Apple Inc - Making Products Better through Innovations and Research Development - Case Study Example

• • Abstract

Apple Inc., as it commonly known, is a tech company that manufactures consumer electronic and is popularly known for its innovative devices such as iPhones, iPads, iPods and Apple computers, and equally, breakthrough software and operating systems. Organized operations management is the secret behind Apple’s success coupled with exemplary innovations and a lot of confidentiality in production. Under the leadership of Steve Jobs, the Cofounder and Tim Cook, the company has managed to outsmart competitors because of the elaborate strategies in management, product design, chain supply management, inventory management, human resources management and also performance management. The company mostly outsources its manufacturing from companies such as Foxconn in China, and products can be shipped direct from the manufacturer to the customer, thus cutting on shipping and storage costs. The Apple stores all over the world are outlaid well in the same design to allow customers ample space to window shop on Apple’s latest products.

Keywords: product design, inventory management, value chain analysis, human resource management, operations performance management

• Apple Company
  • Introduction

Apple Company started in 1976 as a computer company under Steve Jobs, Ronald Wayne, and Steve Wozniak under the name Apple Computers Inc (Rawlinson, 2016). However, in 2007, the company dropped “computers” to be Apple Inc., following its expansion into consumer electronics market like iPhone and iPod in additional to the original focus on personal computers. The company engages in designing developing and also marketing of communication gadgets, portable music players, personal computers, network solutions and software among other related accessories. The company, which is located in the Silicon Valley, employs over twenty thousand people globally and posts large sales annually (Gupta & Prinzinger, 2013). The company has a unique reputation in the consumer electronic industry, which can mainly be attributed to their innovative product and services strategy that is aligned to a digital hub. Success to their product can be associated to the annual conferences and expos that they hold to educate and sensitize people on their products.

With the wide range of products that Apple Inc. offers, customers can get the best hardware devices and software, which also come with expert advice, instructions, and demonstrations by the Apple staff that develops the products, especially during the expos. Preference for their products however, comes from the Mac world, which enables them to maintain premium pricing about their competitors. In the design of products, Apple maintains secrecy in that access to products is only to those employees assigned to their production in new product development teams. Product design is their greatest strategy that enables them to reach beyond the current practices, even before anybody expects them to. In short, product differentiation and the sale strategies have helped Apple Inc. to successfully maintain an upper competitive advantage and equally maintain such vast sales annually.

• • Design of products and Services

Apple’s product production process is among the most successful design process in the world today because of its secrecy, thus making it gain market advantage. The design team at Apple is given autonomy with free reign to set their budget with also ability to disregard manufacturing practicalities. When working on new products, the design teams are separated from the rest of Apple business, and the company may put in place mechanisms that prevent the rest of the team from interacting with other Apple employees (Martin, 2016). The team is therefore detached from the Apple hierarchy by creating their reporting structures that are answerable to the Executive team hence they can focus more on the design instead of the daily minutiae. The new product process information is provided to the team once the process starts and it is detailed at each stage of the process. Each stage the product goes through is defined and individuals assigned at each stage, to work towards achieving the final product within the time frames set.

The Executive team carries out weekly reviews on every single product whose design is in progress, and this is possible because the company only concentrates on a handful of projects at one given time. Therefore, every product is inspected by the executive team which keeps delays in decision-making at a minimum hence enabling the company to be very lean in their approach. It is the responsibility of the engineering project manager and the global sales manager to take over the product immediately it moves from design to production.

Apple outsources most of its manufacturing especially from Foxconn, which thus keeps production costs low while at the same time helping them to maintain a significant market advantage (Martin, 2016). Apple usually iterates the design throughout in the manufacturing process where the product once built it is tested and reviewed severally to make any necessary improvements. The packaging room is very secure, and it is where all Apple unboxes prototypes. Once the product is complete, the product is launched in an action known as the rules of the road.

• • Quality Management

Quality management at Apple is the reason behind the success of the company and their superior competitive advantage they maintain. They are built on a strong vision and mission statement that makes them capable of achieving their objectives in producing quality products and services. They have a centralized organization structure instead of the traditional hierarchical structure and most decisions are left to the executive management (Apple Inc., 2010). According to the founder Steve Jobs, the layers of management, are considered to take off focus on the responsibilities at hand hence, he advocated for maintaining each to work at what they are best in when designing and building the product.

