apple supply chain case study

Apple Supply Chain Case StudyIn this assignment, you will read a case study and answer the following questions:
1. In your own words, explain the difference between Apple Inc.’s and Amazon’s supply chain
methodology.
2. A. What are some of Apple Inc’s supply chain’s biggest challenges?
B: How would you resolve or undertake these challenges?
3. A. Why are Amazon’s Supply Chain Characteristics more complicated than those of Apple’s?
B: How would you reconcile these complications?
Please follow the instructions below:
Download the case study here………
1. You will submit a MINIMUM 2 page paper (single-spaced) that answers the
questions above.
2. You will have three weeks to work on this assignment.
3. This is an individual assignment. Collaboration between students is prohibited
and is treated as a violation of academic integrity.
Notes for grading:
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All questions’ available grades are equally distributed.
An answer without detailed explanation will get no more than 1 point out of
100.
Turnitin will be used to detect any plagiarism for this assignment.
Is Apple Supply Chain Really the No. 1?
In this article, we will discuss why the supply chain of Apple Inc is different and some
analyses that we conduct to capture the essence of Apple Supply Chain.
Apple Supply Chain Excellence
Everything about Apple Inc is the talk of the town. For example, the new iPad, iPhone,
Apple Map or even the environmental and labor issues at its suppliers’
facilities. Surprisingly, IT research firm Gartner ranks the supply chain of Apple Inc as
the best supply chain in the world for many years. Without a doubt, Apple Inc is the
world leader in Innovation, Branding, Customer Service and Software Ecosystem. But is
Apple’s Supply Chain really the number 1? This case will show you the analysis of their
core processes, challenging issues, and complexities of its operations.
Supply Chain Map is the way to express a large system from the points of origin to
points of consumption in a simple to understand manner. Information from the annual
report is also used to produce the Supply Chain Map.
Apple Inc purchases raw materials from various international sources, then get them
shipped to an assembling plant in China. From there, the assembler will ship products
directly to consumers (via UPS/FedEx) for those who buy from Apple’s Online Store.
For other distribution channels such as retail stores, direct sales, and other distributors,
Apple Inc will keep products in Elk Grove, California (where central warehouse and call
center are located) and supply products from there. At the end of a product’s life, a
customer can send products back to the nearest Apple Stores or dedicated recycling
facilities. Apple tries to follow the lean manufacturing concept as much as possible but
not six sigma as used by Samsung.
Apple Supply Chain Challenges
What does it feel like to be “Apple Inc”? One journalist indicated that the life of Apple Inc
is fairly easy by utilizing its negotiation power. Believe me, supply chain of Apple has
very high risks. There are many challenges to overcome, for example,
– Global economy could affect the Company.
– Some re-sellers may also distribute products from the competing manufacturers.
– Inventories can become obsolete or exceed the anticipated demand.
– Some components are currently obtained from the single or limited sources.
– Some custom components are not common to the rest of the industry.
– Ability to obtain components in sufficient quantities is important.
– Supply chain disruption such as the natural and man-made disasters can be serious.
– The company depends on logistical services provided by outsourcing partners.
– The company also relies on its partners to adhere to supplier code of conduct.
The above information is also from the annual report. As you can see, most of the risks
are on the supply side.
How Complex is Apple Supply Chain?
Some people in the blogosphere said that the supply chain of Apple is not that
complicated. So this section will explain some characteristics of the supply chain of
Apple through various metrics and compare them with Amazon Supply Chain.
1. Inventory Turnover
Inventory Turnover is a traditional financial measure to determine how efficient company
uses its financial resources to create sales, the higher number is the better. Supply
chain professionals also use this metric in the inventory management function. The
generally accepted calculation is [Cost of Goods Sold / Average Inventory]
Inventory Turnover of Amazon vs Apple Inc
The above picture shows that the inventory turnover of Amazon and Apple is 10 and 59
respectively (cost of goods sold of digital content/downloadable products is excluded).
From the face value, Apple seems to be more efficient. Anyway, there is a reason for
this. Apple Inc is now a marketing company with no manufacturing facility, but Amazon
is a distributor of general merchandise. It’s pretty natural that Amazon has to keep more
stocks. Then the inventory turnover is much lower.
2. Number of Key Suppliers
Supply chain management is about the relationship between trading partners. Working
closely with strategic suppliers will bring a competitive advantage to the firm.
Number of Key Vendors Amazon vs Apple
Apple recently said that they have about 156 key vendors across the globe. This
number of suppliers is quite manageable. Amazon has about 3 million suppliers in total.
Top 5% of this is 300,000 suppliers, way more than that of Apple Inc.
3. Number of Warehouse Facilities
In the United States, transportation cost is the biggest portion of the total logistics cost.
Then, good management of related function is essential.
Number of Warehouse Facilities Amazon vs Apple
Apple Inc has the central warehouse in California, but Amazon has approximately 28
warehouses from coast-to-coast. What Apple has to do is to synchronize data between
the central warehouse and its own 246 stores + customers. With the appropriate level of
automation, this kind of operations can be done efficiently.
For Amazon, the thing is more complicated than that. Amazon is known to employ
many Ph.D. graduates in operations management, operations research and industrial
engineering for the network design project. The reason is that Amazon’s distribution
environment must be mathematically solved through the optimization method. Typically,
they have to determine how many facilities they should have, where serves which
market, items/quantity stored in each location, how to manage transportation between
warehouse-to-warehouse and warehouse to customers in order to minimize cost and
increase service level.
4. Number of Items (Stock Keeping Unit)
Stock Keeping Unit aka SKU is another indication of supply chain complexity. One
model of the phone but different software inside is considered a different item/SKU.
Number of SKUs Amazon vs Apple
Amazon has about 519 million items in its catalog. About 135 million items are physical
products. For Apple, they have about 26,000 items (rough estimate, subject to change).
The point is that if you have to make a demand forecast, which one will more difficult for
you, 135 million items or 26k items.
5. Product Life Cycle
Put it simple way, the product lifecycle is how long you can sell products (the longer is
better).
Product Life Cycle Amazon vs Apple
From the rough estimate, Amazon has some seasonal products such as summer wear.
They can only sell it for 3 months max. The life of Apple’s key products is way more
than 12 months. It goes without saying that the demand forecast of seasonal, short life
cycle products is very difficult to estimate.
As you may notice, based on the example characteristics, Amazon’s Supply Chain is far
more complicated than that of Apple Inc.
Lesson Learned from Apple Supply Chain
The results of the analysis of Apple’s processes, challenging issues,
and complexities indicate that the success of its supply chain operations depends on
how well they manage the supplier relationship. This includes early supplier involvement
in new product development, close communication, and supplier performance
improvement/evaluation. Then, Apple Inc is dubbed as “King of Procurement.”