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Apple Inc. - an Analysis of the Apple Supply Chain

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Online Assignment Submission

Student ID Number: 1851578

Program Of Study: Exchange Student Autumn 2017

Supply Chain Management (07 14511)

Assignment Title: An Analysis of the Apple Supply Chain

Date and Time of Submission: 07/12/2017 16:29

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Background Information on Apple as a Company

Apple Inc. is a multinational American technology company that was co-founded by Steve Jobs, Steve Wozniak and Ronald Wayne in 1976 as Apple Computers, which became Apple Inc. a year later in 1977. Apple is a leader in innovation in the technology field and currently produces numerous software and hardware products for both personal and commercial use. Apple is listed on the NASDAQ stock exchange as AAPL, and reported revenues of  $229 Billion in 2017 and is currently estimated to be worth around $895 Billion. At Apple there has always been a focus on the creation of innovative products. CEO Tim Cook is quoted as referring as Apple’s goals to “make great products,” in addition to “focusing on innovating” and a belief in “the simple not the complex.”(Go, 2011). And Apple has been voted the world’s most admired brand on numerous occasions, including 2017 (Fortune, 2017).

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Apple’s Supply Chain

In the following few paragraphs a brief outline of Apple’s Supply chain is provided. The term supply chain arose in the late 1980’s and replaced the terms “logistics” and “operations management,” that had been used previously. A supply chain can be defined as “the alignment of firms that brings products or services to market.”(Chopra & Meindl, 1998) A supply chain also consists of “all the stages involved directly or indirectly in fulfilling a customer request” and the supply chain is not just limited to the manufacturer and suppliers but also includes “transporters, warehouses, retailers and customers” (Chopra & Meidl, 2001).

A great deal of Apple’s success as a company can be attributed to its highly efficient and effective supply chain (Fraser, 2017). Current Apple CEO Tim Cook has been described as a “supply chain specialist,” and during his time at Apple has overseen the implementation of various initiatives in the management of the supply chain. Outsourcing is a key component of Apple’s supply chain, and strong long term relationships with key suppliers and the introduction of inventory tracking mechanisms ensure that quotes are fair and delivered on time (Fraser, 2017)

 Apple’s supply chain success is the result of different strategies implemented such as slashing inventory and letting suppliers compete which has created a fast inventory turn over. Inventory turns every 5 days which equals 73 inventory turns per year.

Apple’s supply chain was ranked the most efficient 7 years in a row from 2008-2014, by IT research company Gartner, which publishes a list of the 25 most efficient supply chains every year. In 2015 Apple was placed in a new masters category that was created to “highlight the accomplishments and capabilities of long-term leaders,” and has maintained its place in that category ever since. Gartner described the Apple supply chain as “defining the very notion of a solution,” as a result of its excellent demand creation capabilities (Gartner, 2017).

 Apple’s Supply chain utilises the New Product Development (NPD) Framework. The NPD framework focuses on achieving growth through the creation of new products and strategic innovation as opposed to cost reductions and the acquisition of other companies. The framework created through the NPD is guided by the innovation strategy, with all other processes and activities facilitating and supporting the innovation strategy.

New Product Development Framework

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The Apple supply chain is outlined below through the utilisation of a supply chain map. The map below was created through analysis of Apples annual reports and information contained within  “Apple Computer’s Supplier Hubs: A Tale of Three Cities” from Stanford University (1996). The supply chain begins with the development of new technologies and licensing for intellectual property. This stage is followed by research and testing.

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