The Apple Incorporation was started up by Steve Jobs along with his other two partners in 1976. It was started in a small garage and later turned out to be the multinational company as well as a well wished product line for end customers creating a unique goodwill. It is found in the list of ten innovative companies operating in the world (Levy, 2018).
Operational management can be explained as handling resources of an organization and transporting the product to the end customer on time through fast delivery services. The operational management intakes the productions of products in a company and outsourcing to the outer world, moreover, spreading products and handling sales of business in order to avail higher returns (Fredendall & Hill, 2016). Furthermore, Supply chain management possesses the complete chain of network and process with value chain of the company, which starts from the process of transforming a raw material to a finished good and making it readily available for the end customers.
The logistics involves complete procedure of a business from the procurement of resources, storing the resources and shipping the product to its final destination. There are two types of logistics and they are inhouse and outsource logistics (Fredendall & Hill, 2016). The difference between production and productivity can used as the procedure for the value addition, in which value addition is made in the product at each level. On the other hand, productivity is related with the efficiency of the business, which includes reducing maximum number of units in the given time with lowest cost. In other words, it includes getting maximum output with minimum input. This study focuses on analyses and understanding the departments of operations, supply chain management and logistics controlling for Apple Inc through analyzing the departments of supply chain, operations and logistics problems incurred by Apple. Whereas, this essay emphasis on to identify and clarify the functional tools of operations in Apple and its targeted market. This study is focused onto analyze the delivery system being used or carried out by Apple and this includes service delivery system, manufacturing process of products and the quality infrastructure used in by Apple.
In making unique supply chain strategies, Apple Inc has been among the top notch company in making strategies. The one of main reasons from all through which Apple has become the world’s favorite is because of it highly prioritized supply chain management system which gives them competitive edge. The idea of supply chain management was started in 1980s (Li, 2014). (Li, 2014), defined supply chain management as the procedure to plan, implement and control the movement of goods at high intensity and fluctuations through strategically implementation which would be effective for business. Theories which are part of supply chain management are cost per transaction in an economy, theory of agency and theory which is based on resources, theory based on dependence of resource, theory of rational exchange and theory of networks. As per (Hitt, Xu, & Carness, 2016) theory based on resource is most popular in the operation management. The theory of operation management deals with organizational resources and defined the ways by which the functions of the business effect on the business to achieve its goal and objectives.
The operational management has 3 types of strategies which has their own functions and they are business level, corporate level and functional level strategies. Firstly, cooperate strategy level of Apple incorporation includes bringing the innovative products in the market and maintain differentiation strategy to get competitive advantage. The application of resourcebased theory can also be seen in Apple, because it can create and maintain competitive advantage over its competitors due to rare, value, and unique products (Hitt, Xu, & Carness, 2016). The definition of the logistics in the business is related with the managing inventory in the business, buying necessary material, managing cost of material ( (Oleszczak, 2017)I
The transaction cost theory focuses on the minimizing the risk of transaction and are used by the firms that are vertically integrated. Under this theory the business conduct all tasks from producing the goods, and distributing it to the end customer. The Apple Inc. use transaction cost theory because it is vertically integrated, and control all of its main phases of producing its products. The application of agency theory can also be seen in the Apple Inc. because this theory defines the relationship between principal and agent, where the Apple is the Agent of the Business while its shareholders are the principal (Shogren, Wehmeyer, & Palmer, 2017). The application of resource dependence theory can also be seen in the Apple Inc. because this theory assumes that an organisations is influenced by external environment due to depending the external market. Moreover, this theory assumes that companies exchange their relationship to each other due to scarce resources and have competitive advantage. These assumptions best fit with Apple Inc. because it outsources the manufacturing of its product and design its products by their own (Biermann & Harsch, 2017). The Apple does not own any factory but outsource all its operation and design the products by their own. The main focus of this study is to highlight how Apple Inc. manage people who handle its supply chain out of the company control (Culpan, 2017). The issues face by Apple Inc. includes delayed products, and payment to suppliers in advance. The supply management of the Apple is very complex that supply chain based upon multiple countries all over the world. Apple outsourced its products in China, United States, Europe and many Asian countries. In this situation, they have to manage its supplier from multiple countries who have different business environment and different cultural background.
The concept of triple bottom line (TBL) illustrates that a company must work upon gaining suitability. It has started to Emphasis Company to consider the importance of two major areas through which they can dominate and they are social and environmental phenomena that may impact the company. The triple bottom line consist on three major P and they are People, Planet and Profit.
