Apple Inc. case study resolved

1. Apple Inc.
Master in International Management
Global Operations and Logistics

2. TABLE OF CONTENTS
• Presentation of the Company
• Case Analysis
• Theoretical frameworks
• Questions
• Suggested solutions

3. 1976
Company is
founded
1980 1983 1985
US largest
private
manufacturer
of pc´s.
Fierce
competition
from IBM
Jobs
leaves the
company
1993
Poor operating control
and inventory
management abd
failed demand
estimation
1996
Mac operating
system to third-
party
manufacturers.
An Historical overview
Presentation of the Company

4. 1996 1998-2001 2003-2004
Introduction of Mac
computers and App
store. Launching of
iPad.
2007-2013
Jobs returns Lunched
iMac
2001
Opening of their own
retail stores
Better control of supply
chain by working with
new suppliers
Presentation of the Company

5. iPhone 5 Supply Chain
• Launch date: September 2012
• System: Just in time (JIT)
R&D Testing Pre-launch Launch Quarterly review

6. IPhone
Development Cycle
Supply Chain
Control:
Apples’ Products
Closer to 1 year
Internal control
in contrast to Samsung
- High level of obsolesce
- High inventory costs
- High profit margins.
Demand characteristics
Market-leading
consumer devices
Innovative products
iPhone 5 SUPPLY CHAIN

7. Theoretical Frameworks
QUESTION 1
QUESTION 2
QUESTION 5
QUESTION 4
QUESTION 3
Supply Chain Management; JIT Supply Chain; Customer Service
Managing Logistics Internationally
Managing Risk in the Supply Chain
Supply Chain Management
Advantages and Disadvantages

8. QUESTION 1-Draw a diagram of the supply structure of the company and
identify and describe the physical and information flows.

9. QUESTION 2: Apple decides to control the supply chain internally instead of
outsourcing its manufacturing to 3rd party service providers. What are the
advantages and risks?
Instead of outsourcing its manufacturing to third-party service providers
Apple preferred to control the entire supply chain internally.
Therefore, Apple reallocated the manufacturing
center to china where the whole assembly process is
made.
Apple requested from the suppliers:
• Investment on capital equipment
• High-volume orders
• Expected 2-week inventory with proximity
plants
• Low prices request

10. QUESTION 3-What are the main concerns of Apple in terms of Supply
Chain risk management? What should be done to overcome it?
Supply Chain Risk Management
Risk Solution
Environmental Natural or Man-made
disasters;changes in the global
economy. Political or legal changes.
Product life cycle is larger than
seasonal items; aggressive action
during holidays
Industrial Supplier key components are often
out of stock due to heavy
competition; re-sellers may also
distribute products from competing
manufacturers
Part of apple’s procurement strategy
is to purchase suppliers’ production
capacity in advance to ensure the
steady supply of key parts.
Organisational Inventories can be absolete or
exceed anticipated demand;
dependence on outsourced logical
services and sales forecast
Real-time supply chain surveillance
system;quaterly revision of
inventory;adjust its demand
forecasts;monitored its components
cost.

11. QUESTION 4 – Is this a responsive Supply chain?
e.g: Sudden
order changes
e.g: Highly
qualitative and
innovative
products

12. QUESTION 4 – Is this a responsive Supply chain?
• High demand uncertainty
• High profit margins
• Immediate reaction
to situations
• Quickly adjusts
• New suppliers for
the products

13. QUESTION 4 – Is this a responsive Supply chain?

14. QUESTION 5 – Critically comment the decision made by the company
described in the 2nd paragraph of page 6 to decline Apple’s offer. Provide
advantages and disadvantages of taking or refusing it.
“A major parts manufacturer declined to commit its manufacturing capacity to
Apple’s products, even refusing a 1$ billion upfront payment from Apple. The
manufacturer was worried that Apple’s insistence on committed capacity and low
prices would have an impact on sales to its other customers.”
Apple’s stock plan:
 Exclusivity
 High volume purchase

15. Manufacturer’s position:
Advantage
• High volume orders from Apple
Disadvantage
• Risk in losing other customers
• Conditions imposed by Apple
QUESTION 5 – Critically comment the decision made by the company
described in the 2nd paragraph of page 6 to decline Apple’s offer. Provide
advantages and disadvantages of taking or refusing it.

16. Thank You