Most of Apple’s operations are coordinated by the Senior VP with other senior VP to ensure compliance of the company with its quality standards. With the company divided into product divisions the structures make it easier to hold each member accountable since the members are aggregated in small teams of less than 100 people managed by a team leader. Smaller teams make it easy for accountability as demonstrated by their directly responsible person approach hence there are no room excuses. Apple's management maintains high secrecy when it comes to their products in that not even the employees are supposed to have information about new products and any individual who leaks company information is easily terminated (Apple Inc., 2010). It is for such reason that not many members of key management committees are permitted to volunteer to other organization although such practice is common in a big corporation. They believe if employees dedicated most of their time to Apple they would focus more on product development thus achieve the best. Therefore, the high-quality standards in their product design and development, marketing, supply chain and human resources management have continually ensured their success. Apple's holistic approach, therefore, ensures there is quality address to the decision areas of operations management.

• • Process and capacity design

The company's human resource management strategies are inclusive of the need to support workforce so as to maximize capacity in the development and design of the product. The design process involves a design team that is assembled to work out the whole design with regular meetings weekly. The design teams are maintained to work together for as long as they should in the process of design till the team creates a physical product from their drawings which are very advantageous since it galvanizes and makes the team be focused (Chen & Matt, 2014). Their products are highly differentiated because their design processes focus mainly in addressing the customer need. Hence, their designs and graphic systems remain to notch compared to other competitors.

The company equally works with suppliers in ensuring there is efficiency in the processes and that there is sufficiency capacity in the design process are of operations management. For instance, Apple gives its suppliers from which they outsource such as Foxconn directives for the process design on what they are supposed to deliver. However to optimize on their Human resource management, they also provide the Apple Supplier Code of Conduct so as to make it easier to manage suppliers (Johnson et al., 2012). Also, Apple Inc. is always looking for a way of improving their products through innovation in its facilities as a means of optimizing capacity and also the process of efficiency. Therefore, Apple has a very comprehensive approach for product process and capacity design as a decision area in its operations management.

• • Location strategy

Apple's location strategy is very selective, and it involves very limited authorization of dealers. However, most of their Apple stores are located in densely populated urban centers so as to maximize on the large numbers of foot traffic and equally get more brand exposure. Currently, Apple has more than 450 stores around the world in 16 countries. Customers have to line in the stores to purchase the latest product which is a strategy that Apple employs because the queues indicate that there is actually demand for the product and also generate publicity from the media frenzy (Kalb, 2015). This, however, has a synergistic effect because the attention usually creates a viral word to mouth interaction which is very valuable to Apple an investment whose cost is small compared to paid media advertisement. The queues in the stores have proved to be very important in marketing especially in combination with brand uniqueness. Nevertheless, despite the limited approach in the authorization of dealers, Apple is among the most profitable corporations in the world today, and their stores post the highest revenue per square foot in the US regarding Retail space.

• • Layout Design and Strategy

The design of the layout of Apple stores is structured in a way to emphasize on customer expectations. For instance, the stores are very spacious with very minimal décor so as to ensure the customers have sufficient focus on the products. The company's other facilities are addressed through having innovative office outlays that encourage efficient workflows and creativity. Their store design is trademarked under the US Patent, and Trademark office approving their glass fronted rectangular recessed design (Apple Inc., 2010). The interior shelves are cantilevered, and the spaces along the front side wall are recessed for display. Inside rectangular tables are arranged in a line parallel to the walls to give customers ample space to check on then Apple products.

At Apple creativity is very important among the employees who are tasked with product design and then development process that is why the store layout is a mesh of creativity and ingenuity to ensure customers get the best. Trade marking of their architectural layout is proving that it is intellectual property. The simplicity of the iconic store design promotes intuitiveness which is an advantage for the company since it is recognizable as Apple's product design strategy (Lu, 2014). This, however, promotes creativity among other competing tech companies which will move to redefine their brands. The Apple retail store layout has been planned designed out to encourage and influence customers into spending more as they shop while browsing.

• • Job Design and Human Resource

Job design and human resource is an operations management decision area where he company needs to be specific because it is very vital n ensuring they remain competitive. The company is well known for its ability to maintain creativity and commercial personnel an element that was epitomized by the cooperation of Steve Jobs and the COO Tim Cook. At Apple, the work culture has a consistency image like that of the products and the recruitment requirement requires individuals who are good at what they do. Their human resource policy is cultured around establishing a strong and equally supportive work environment that fosters innovation and creativity (Rowland, 2015). The job design and human resource strategies are all built around Steve Job's original emphasis on excellence. Nevertheless, under Tim Cook's leadership, the company has been reforming the strategies gradually to reflect a sociable work environment that can boost employee morale.

The company is an equal opportunity employer, with over 10,000 permanent employees in their retail stores, and it considers all calibers of people even the disabled through their special reasonable accommodation plan. The top management promotes active employee participation by engaging employees to provide their input in solving challenges that Apple might be facing. Further engagement encourages employees’ commitment, flexibility, and adaptability which make it possible for lifelong improvement and learning (Apple Inc., 2010). Apple equally employs other ways of shoring up their human resource by hiring individuals who are committed to excellence, and they appreciate the significance of retaining skilled employees by means of paying them what they are worth. The skilled workforce in line with employee incentives has helped Apple master their jib designs and human resource strategies hence ensuring that they continue to have adequate support for its industry leadership.

