Logistics Management - Apple Company - Case Study Example

ABOUT APPLE COMPANY Name Institution Course Professor Date ABOUT APPLE COMPANY Existing Situation Logistics management is a vital area for the success of the Apple. Inc, especially owing to its status and business function as a multinational company. According to Coyle et al. (2008, p. 6), the supply chain and logistics management are significant areas whose activities and their performance influence the success of a company. The success factor entails the creation of value to the different shareholders of a firm (Bowersox, Closs, and Cooper, 2002, p. 1; Kraemer, Linden, and Dedrick, 2011, p. 3; Dedrick, Kraemer and Linden, 2011, p. 505). Coyle et al. (2008, p. 14), introduces the concept of the physical distribution involving the fields of transportation, warehousing, inventory control, packaging and material handling. The areas align to the discussion by Stadtler (2015, p. 7) where the supply chain system in the flow of products involves various individual, organization, and activities. Apple Inc operates with different manufacturers across 178 countries totaling to over 100 manufacturing outlets with a majority of these located in China (Johnson et al. 2012, p. 6; (Clara, 2014, p. 1). The location of the production plants in China follows the cheaper labor costs compared to the US. Johnson et al. (2012, p. 6) identify the suppliers as the Koreans supplying raw materials for the Chinese manufacturers, especially the LCD panels. Once production is complete, the products enter a testing and review process that proceeds with packaging and distribution to the marketers. Apple works with both the retail and wholesale distributors to reach as wider consumer base (Kraemer, et al. 2011, p.10). Moreover, the use of online outlets enables an easier interaction of the company with the direct consumer. Information flow includes the specification of relative areas within a system according to its particular needs (Bowersox et al. 2002, p. 45). Three areas falling under this field include the consumer, the availability of the inventory, and the level of urgency that is a function of both the individual logistic and the structure of the inventory (Bowersox et al. 2002, p. 45). The success of the information system relies on the proper integration of the three areas which represent the procurement, manufacturing and distribution activities of the firm. Bowersox et al. (2002, p. 45) provide two vital areas of information flow including the operation and planning or the coordination function. The fulfillment of the planning function relies on the specific objective of the company. In the case of Apple, its strategic objective involves the capturing of value through the employment of financial and marketing strategies (Lehman & Haslam, 2013, p. 246). According to Cornelissen (2014, p. 97) communication strategies is central to the achievement of a productive information and communication system in the organization. Although different from information flow which outlines the particular fields and how each relates to another through a sequential system, communication addresses the particular shareholders performing the activities through an analysis system of the organization environment. To meet the marketing requirement, Apple prioritizes innovation where each successive product has a characteristic feature of improved technology, efficiency, and performance. Comparatively, its financial strengths develop through its outsourcing strategies that significantly reduce the cost of production (Lehman & Haslam, 2013, p. 246; (Clara, 2014, p. 1). Based on Bowersox et al. (2002, p. 48), the operation function acts to see the effective implementation of the plans identified, especially pertaining to the areas of order processing, assignment, procurement, distribution management, inventory, and transportation. The imperative in the information and communication system is the level of confidentiality demanded by the company which its management equate to productivity (Chen & Bai, 2016, p. 1140). Apple directly manages its suppliers as part of its supply chain strategies, restricting an input by other third-party players. The control over its functions provides room for a single direct and influential power that oversee a continuous and success flow of information. Concerning the organization and management structures controlling the supply chain in Apple company, Chen and Bai (2016, p. 1140) provide that Apple applies a supervision approach. Through the strategy, the company performance of a rigid supervision ensures that the suppliers and outsourced companies perform exemplary to the objectives of the company. The performance of audits follows a strict process designed by Apple where the auditor is an Apple personnel working with a trained third party assistant (Chen & Bai, 2016, p. 1140). As part of the management process in managing the success of the supply chain, there are the frequent and unannounced audits where the auditor reports to the Apple