Department of Management, Leadership and Organizations
Global Supply Chain Management
Apple Inc. is a global technology corporation with its headquarters in Cupertino, California, USA. It was founded in 1976. It develops, produces, and sells a wide range of electronic goods, software, and web-based services to consumers. The company's most well-known offerings are the iPhone, iPad, Mac, Apple Watch, and several online services (Clarke, and Boersma, 2017).
Apple's supply chain is famous for being both intricate and remarkably effective. Many different nations are represented in this supply chain; from China and the US to Japan and Taiwan and beyond. Apple's supply chain is comprised of product design, component sourcing, production, distribution, and retail.
· Supply Chain: Supply chains connect businesses and their vendors in order to manufacture and ship goods to customers. Various actions, participants, entities, data, and assets make up this network.
· Outsourcing: Outsourcing refers to the practise of relying on third-party service providers rather than keeping some tasks in-house. Manufacturing and assembly are common examples in discussions about supply chains.
· Lean/Agile/Leagile Supply Chain: An agile supply chain can quickly adapt to new circumstances, whereas a lean supply chain prioritises efficiency and cost savings by eliminating waste. Leagile is a hybrid approach that tries to strike a balance between low overhead and rapid response (Grimes, and Sun, 2016).
· Competitive Advantage Strategies: Advantageous business practises that set one company apart from the competition in terms of quality, cost structure, customer service, or product offering.
· Technology and Knowledge Transfer in Supply Chain: Changes in the supply chain that include the introduction of new technologies and the exchange of vital data, knowledge, and expertise among the many participants.
Apple's strategy of expanding its company abroad has been crucial to its ongoing success. Its worldwide reach helps it to capitalise on markets with varying populations, income levels, and preferences.
Apple's main approach to doing business internationally is to move production to nations with cheaper labour rates. Due to the region's cheaper labour costs and established manufacturing environment, Apple started moving its production operations to Asia, notably China, in the late 1990s (Lockamy III, 2017). Foxconn, a Taiwanese electronics manufacturing giant, became Apple's principal assembler when the two companies struck a strategic alliance.
Apple's production is outsourced, but the company keeps control of design, R&D, and software development in-house. Using this strategy, known as insourcing, Apple has been able to keep tight reins on its intellectual property, guarantee the quality of its products, and keep the creative juices flowing.
The approach of product diversification that Apple employs has had a major bearing on the company's worldwide success. Apple's global customer base is devoted to the company because of its regular release of new, high-quality goods. Apple is able to demand greater prices for its goods than its rivals because to this tactic (Rikap, 2018).
The company's foreign retail strategy also plays a role in Apple's worldwide success. It operates brick-and-mortar shops in strategic places throughout the globe, where customers can enjoy a one-of-a-kind, hands-on shopping experience (Raj-Reichert, 2018). It can sell to people all around the world because to its website and the App Store.
In short, Apple's foreign business strategy is based on strategic outsourcing, product differentiation, and a strong retail presence, all of which allow the firm to reach consumers all over the globe and keep its place as a market leader in the technology industry.
Figure 1 the international business strategies
Source: (Lockamy III, 2019)
Apple's supply chain has garnered praise all around the world for its meticulous planning and high level of operational effectiveness, both of which contribute significantly to the company's overall success. It has a worldwide supply chain that includes suppliers and manufacturers located in a number of different countries, with the majority of its production being outsourced to Foxconn in China (Venkataraman, and Pinto, 2016). The management of Apple's supply chain places an emphasis on maximising operational effectiveness while simultaneously reducing costs and maintaining quality standards.
A major component of Apple's business model is a concept known as "lean supply chain." This approach prioritises the elimination of waste and the enhancement of operational efficacy, the primary means by which these goals are accomplished being a just-in-time (JIT) production and inventory model. JIT enables Apple to keep just a small amount of inventory at each stage of its supply chain, which helps the company cut down on both its inventory expenses and the possibility of its products becoming obsolete. To guarantee that all of the components and final products are in the correct location at the right time, it takes careful coordination as well as logistical organisation that is very effective.