• • Supply Chain Management

Apple's supply chain management strategy is among the most efficient in the world today in terms of management of suppliers and the supply chain. Apple has outlined its expectations from the suppliers, and it has established exclusive agreements with them in exchange for volume guarantees. The company employs an automation of processes in their supply chain activities and equally carries regular monitoring of suppliers (Business week, 2007). Monitoring is of an essence in that it evaluates the suppliers' capacity and productivity as well as whether they comply with the Apple Supplier Code of Conduct. Automation of processes is an aspect that serves as the main strength behind apple's successive supply chain management approach. The company, therefore, has developed relationships with their suppliers with time which has helped in their quick sale operations to demand of existing products. In order to ensure adequate production capacity, Apple places high volume pre-orders with suppliers which help in preventing competitors from getting access to similar manufacturing resources.

Since Apple's most products are outsourced globally then, the manufacturing partners have to sign the Code of Conduct as a precondition for a business contract. They equally carry out onsite audits, approving of corrective action plans and equally verification of the implementation of these plans as a way of ensuring quality. Distribution outlet that is the Apple stores are strategically positioned to give a unique customer experience (Lu, 2014). Their distribution channels are either direct or indirect ranging from the physical Apple stores, wholesalers, retailers, online stores and also third-party cellular network carriers. With the use of automated services to deliver digital content and also software updates through internet Apple is able to remain ahead of competitors in ensuring their products reach their customers.

• • Inventory Management

Apple is known for its exemplary designs and innovative products which necessitated them to come up with the best inventory strategies that have been the pillar of their success in the market. Their obsessive control over their inventory has helped them maintain control of costs as well as meet customer needs with the right balance of inventory in various locations in the world. They employ various inventory management methods like the serialized method for effective and efficient tracking and control of their products (Victor, 2012). They equally use a method called first in first out (FIFO) which ensures that old stock and model units are sold before new product models are released into the market. The apple store managers are also obligated to handle inventory management at their respective stores.

The approach that COO Tim Cook adopted is very efficient in that outsourcing of facilities makes the company leaner hence cutting down on the costs and equally reduce inventory stocks. Their products have an a life cycle of approximately twelve months with a depreciating value of 1-2% per week hence they treat their inventory as if all products had and expiry date. Therefore, they maintain very little inventories so as to increase chances of selling everything they produce. It takes averagely 3.2 days to sell the entire inventory, and this is achieved by the company having a central warehouse in the US whereas most of its inventory is stored in retail stores (Apple Press Info, 2016). Drop shipping has also been advantageous for online purchases in that products can be shipped directly to the customer from the manufacturer in China thus eliminating shipping costs and storage cost from the supply chain.

• • Goods, Services and Operations Management

Operations management at Apple has proved to be impeccable since its inception, and the company has been focused on delivering quality goods and services to their customers by promoting suitable user experience in their products. Success in producing quality products results from extensive research and designs a factor that has been behind their high levels of customer retention at Apple (Chelnicuic, 2013). Their products are designed in that they are complementary for instance the iPhone has a revolutionary phone, an iPod and also an internet device and equally an iPad can enable one to download music through iTunes. Their products are basically the same hence if someone owns one they will easily know what to expect once they purchase another product.

Unlike typical approach in product differentiation and diversification, Apple commits resources to a few flagship goods which they make exceedingly fit. This approach makes their products be inherently sustainable which means the less the number of products they produce the most sophisticated the design and hence a standardized operations management process in manufacturing (Meyer, 2015). In terms of operations management, the company has an operations manager who is responsible for streamlining business operations while at the same time upholding the value of the company. The operations management unit is tasked with monitoring and evaluation of productivity in the company.

• • Value Chain Analysis

Apple as a manufacturing company has it strategy built on the ability to leverage their unique designs and manufacture of a variety of products that satisfy their customers. Therefore their value chain analysis is typical of the primary activities such technology and product design, sales and marketing, manufacturing and production and customers services. Technology and product design represent their core capability of a strong research and development team that embraces innovation and continued learning which has lead to the production of their unique products that drive their value chain activities (Rowwland, 2015). Big companies generate revenue through the value that they attach to their products and services, and Apple is no exception in this case. The company does not license external software and hardware which makes it able to retain this as the cornerstone of their production process. Their high-end technology and unmatched performance in production create a unique position for Apple, which remains as its core strength. Production of components is treated as a natural process which is part of the company's design process hence enabling Apple to eliminate fierce competition in the tech industry.