executive team handling supplies who immediately respond to any irregularities (Chen & Bai, 2016, p. 1140). Moreover, its management places huge standards and high demands on the suppliers as a means to continue its position and dominance in the market. The imperative is the central position of Apple over other shareholders in deciding and direct the supply chain. Considering the form of relationship representing the case of Apple to the other shareholder, it takes the characteristic of the transactional kind where there is minimal collaboration substituted with the authoritativeness of one party. Current Performance of Supply Chain Performance in the supply chain management involves the areas of time, cost, quality, and supporting metrics. With quality and time management of the inventory becomes significant since it involves the integration of shareholders in meeting the consumer’s needs and expectations. According to Clara (2014, p. 1), the inventory is a fundamental component whose effective management interprets to the firm’s success. Following the reports on inventory performance, the company produced a total of $2.1 billion within the first quarter of the year 2014 (Clara, 2014, p. 1). Moreover, the performance includes a $ 1.6 billion in finished goods and a maximum of $525 million in components. The imperative to this success is the ability of the firm to sell each and every inventory according to the stipulated or expected time (Clara, 2014, p. 1). Clara (2014, p. 1) provides typical examples of the activities carried out by Tom Cook in managing the success of the inventory as the Chief Executive Officer (CEO) of the firm. The examples of the active decision include the cutting down the number of suppliers to maximize competition among the suppliers (Garter, 2015, p. 1). The strategy positively results to more quality of material and innovativeness as a means to acquire a competitive advantage and attract the company investment. Moreover, it improves the relations between the suppliers and the firm. Cook also decided on reducing the number of the warehouse to prevent overstocking of the products which equate to a reduction of losses and a strict reference to the inventory in deciding information flow. Clara (2014, p. 1) addresses the imitative by Cook as a means to maintain a value of product following the dynamism of the technology fields and the high competition. Based on Clara (2014, p. 1) the inclusion of a long-term product life cycle of up to 12 months ensures better prediction of the future trends by availing important supportive metrics, prediction of technology and changes in consumer needs. Through the supply chain system, the company efficiently managed its forecasting on demand allowing the company to reduce production cost through placing long-term orders with the suppliers. The application of the strategies provides considerable advantages to the suppliers as well, especially following the increased competitiveness to trade with Apple. In regards to Garter (2015, p.1) the current performance of Apple supply chain involves the diversification element where different suppliers and manufacturers are organized in managing the production, storage and supplying of the end products. According to Garter (2015, p.1), Apple’s 2015 suppliers list included 200 suppliers accounting for 97% of the companies supply chain. The 200 suppliers function in the areas of assembly, procurement, and manufacturing (Garter, 2015, p.1). Moreover, Garter (2015, p.1) identifies the remaining 3% as comprising of a total of 585 companies who also manage other sectors of the supply chain. In particular, the diversification of its activities contribute the advantages of mitigating disruptions within the supply chain allowing it to achieve gross margins, adjust order ratio with the particular suppliers reducing a dependency on third-party, quick response to changes in consumer patterns, operate on a low supply cost with an increase in supplier competition. SWOT Analysis Strengths The financial position and success of Apple is one among the major strengths (Johnson et al. 2012, p. 15). The financial strength is an outcome of its ability to progressively improve technology and reduce the cost of production through the diversification of the suppliers. According to Johnson et al. (2012, p. 15), the company holds the largest cash in hand totally to $116 billion. Johnson et al. (2012, p. 15) also mention an average of 46 % in terms of profit margin. Ovidijus (2016, p. 1) provides the advertising capabilities as part of the strength providing an increased brand awareness and a stronger demand for the company’s products. Other imperative advantages include strong distribution of products globally through a retail strategy and positive reputation (Ovidijus, 2016, 1; Justin, 2014, p. 1) Weaknesses Apple Company has a weak presence in India whose large population would provide a strong market base for the firm (Ovidijus, 2016, p. 1). The weakness results from the inability of the company to access