This approach to lean manufacturing also translates into excellent ties with Apple's suppliers. Apple is able to negotiate better price, guarantee that its components are of excellent quality, and have a greater level of control over its supply chain because of its tight collaboration with a select group of suppliers (Fujita, and Hamaguchi, 2016). Apple choose its suppliers depending on whether or not they can achieve the company's stringent quality requirements and whether or not they can supply big quantities of product under rigorous deadlines.
Apple maintains a streamlined supply chain while also including factors that contribute to its agility. For instance, Apple is known to charter flights in order to transport freshly released items from producers in Asia to retail locations in the United States and other areas of the globe. This practise is not uncommon for Apple. The flexibility of Apple's supply chain is shown by their prompt responsiveness to the strong market demand.
Apple has, in essence, developed a supply chain that blends the responsiveness and flexibility of agile technique with the cost-efficiency of lean methodology (SinghKang et al., 2023). The most important aspects of its effective supply chain strategy are the strategic supplier connections it maintains, the just-in-time inventory model it uses, and its emphasis on quality and efficiency.
Figure 2 Apple's supply chain
Source: (Aljafari, 2016)
Apple's supply chain is at the centre of numerous of the company's distinctive methods that have allowed it to retain a competitive advantage in the industry. Some of these methods that stand out the most are as follows:
Facilities Planning | Apple's choice to produce its goods in China, where labour and manufacturing costs are cheaper, has given the company a competitive edge. They're able to do this by teaming up with factories capable of producing at Apple's massive scale, factories like Foxconn and Pegatron. |
Outsourcing and Insourcing | Apple may contract out for most of its production, but it keeps vital processes like product design and R&D in-house (Qiu, 2022). This provides Apple a huge leg up on the competition by guaranteeing the superior quality and cutting-edge innovation of its products. |
Inventory Management | Apple uses a just-in-time inventory approach, which reduces the need to store excess stock and thereby saves money. As a result, Apple will never pay to store more inventory than it needs and won't have to worry as much about its products becoming obsolete. |
Transportation and Distribution | Apple's goods are sold all over the world through a combination of official retail locations, internet marketplaces, and independent distributors. Its competitive edge is in the effective distribution of its goods to international markets, which it achieves by careful management of the logistics and coordination of its complex network of suppliers, manufacturers, and retailers (Straube, and Durach, 2017). |
Information Sharing | Apple's product development strategy is shrouded in secrecy. However, it collaborates closely with its vendors and other partners to improve manufacturing efficiency and quality. Apple is able to keep to its production schedule and improve the quality of its products thanks to this cooperative method. |
Apple's competitive edge is the result of a number of these tactics working together. The firm stands out from the competition because to its innovative supply chain practises and commitment to quality, originality, and the satisfaction of its customers.
Apple's supply chain operations are greatly aided by technological advancements, which boost both efficiency and responsiveness. Apple's supply chain makes use of a wide range of cutting-edge technology and systems.
The ERP system from SAP is what Apple employs to manage its supply chain and deliver customer orders. As a result, activities may be monitored in real time, providing better information for making decisions (Yeung, and Coe, 2015).
Figure 3 Functional Areas of an ERP System
Source: (Zeng et al., 2022)
Apple uses these tools for data analysis and market trend prediction, which aids in demand forecasting and stock management.
The Internet of Things improves Apple's supply chain by allowing for real-time shipment tracking and warehouse/transport condition monitoring.
Automation and robots are used by Apple and its suppliers during production to boost output, lower mistake rates, and enhance product quality (Van De Vliert, 2021).
Blockchain technology has the potential to improve traceability and reduce fraud, therefore it has been claimed that Apple may employ it to increase supply chain transparency and security.
