Apple's Supply-Chain Secret? Hoard Lasers


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1. What is Supply Chain Management about? What has to be managed?
2. Why is effective supply chain management (SCM) crucial for companies like Apple? Give examples
for Apple’s successes related to effective SCM.
3. Analyze Apple’s supply chain management. How does the company use SCM to achieve
operational excellence? Mention some interesting tricks used by Apple.
4. What other companies rely heavily on SCM? Give one concrete example.

Made and presented for the course Management Information Systems at Viadrina University, winter term 2012/2013.

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  • Organization and processes for PmD Goods/Sevices Information Money, Finances
  • Supply chain planning systems Model existing supply chain Demand planning Optimize sourcing, manufacturing plans Establish inventory levels Identifying transportation modes Supply chain execution systems Manage flow of products through distribution centers and warehouses
  • With Apples approach of looking further ahead in time for its resources, capacity and transport needs it has been able deliver its products to millions of customers across the world with little delays
  • Apple's Supply-Chain Secret? Hoard Lasers

    1. 1. Apple’s SC Secret? Hoard Lasers Management Information Systems 17.12.2012
    2. 2. Outline 1. What is SCM about? What has to be managed? 2. Why is effective SCM crucial for companies like Apple? 3. How does Apple use SCM to achieve operational excellence? 4. What other companies rely heavily on SCM?
    3. 3. Appleo Founded April 1, 1976 by Steve Jobs, Steve Wozniak, Ronald Wayneo 394 retail storeso Worldwide operationso Electronic devices with own software and hardwareo Famous for: iMac, MacBook, iPhone and iPado Biggest company on the world based on market capitalization
    4. 4. Supply Chain ManagementManaging flow of... ... in both directions.
    5. 5. SCM Goal Competitive advantageo Increasing effectiveness and efficiency  operational excellenceo Decrease operational costso Communication and relationships in a network of companies Company Company
    6. 6. Importance and valueCompanies like Apple: Operational Excellence asoHighly innovative competitive advantageoShort product life cycle  oHigh control over costs andcontinuous improvement informationoHigh number of competitors oSpeed product time to marketoLimited number of suppliers oDelivery based on demandoInvestments needed oIncreased sales and marginsoTrade secrets oHigh qualityoWorldwide operations oReduce inventory levelsoDecreasing margins
    7. 7. Example of Apples successrelated to SCMo Design requirements: Light shining through aluminum, holes invisible to human eye cut with hoard laserso Exclusive contract with laser manufacturer (impact on competitors supply chains)o Long-term commitment, dependability of supplier on Appleo High volume, pressure on prices, negotiation  high margins
    8. 8. Apple´s SCM “They have taken operational excellence to a level never seen before.” Driving factors of their effective SCM1. Closed ecosystem2. Big discounts – due to Apple´s volume3. Mentality to spend exorbitantly
    9. 9. Apple´s SCM4. Apple engineers work close with suppliers – optimizeindustrial process5. Focus on a few product lines – do little in the way ofcustomization6. Big weapon - $80 Billion in cash and investment7. Tough bargaining with suppliers o demands detailed price quote o requires key suppliers to keep two weeks of inventory o does not pay as long as 90 days after delivery
    10. 10. Apple´s SCM8. Control reaches peak before announcement of newproduct o factories work overtime o surveillance to track efficieny / ensure pre-launce secrecy o every handoff point is monitored9. Retail stores give it a final operational advantage o track demand by store / hour o extra spending to get around bottlenecks Enormous profits and margins due to their Enormous profits and margins due to their operational edge operational edge
    11. 11. Tricks Apple useso innovative production techniqueso buy up all available air freight – handicapped rivalso manufacturers are busy with Apple orders – rivals like HTC fall behindo ship product in tomato boxes to avoid detection
    12. 12. Toyota – SCM at its highest pointo „Toyota Production System“ - pioneer of „Just in time delivery”o world´s top carmakero hyper-efficient supply chain  Well-intentioned BUT carries also unintended consequences  be exposed to supply chain surprises  can compromise quality  e.g. Toyota´s massive recall in 2009
    13. 13. Thank you!