Supply Chain Management - Apple IPad - Case Study Example

Running Header: Apple Ipad- supply chain management Student’s Name: Instructor’s Name: Course Name & Code: Date of Submission: Apple Ipad- supply chain management Introduction Determining the issues facing the global market and defining the risks involved is one method used by companies in managing risks in supply chain. Apple has a major challenge of maintaining iPad production and component supply once the key suppliers are out. The company has therefore to figure out how to effectively deliver into new territories and in dealing with incredible demand especially in online orders in the US. These challenges are to complicate Apple’s iPad and future launches. It will also baffle efforts of another company wanting to match Apple’s offering price. The importance of supply chain management for any company is indeed valued to the extent of proper attention as the wrong predictions may lead to less profitability. 1. Characteristics of the product The iPad is a line of tablet computers that is designed as a platform for audio visual media which include books, games, movies and web contents. Steve (2010) shows the weight and size falls between that of a modern Smartphone and a laptop and runs an operating system similar to the iPad or iPhone. The device is controlled by a multitouch display that uses a pressure- triggered stylus and an onscreen keyboard. The first iPad was released in April 2010 where about 14.8 million iPads have been sold worldwide. In March 2011, iPad 2 was introduced and currently about 15 million have been sold and it is expected to take about 83 percent of the tablet computing market share in U.S. (Donald 2011). 2. Changes in the market According to Donald (2011) initially, the device was available only at the Apple store and the company’s retail stores but currently it can be purchased through many retailers such as Amazon, Wal-Mart, Verizon, etc. The first channel of distribution is the online store where it was launched in various countries and pre orders can also be made online. Apple uses four different types of new and improved distribution channels which include online store, retail stores and third party distributors. The product strategy cultivates an emotional connection to its consumers through content. Murph (2010) puts it that the device has about 65,000 applications through to consumers this is not more important than the price, battery life and 3G service flexibility. The other factor is the channel of distribution where most people prefer to buy from the Apple stores to have some knowledge from sales staff on how to use. The service matters for example a study conducted showed that consumers are willing to pay more for Apple products since they perceive that the services offered are built according to the price of the device. 3. Importance of innovation Apple iPad 2 becomes the tablet to be beaten in 2011 due to its various applications such as thinnest construction, longer battery life and it has a competitive price. Murph (2010) shows the device also has an existing pool of thousands satisfied and it is evangelizing to its customers. Other features include multi touch screen, headset control, and digital compass and ambience light sensors. The storage of the device ranges from 16GB to 64 GB flash memory and has a front facing and 720p rear facing camera. However, pioneering in the technology market is very risky as late movers and competitors copy some features and add new features therefore redefining the market. The competitors also copy the marketing efforts used to create demand of a product in the market. The company’s ability to increase volumes of both hardware and software and at the same time in redefining a sophisticated mobile phone has brought about impressive outcome. The company is still not ready to rest in innovation since the introduction of iPad and then iPad 2 which brought about a new platform for digital content and extension of the brand. Apple’s supply chain therefore depends on three major ingredients which include embedded innovation, networked supply and demand shaping. Steve (2010) shows Apple is therefore in the verge of pushing some of the supply chain icons across the globe such as Dell, Wal-Mart, Cisco, Proctor & Gamble etc. 4. Necessary supplies for delivering the product Ipad has been able to establish a recognised supply chain management which has shown that Apple is no. 1 in AMR top 25 supply chains. Jason (2011) describes that this began when Apple announced the acceptance of pre-orders which was a journey to fulfill the demand across the US. Apple therefore implemented activities for making things work in terms of a higher level on-time delivery. They also improved their market dynamics and their supply chain commendable record time. To begin with, Apple ensured that they have enough stock at hand before starting the actual shipping’s. This is because the demand for iPad had significantly increased. The company also put a condition that a customer can only pre book a maximum of two iPads as this would avoid retailers stocking more iPads and to resell them at a higher price in case there is a shortage from the company (Jason 2011). Due to the unprecedented demand, the company was able to sell more than 200,000 units on the first day of shipping. The supply chain was further improved through forecasts and negotiations with the key suppliers who were to bring their lead times down significantly. Some of the iPad suppliers include