direct market to the nation. Moreover, the company functions with a low expenditure on R&D limiting their abilities to tap on innovation and improve their performance on different technological outputs. An example is the incompatibility of the products to other Operating Systems (OS) limiting their integration and usability in the market. Comparatively, Johnson et al. (2012, p. 17) included the example of operating on a protective strategy involving a similar line of products such as the iPhone series. Opportunities Apple currently has immense opportunities in which it can enhance its market opportunity and expansion. In particular, the company has an established loyal customer base that is eager for the next product (Johnson et al. 2012, p. 18; Ovidijus, 2016, p. 1). Apart from a loyal consumer, there is the growing dependency on technology through the rise of the internet of things (Johnson et al. 2012, p. 18; Ovidijus, 2016, p. 1). With this, there is a likely potential of the company to continue its relevance in the market as one of the significant companies availing technology to the public. Threats Competitions from other manufacturers such as Google pose significant challenge to Apple. Moreover, innovation in technology is dynamic limiting the success of a particular product. These innovations affect the supply system which has to change as well. The company faces multiple law infringement limiting its reputation (Johnson et al. 2012, p. 18; Ovidijus, 2016, p. 1). Major Issues and Problems Based on Rene (2016, p. 1) introduces a number of the current problem affecting the success of the company including shipping which is a function of the supply chain management. Although successful from a general perspective, the company supply chain has continually faced challenges in managing the personnel and the quality of the product. Eric (2013, p.1) includes the changes in the technology and its impact on a tech company such as Apple. The question is the ability of Apple to continually respond to these changes. Moreover, there are the issues of the including other shareholders in the decision-making process, especially the supply chain which contributes to the performance of the firm. References Bowersox, D.J., Closs, D.J., and Cooper, M.B., 2002. Supply Chain Logistics Management. New York, NY: McGraw-Hill. Chen, J. and Bai, H., 2016. Analysis on the Reasons of Social Responsibility Management Deficiency of Multinational Corporations’ Supply Chain Based on PDCA Model-a Case Study of Apple Company. Clara, L., 2014. Apple Supply Chain-The best supply chain in the world. [online] Available at: https://www.tradegecko.com/blog/apple-had-the-best-supply-chain-in-the-world-for-the-last-four-years-here-is-what-you-can-learn-from-it [Accessed 25 Apr. 2017]. Cornelissen, J., 2014. Corporate communication: A guide to theory and practice. London: Sage publications. Coyle, J.J., Langley, C.J., Gibson, B.J., Novack, R.A., Bardi, E.J., 2008. Supply Chain Management - A Logistics Perspective. Australia: South-Western, Cengage Learning. Dedrick, J., Kraemer, K.L. and Linden, G., 2011. The distribution of value in the mobile phone supply chain. Telecommunications Policy, vol. 35, no.6, pp. 505- 521.\ Eric, J., 2013. The 5 big problems facing Apple-None of which is too much cash. [online] Available at: https://www.forbes.com/sites/ericjackson/2013/02/26/the-5-big-problems-facing-apple-none-of-which-is-too-much-cash/#7138090454b3 [Accessed on 25 Apr. 2017]. Garter., 2015. A case Study of Apple’s Supply Chain. [online] Available at: http://www.companydirectors.com.au/director-resource-centre/governance-leadership-centre/governance-driving-performance/streaming-the-supply-chain-a-case-study-of-apple [Accessed 25 Apr. 2017]. Johnson, K., Singer, J., Li, Y., Phan, H. and Trinh, H., 2012. The Innovative Success that is Apple, Inc. sc. Marshall Digital Scholar, vol.1, no.1, pp. 1–43. Justin, H., 2014. Apple Inc, a short SWOT Analysis. [online] Available at: http://www.valueline.com/Stocks/Highlights/Apple_Inc-A_Short_SWOT_Analysis.aspx [Accessed on 25 Apr. 2017]. Kraemer, K., Linden, G. and Dedrick, J., 2011. Capturing value in Global Networks: Apple’s iPad and iPhone. University of California, Irvine, University of California, Berkeley, y Syracuse University, NY. http://pcic.merage.uci.edu/papers/2011/value_iPad_iPhone.pdf.Consultadoel,15 Lehman, G., & Haslam, C. (2013). Accounting for the Apple Inc business model: Corporate value capture and dysfunctional economic and social consequences. In Accounting Forum, vol.37, no.4, 245- 248. Ovidijus, J., 2016. Apple SWOT analysis. [online] Available at: https://www.strategicmanagementinsight.com/swot-analyses/apple-swot-analysis.html [Accessed on 25 Apr. 2017]. Rene, R., 2016. Biggest problems facing Apple in 2017. [online] Available at: http://www.imore.com/biggest-problems-facing-apple-2017 [Accessed on 25 Apr. 2017]. Stadtler, H., 2015. Supply chain management: An overview. In Supply chain management and advanced planning. Springer Berlin Heidelberg. Read More