Analyzing Tech giant Apple’s supply chain planning..
Company: Apple Inc.
As we all know Apple is a worldwide leader in product development and design, innovation, marketing and branding.
There products range from iPhone, iPod, iWatch, iPad, OS, accessories etc. They sell their products via their retail stores, online stores, third party cellular network carriers and retailers.
Apple’s supply chain was ranked #1 from the year 2010–2013 by Gartner.
The supply chain model, inventory control and software systems make them one of the leaders in supply chain market. Materials and components that Apple purchases from various suppliers are shipped to China for assembly via air. Then from China, the products are shipped directly to customers.
Apple forecasts the demands to determine the product quality it will manufacture. For this the company uses consensus methods and conducts surveys (bottom-up approach) where opinions drive final decision. This leads to innovations.
The potential demand rate of the products i.e. volume is estimated using tentative approaches and consumer panels are used during early stages of manufacturing to assess future performance of the products in the market.
The inventory control department handles item history and planning, handling, estimation, reorganization, after sale assessment of item performance with the dealers.
How company growth impacts the process map or supply chain forecast?
Components like volume, sales, cost and profit affect each decision we take in process map.
In R&D phase of product:
- Forecasting the supply chain demand doesn’t only depends on what products our customers would buy but also on what kind of technologies in the near future will be driving our business products, enabling the company to lower down its cost with the suppliers so that other competitors cannot order the components.
- Sleek design with better performance than competitor’s product needs to be designed.
- Only downside is the increase in the time and cost of patenting the technologies.
Since Apple’s sales volume increases on a modest rate, the demand for products coming to market faster is high. Moreover the life cycle for Apple products has shortened.
The best ways to handle would be:-
Stabilizing the pricing power: By managing the product and services pricing, for example increasing the product or service cost when the demand volume is high and not easy to mange, will enable the company to efficiently handle business and grow organically. It can even get rid of those demanding customers at the bottom that the company loses money on.
In order to increase the sales of the products, they need to:-
- Re-evaluate the conceptual phase where they gather the requirements and identify loopholes to understand better the customer’s needs.
- Budget for Promotion and advertisement department needs to be funded enough to expand the product’s sales.
If the company is not making profit due to high cost structure then possible steps to incorporate in the process map may include:-
- Key suppliers involved in manufacturing, shipping and storing can be reduced to an optimal number enough to carry out the target demand.
- Requesting suppliers to relocate closer to Apple’s factories thus reducing transportation cost.
In order to maximize on profit, the company needs to know its potential market and customers.
- Developing a powerful and well managed inventory control strategy helps the company identify the best section of the market where it should sell its products.
- A well implemented inventory management strategy leads towards high rise in sales, ratings, incomes and returns.
- Reduce the number of sku’s and develop more accurate demand forecast in quarterly review phase.