Apple's ability to maintain a supply chain that can respond quickly and effectively to changing market circumstances and consumer preferences is made possible by the tools at the company's disposal.
Apple's supply chain management relies heavily on the sharing of relevant information and expertise. Integral to this process is the free flow of information between the many nodes in the network, from individual offices to external vendors and collaborators.
Internal Knowledge Transfer | Apple encourages its employees to share what they've learned throughout the organisation. Teams from design, engineering, manufacturing, and logistics constantly communicate and exchange data to guarantee that all functions adhere to the same high standards and goals as the rest of the business. |
External Knowledge Transfer | Apple also actively educates its vendors and business associates. This might take the form of briefing suppliers on Apple's quality standards and manufacturing procedures, discussing recent market developments, or offering technical support (Khalid, and Vida, 2023). Suppliers may now make parts to Apple's exacting requirements and refine their operations in the process. |
Supplier Development Program | Apple's Supplier Development Programme offers its suppliers access to tools, education, and guidance to help them enhance their operations and conform to Apple's high quality and environmental requirements. |
Supplier Responsibility | Apple's programmes for Supplier Responsibility promote supplier respect for human rights, workplace safety, and the environment. Best practises and regulatory compliance education are also part of this process (Mogensen, 2018). |
Essentially, knowledge transfer throughout Apple's supply chain aids in upholding the company's rigorous product quality standards, fosters a culture of continual development and innovation, and guarantees conformity with Apple's ethical and environmental tenets.
Several suggestions for improving Apple's foreign supply chain's efficiency and adaptability have been derived from the company's investigation:
· Diversification of Manufacturing Locations: Apple should explore manufacturing in other countries as the US-China trade war and other geopolitical challenges threaten Chinese production. With cheaper labour costs and increased technological capabilities, Vietnam and India are becoming viable options.
· Developing Second Sources for Key Components: Apple relies on certain vendors for vital parts. To prevent supply disruptions, the corporation should invest in secondary components. This entails training other prospective providers.
· Enhancing Supplier Sustainability Programs: Apple might encourage suppliers to use green energy in production. This would cut carbon emissions and safeguard Apple from energy price fluctuations.
· Strengthening Blockchain Implementation: Apple should adopt blockchain technology throughout its supply chain to boost traceability and transparency. This would also protect its supplier responsibility programmes.
· Leveraging AI and Big Data for Demand Forecasting: Apple employs these technologies, but they may be improved. AI and Big Data may help Apple improve demand estimates, inventory management, and costs.
Apple's worldwide supply chain is already a standard for the industry; if these ideas are applied, they may assist the firm in further improving its supply chain resilience, lowering costs, increasing transparency, and becoming ready for upcoming problems.
Aljafari, A., 2016. Apple Inc. industry analysis business policy and strategy. International Journal of Scientific & Engineering Research, 7(3), pp.406-441. https://down.documentine.com/334efa922f97739e75944aeaeaca159c.pdf
Clarke, T. and Boersma, M., 2017. The governance of global value chains: Unresolved human rights, environmental and ethical dilemmas in the apple supply chain. Journal of business ethics, 143, pp.111-131. https://link.springer.com/article/10.1007/s10551-015-2781-3