Broadcom, Foxlink technology, Cirrus Logic, Seiko Epson etc. this negotiation was to initiate a collaborative planning where Apple would share actual demand and choice pattern with the suppliers. Apple therefore had to make sure that they have the most effective and efficient supply chain for iPad (Donald 2011). The consumers in the market also responded to the revolutionary design and features of Ipad and it was difficult for them to resist. This therefore increased the demand which resulted to issues arising from the Apple’s supply chain teams. InfoVerto (2010) shows Apple Company was however prepared for the new situation and handled it quite well and this was shown by the increased sales which increased to 2 million units in 60 days. This accomplishment was also noticed by the Chief supply chain officers across the globe as it was commendable. This also made Apple Company to get a position among the AMR supply chain top 25 for 2010. The reason why Apple dominates is because it significantly brings both operational and innovation excellence which is difficult to bear in the competitive market (InfoVerto 2010). 5. How supplies can be made sustainable This makes it the reason why anytime Apple announces a new product in the market; the business press is more interested in not only how the product is made but which suppliers are playing the part in its production. Steve (2010) explains that the new iPad for example sold about 300,000 copies in the initial launch this is due to some of its suppliers such as Silicon Valley Giant. iPad increased demand is because it contains features of iphone and iPod touch which also had an effective supply chain. Apple is also critical in how its supply chain partner’s gourd information about the product and it also looks more into what its employees do for example in the factories the company use metal detectors to such their employees in case they have metal objects with them. According to Jason (2010) one of the most prominent Apple supply chain partner is Samsung which supplies flash memory in Korean companies and Toshiba Corp. the storage device is one of the most expensive part of the iPad as Apple designed one called A4 which is preferred due to its ability to download large chunks and it also speed up routine tasks such as downloading e-mail, surfing or launching applications. The other Apple supply chain partner is Amperex Technology Ltd. which supplies batteries and other iPad components around Japan (Jonny 2011). The ability of the media, customers and competitors to break down a supply chain like Apple’s ipad is largely limited by the high technology involved. Jonny (2011) shows this great transparency of high tech may afford the ability to rapidly disrupt a company’s supply chain. However, 6. How supply can be made sustainable According to Joel et al. (2008) the importance of supply chain management while all firms are part of a chain of the organisation is bringing products and services to customers. Due to complexity in the modern supply chain, the tilted practices have weakened supply chain networks. One example is a firm where there is there is little or no buffer inventory thus causing a rapid impact on the process in which goods are supplied. This impact may be caused by various disruptions which include strikes, terrorism attacks or natural calamities for example in Japan earthquake. It is therefore necessary for managers to try and get new ideas and strategies of dealing with the complexity (Lee and Wolfe 2003, pp. 12-20). The diagram below shows the features of supply chain management and how goods move from the company, suppliers to customers. Fig. 1 Conclusion One major way of exploiting uncertainty is to stop avoiding it but face the reality. This is by capitalising on uncertainty, exploiting it and finally getting benefits from it. The other method of managing risks in supply chain is by determining the issues facing the global market and defining the risks involved. This method enhances the continuity of the firm as managers deal with every issue s stake and come up with possible solutions. A strategic choice is therefore made which will be used in dealing with the stated risk. Supply chain therefore works by reducing inventories along the chain, providing better information among partners and planning events through consultation rather than through isolation. Other benefits of supply chain include better customer service, efficient manufacturing, lowered costs and improving trust among partners. References Donald, B 2011, Apple iPad 2 hands-on, Predictable, awesome, viewed, 26 August 2011 InfoVerto 2010, iPad supply chain success shows why Apple is no. 1 in AMR Top 25 supply chains, viewed 26 August 2011, Jason, B 2010, The new Apple iPad, High-tech supply chain transparency (part 1), viewed 26 August 2011, Jason, P 2011, Apple's secret iPad advantage, The supply chain, viewed 26 August 2011, Joel, D., Keah-Choon, T. & Keong, L 2008, Principles of Supply Chain Management, Springer, London, pp. 241. Jonny, E 2011, Apple helps Japan as supply chain problems grow, viewed 26 August 2011, Lee, H & Wolfe, M 2003, Supply chain security without tear, Supply chain management review, pp. 12-20. Mentzer, J et al., 2001, Defining supply chain management, Journal of Business Logistics, vol. 22, no. 2, 2001, pp. 1–25. Murph, D 2010, Knockoff 3-in-1 iPad camera connection kit improves Apple's own design, Michigan, Engadget. Steve, K 2010, Apple’s iPad and the supply chain, viewed 26 August 2011, Read More