Most of the company's key components in the value chain can be associated to Steve Jobs as he was the pillar of sales and marketing in the company because he was involved in conducting almost all product launches, marketing campaigns and carrying out product reviews. Steve Jobs excelled in the sector of sales and marketing which has been core to the success of the company and after his death, the company executives have put in place a strong sales and marketing team. One may worry about the long queues at Apple stores during product launches, but the secret behind attraction of such following is Apple's ability to produce technologically superior products (Apple Inc., 2010). Equally, their high transparency levels and strong customer focus has resulted in the increase in Apple's market share thus increasing cash reserves.

• • Measuring Performance in Operations

Apple has a performance evaluation system for its employees which are carried out usually after every six months to decide what employees get a pay raise. When planning the goals of performance management is deliberated by the line managers, and the individuals are appraised based on the agreed criterion. On recruitment, Apple chooses the best so as t o guarantee quality performance and employees should undergo proactive internal career progression at Apple (Cooper & Edgett, 2009). In the recruitment process employee competence and ability to deliver is assess and Apple always like going for individuals who have the admiration of their products. However, the secret to their innovations is their intellectual capital because they consider knowledge management as very important to the success of the firm. The company ensures that employees are highly trained, and they continue to get additional skills which define the organizational strategy that Apple employs in aligning individual goals with that of the organization.

The executive management at Apple provides support to the employees to achieve organizational goals and objectives by carrying out a review of organization performance plans, observing and equally documenting performance to provide feedback. Management ensures that individuals who are not up to the task in performance are corrected and provided with the necessary guidance. At Apple, leaders lead by example as demonstrated by Steve Jobs, whose leadership skills made employees promptly available at work whenever he was involved, which cultivated the culture that leaders should be coaches and mentors. Although communication is top down at Apple, it is very inclusive in that feedback is given in time to help in making necessary steps to guide in improving performance. Employees who perform exemplary are rewarded through the partnership program since their culture dictates that individuals who have had immense contribution to the company should be recognized.

• • Operation strategy

Apple adopts a generic operations strategy and an intensive growth strategy that is directly related to the company's strategies in marketing, pricing and other areas. Their operations strategy is what makes them have a competitive advantage over competitors such as Blackberry. Because of their high innovation rates and emphasis on a unique product design the company has succeeded in maintaining their relatively high selling prices in the market. They actually do this by pricing their products to customer segments which establish a market for more customers (Meyer, 2015). Consequently, they can capture relatively high margins from the early adopters’ hence driving penetration in the market. Apple is always able to look at the future in with their continuous innovations they can focus a head thus staying ahead of their rivals. Outsourcing is equally an area of operations management that the company has really excelled in that they make use of the economies of scale by manufacturing huge volumes of products that are essential during marketing launches however they bear the risk of inventory because of outsourcing manufacturing.

• • Technology and operations management

Apple's success where other tech companies failed can be said to be its technological innovation strategy that has left them ahead of the rest. Apple delivers a succession of products to consumers in the form of great software in excellent hardware that is beautifully packaged. They have created a unique game changing devices that are a result of their innovation team that is relentlessly pushing for innovations (Yarow, 2013). To safeguard their Apple technology patents every piece of technology they produce which is actually very important in protecting rivals from working on same stuff.

Most of their systems are automated thus their operations managements system blends both manual processes and automated processes. Automation helps them maximize in the capacity of utilization of the human resource, equipment, and other facilities. Their IT team, however, carries dual tasks in that it doubles in as the maintenance team for the company's servers and information technology assets.

• • Conclusion

As we have discussed Apple Inc. continues to strive to make its products better through innovations and research development in thus out smarting rival competitors. This success, however, can be attributed to one of the co-founders Steve Jobs and COO Tim Cook whose innovative and management ideologies have helped drive Apple to the map today.. Their focus on more innovation and secrecy in production leads to the brand being the best in the world because it is unlikely for the quality of their product to be imitated and actually their strong policy on patenting actually helps a lot. Their Manufacturing strategy whereby they outsource it is very advantages as it helps them in maintaining low inventory stocks thus cutting on cost and if anything it is a strategy most big companies should adapt so that they can cut on shipping and storage costs.

However regardless of their enormous effort in innovation they should keep tabs at it and utilize their talent pool effectively. Similarly, with product differentiation, Apple will remain to maintain a bigger market share, and they should continue producing the highest quality in the tech industry so that they can satisfy the needs of their customers. Nevertheless, with the introduction of product extensions and quality products in the market, Apple needs to ensure that each product is assimilated so as to increase their customer's desire to increase their Apple Portfolio. The use of the same layout of products which makes it easier to own more than one Apple product because they are more less the same technology wise should be maintained since it makes customers at ease when using Apple Product.