1 position after Coca-Cola’s 13-year run at the top and has stayed at the top every year since that time (Google is now number 2 and Coca-Cola in number 3). Apple has an estimated brand value of about $180 billion. “Few brands have enabled so many people to do so much so easily, which is why Apple has legions of adoring fans.” These “fans” or customers have downloaded apps for Apple’s electronic gadgets more than 130 billion times (Apple’s app store has more than 2 million apps).The company’s general supply chain model follows the path of most large multinational corporations’ supply chains. Apple does research and development to cultivate new technologies and/or to acquire the intellectual property needed for future products. It tests the product concepts via marketing research, product testing, and total cost analysis. After that, Apple typically does a prelaunch of new products, where global production, sourcing commitments, inventory management, and so on are evaluated. The product launch involves doing demand forecasts, re-solving potential backlogs, and ensuring that the products are in the hands of its customers in as fast a cycle time as possible. After the launch, monitoring starts with periodic reviews of inventory, demand, life cycle status, and component cost forecasts.A number of factors make Apple’s global supply chains world-leading. First, early on, Apple took steps to manage the total value created in its global supply chains by managing its suppliers and all other providers within the chains. Predetermined expectations of suppliers, exclusivity in supplier arrangements, and volume guarantees ensured a supply chain infrastructure that could support Apple’s aggressive market leadership. Apple’s relationship building with its network partners is also a strength that has helped with increased scaling of production and resulted in improved quality in the manufacturing processes. Plus, and not to be underestimated, Apple has amassed lots of cash! The available cash funds have partially been used to place high-volume orders, which strengthen supplier relationships, and in other ways maintain global supply chain leadership.Using its supply chain infrastructure, Apple has man-aged to solve most of the challenges it has faced. For example, while the global economic downturn in 2008–2009 presented problems for virtually all companies, Apple came through it in great shape. At the time, then CEO Steve Jobs said, “We’re armed with the strongest product line in our history, the most talented employees and the best customers in our industry. . . . Apple just reported one of the best quarters in its history.” Other challenges that Apple is facing include obtaining enough quality components for its consumer electronics, the potential for supply chain disruptions (natural and people created), dependence on third-party logistics providers, and inventory management issues. In each case, so far, Apple has strategically solved major issues to the satisfaction of the marketplace (the company consistently ranks at the top in “customer satisfaction” in the American Customer Satisfaction Index).However, everything is not all rosy or positive about Apple. The company’s reputation has taken a few hits recently. For example, Apple was found guilty by a U.S. court of conspiring with publishers to set the price of e-books that were bought using iTunes. The ongoing feud with Samsung regarding various patents keeps lingering year by year, and worldwide customers are almost fanatically taking sides for or against Apple. There have also been allegations about the treatment of employees at Fox-conn in China (one of the Apple suppliers and the world’s largest contract electronics manufacturer). Plus, there was a U.S. Senate hearing that investigated Apple’s “highly questionable” tax minimization strategies. Now, on the more positive side, Apple has a portfolio of potential blockbuster products, welcomed upgrades, and innovative services in the making that are sure to remind its fans why they favor Apple products.The challenges attached to these new offerings are sure to test Apple’s leadership in both brand value and best global supply chains. To some degree, the future challenges are clear. To stay at the top of its industry, Apple has to succeed in continuing to slow Samsung’s momentum and capturing the booming Chinese mobile phone market. As always with Apple, as set in our expectations over the years by Steve Jobs’s “one more thing” announcements, CEO Tim Cook and the new Apple leadership team must keep communicating to the market that their vision, innovations, and leadership can drive the idea that Apple’s best days are ahead. As one way to do this, Apple is on a hiring binge in Asia, adding hundreds of engineers and supply chain managers to its staff in Shangai and Taipei as it seeks to increase the speed at which it introduces new products. Plus, with Cook as the CEO, Apple has a global production and supply chain management expert at the helm who constantly scrutinizes Apple’s supply chains, production operations, and fair labor practices.
SourcesGordon Kelly, “iPhone 7s Leaks Reveal Apple’s Expensive Smartphone,” Forbes, April 30, 2017; “Beating Apple, Xiaomi and the Gang in China,” The Economist, February 4, 2017; Jordan Golson, “Apple’s App Store Now Has Over 2 Million Apps,” The Verge, June 13, 2016; D. Hofman, “The Gartner Supply Chain Top 25,” www.gartner.com/technology/supply-chain/top25.jsp; “Interbrand’s Best Global Brands 2016,” www.interbrand.com; E. Doe, “Apple Goes on Hiring Binge in Asia to Speed Product Releases,” The Wall Street Journal, March 3, 2014; “Fixing Apple’s Supply Chains,” The New York Times, April 2, 2012.
1. According to Interbrand’s analysis, Apple’s brand is valued at more than $180 billion, while Google in second place is valued at $133 billion and Coca-Cola in third is at $73 billion (2016). Do you agree that Apple should be so far ahead of its nearest brand competition? What about Samsung (Samsung is (Samsung is valued at $52 billion)?
2. With the 2011 death of Steve Jobs, Apple’s legendary founder and CEO, what can we expect from Apple in the future? Will it be as innovative? Will it maintain brand value leadership? Will it run the top global supply chains in the world?
3. Apple products have usually been priced above their competition and sold for their value, intrigue, and market leadership. Some would say Samsung is catching up on many of these fronts and even, perhaps, passing Apple. Do you think Apple can charge a price premium for its products much longer?
4. Apple’s global supply chains make its business thrive. There is secrecy among suppliers, superior quality standards by every party involved in Apple’s supply chains, and a total value focus that ultimately makes the customers happy. Is this a sustainable business model for Apple’s global supply chains?
Image preview for”for the last decade, Apple has been recognized as having perhaps the best worldwide supply chains. “
APA
734 words