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Supply Chain Management Apple - Essay Example

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What is Supply Chain Management at Apple? The supply chain is the set of companies that are involved in the creation of a product, from the start-point of production to the very end…
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Download file to see previous pages This success could be due to the increasing amount of supply chain managers reporting to the CEO of a company rather than to the manufacturing department, a trend across businesses (Allen, 2010). It has been suggested that the supply chain for Apple involves ten steps in four different countries, which are Singapore, Taiwan, the US and China. Taiwan provides most of the manufacturing components for an iPhone (Apple’s biggest seller []), with six different elements being produced here – the digital camera modules, international circuitry, industrial connectors, silicon Bluetooth chipset, technology printed circuit boards and stainless metal casings (Lyons, 2010). This encourages us to believe that the supply chain manager believes that Taiwan is the cheapest and most efficient supplier of many of the components for the iPhone and other Apple products. It also means that there is a bottleneck for the supply chain, in that if there were to be any economic issues or disasters in Taiwan, then the supply chain for the iPhone would be severely disrupted and there would be problems in the supply of these products. Essentially, the supply chain manager at Apple feels that the benefits from producing many components in Taiwan (cost and efficiency) outweigh these dangers. China is the location in which all these components come together to be assembled, suggesting that the country has a very cheap labour rate compared with the US, and the shipping costs from this country are low enough for the cost of labour in this country for this to be the most efficient method. All of this information suggests that Apple uses a vertical integration system for their Supply Chain Management (Lyons, 2010). A vertical integration system is one where most of the hardware components of a product are bought from a variety of different manufacturers which are all owned and controlled by the central company – in this case Apple. This helps to avoid any hold-up from trying to integrate many different companies, and it also stops the different pieces of hardware being used by other companies, ensuring that the end product is something completely unique – again, something very important to Apple. The use of a manufacturer owned by the central company also ensures that the data chip, or processor, or other product, can be manufactured exactly according to company specifications, ensuring a greater specificity. This can be a response to the make-buy decision. The make-buy decision The make-buy decision is essentially a choice between outsourcing and manufacturing (Probert, 1997). It has been suggested that the decision is easy, and that a company should outsource any components that are not critical to the product’s success, do not require any specialised design or manufacturing elements, and are not core to the company’s future plans and central products (Burt & Burf, 2009). There are many other ways of making the decision, one of which is known as the contribution-per-constraint module (CPCM) that relies on knowing and analysing the constraints of the component (Gardiner & Blackstone, 2007). In this case, the Supply Chain Management team at Apple have decided that it is best to make many of the components (or ...Download file to see next pagesRead More
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