Fujita, M. and Hamaguchi, N., 2016. Supply chain internationalization in East Asia: Inclusiveness and risks. Papers in Regional Science, 95(1), pp.81-100. https://rsaiconnect.onlinelibrary.wiley.com/doi/abs/10.1111/pirs.12183
Grimes, S. and Sun, Y., 2016. China’s evolving role in Apple’s global value chain. Area Development and Policy, 1(1), pp.94-112. https://www.tandfonline.com/doi/abs/10.1080/23792949.2016.1149434
Khalid, M.A. and Vida, V., 2023. Strategic Marketing Plan for APPLE Inc. Network Intelligence Studies, Year (volume) XI, (21), pp.61-74. https://www.researchgate.net/profile/Viktoria-Vida/publication/371876043_Strategic_Marketing_Plan_for_APPLE_Inc/links/649ac6f9c41fb852dd355e52/Strategic-Marketing-Plan-for-APPLE-Inc.pdf
Lockamy III, A., 2017, July. An examination of external risk factors in Apple Inc.’s supply chain. In Supply Chain Forum: An International Journal (Vol. 18, No. 3, pp. 177-188). Taylor & Francis. https://www.tandfonline.com/doi/abs/10.1080/16258312.2017.1328252
Lockamy III, A., 2019. Benchmarking supplier external risk factors in electronic equipment industry supply chains. Benchmarking: An International Journal, 26(1), pp.176-204. https://www.emerald.com/insight/content/doi/10.1108/BIJ-01-2018-0004/full/html
Mogensen, B.G., 2018. Managing Corporate Legitimacy Through CSR Reporting: A Qualitative Case Study of Apple Inc.’s Supplier Responsibility Reports (Master's thesis). https://www.duo.uio.no/bitstream/handle/10852/63476/1/Master-Thesis-Bendik-Mogensen.pdf
Qiu, H., 2022, December. Analysis of Apple Inc's Business Model Based on the SWOT Model and Financial Ratios. In 2022 4th International Conference on Economic Management and Cultural Industry (ICEMCI 2022) (pp. 245-257). Atlantis Press. https://www.atlantis-press.com/proceedings/icemci-22/125981243
Raj-Reichert, G., 2018. The changing landscape of contract manufacturers in the electronics industry global value chain. Development with global value chains: Upgrading and innovation in Asia, 20, p.62. https://books.google.co.in/books?hl=en&lr=&id=ao5yDwAAQBAJ&oi=fnd&pg=PA20&dq=apple+inc%27s+global+supply+chain&ots=6sPDjnSQTv&sig=Dt9jYH5Vz7yTwaGv6TQlII-XoZI&redir_esc=y#v=onepage&q=apple%20inc's%20global%20supply%20chain&f=false
Rikap, C., 2018. Innovation as economic power in global value chains. Revue d'économie industrielle, (163), pp.35-75. https://journals.openedition.org/rei/7226
SinghKang, P., SinghBhatti, R. and Patil, A., 2023. Apple’s Response to COVID-19 Disruptions: Supply Chain Risk Analysis and Mitigation. SAGE Publications: SAGE Business Cases Originals. https://sk.sagepub.com/cases/apple-covid-19-disruptions-supply-chain-risk-analysis-mitigation
Straube, F. and Durach, C.F., 2017, July. The future of firm and supply chain strategy. In Supply Chain Forum: An International Journal (Vol. 18, No. 3, pp. 121-122). Taylor & Francis. https://www.tandfonline.com/doi/full/10.1080/16258312.2017.1377403
Van De Vliert, D., 2021. Apple iPhone: a market case study. MacEwan University Student eJournal, 5(1). https://journals.macewan.ca/muse/article/view/2010
Venkataraman, R.R. and Pinto, J.K., 2016. Operations management: Managing global supply chains. Sage Publications. https://books.google.co.in/books?hl=en&lr=&id=OoqlDQAAQBAJ&oi=fnd&pg=PP1&dq=apple+inc%27s+global+supply+chain&ots=eGqk-vMdQf&sig=O3IcdWgj3BGgtJ4aUQmiOrTjN0I&redir_esc=y#v=onepage&q=apple%20inc's%20global%20supply%20chain&f=false
Yeung, H.W.C. and Coe, N., 2015. Toward a dynamic theory of global production networks. Economic geography, 91(1), pp.29-58. https://www.tandfonline.com/doi/abs/10.1111/ecge.12063
Zeng, H., Li, R.Y.M. and Zeng, L., 2022. Evaluating green supply chain performance based on ESG and financial indicators. Frontiers in Environmental Science, 10, p.982828. https://www.frontiersin.org/articles/10.3389/fenvs.2022.982828/full