The main issues faced by apple includes, impact of global economy on the Apple, managing the resellers who sell products of its competitors, managing outdated or lower than demanded by the market products. The issues of SCM for Apple Inc. also include limited sources of some components of its products, rare components that are not available in the market, managing the efficient capacity of the components. The SCM issues of the Apple also includes managing disaster resulted from the mistakes of workers or occur by natural phenomena, depending on outside logistics and dependence on allies to obey the code of conduct of the suppliers. Furthermore, Apple inc does not deal in the third world countries or can be likely to say countries which are developing such as Nepal, Pakistan, Bangladesh and many other countries in Africa as Apple does not operate their official stores in such countries making their loyalty towards the brand name declining. The suppliers of accessories have to import it on their own risk from other neighboring countries which does have Apple’s outlet operational. Moreover, the economic crises and economic tension among countries create proper from Apple to manage its operations such as USChina tension create hurdles from Apple to come up with solution in order to protect their operations and supply chain of product as it’s been a local product for native Americans but phone and other products are been assembled in China.
Apple seems to be highly working on triple bottom line as being one of the top cooperatives of the world. Firstly, emphasizing the importance of people to an organization. As being highly following of triple bottom line, Apple inc consider their employees as their top priority as they are at the highest stage only because of their employees and Apple Inc pays their employees in high quantity and offer unexpected working condition with leisure and facilities. Through following of triple bottom line, Apple Inc consider paying back to the people in which they operate. Considering the people through which they run and achieve fame, they tend to pay out and fulfill their needs through donations and needful supplies to the ones who are underprivileged. Secondly, the major emphases nowadays is the importance of planet and global warming. For such cause Apple Inc has taken major concerns on environmental sustainability and considered to pay huge cost to protect it. It came into consideration that Apple Inc runs on renewable source of energy and which is total of 93% out of 100 which engages other giants like Google and Facebook to take it under consideration. Lastly, the most important element which companies emphasis on is profits. As Apple Inc follows the concept of triple bottom line, they considered to be earning the most profit out of their product worldwide but they try to use and manufacture their products through recyclable good which are been considered as wasted that results in cost effective source and ending up with higher profits.
The supply chain of the Apple Inc. includes more than 200 suppliers, which provide more than 97% of its total materials. Apple Inc. participate in the suppliers business by providing them necessary material procurement to meet their demands. This strategy helps apple to make strong and long term relationship with its suppliers, which help them to control the standards. Furthermore, apple operates their specific and special methodology of conducting and reasonably responsible standards for their suppliers which evaluates responsibilities of suppliers for following the defined principles of the Apple Inc. It also help Apple to negotiate better with suppliers (Barnes, 2014)
The Apple is considered market leader due to managing the complex supply chain process. The Apple Inc. manage its operation by using advanced technology that enable the company to know the exact amount of inventory in its warehouse, the demand of its products and actual production in suppliers factories with the use of up to date software. The manufacturing process of the Apple is based in China. All products of Apple are assembled in China. Whereas, its components are manufactured by multiple companies from Asia, United states, Europe, and Chine. For example, the iPhone of Apple is manufactured or assembled in Chinas city of Zhengzhou. However, the components, such as camera, modem, the memory chips, microphone, and touch screen controller, are prepared by more than 200 suppliers. These components than are transferred to Foxconn, that is Taiwanese company, operate in Zhengzhou. The company also manufacture smaller components of the iPhone. All components of the iPhone are ordered by apple and then transferred to Foxconn. After the completion of the production the iPhone is transferred to government custom facility, which is a bonded Zone, where the iPhone is sold to its customers in Chine (Barboza, 2020)
The product development of the Apple Inc.is based on seven steps. In the initial stage a product is designed by specialists. After the completion of design an expert team is formed that start the initial process of product; this is called the startup process, which is held within the company secretly. After successful completion of this process, Apples New Product Development is formed, it is a document that define the manufacturing process of the company, which provide guidelines for product development. After the successful completion of ANPD, the product is reviewed by the experts, which make the required change if necessary. The review process is conducted on every Monday. After the review process, a new stage begin that is making a concrete product. In this stage, an expert engineer and suppliers are involved. The sixth stage start with testing of the product and making necessary adjustment. The last stage of the production process includes launching product in the market. Product planning of the Apple Inc. (Anastasia, 2015). Apple tend to use recyclable item in their product line in order to reduce cost of each unit though the process of the triple bottom line concept.
The serves delivery of Apple Inc. is based on authorized services providers. There are two types of service provider used by Apple Inc. which are authorized providing of service and limited provider of services. The authorized providers of service are the one who various services such as repair and maintenance services to their potential customers. Whereas, limited provider of services are those firms and corporations that give limited services and permit service form selected clients of Apple with predefined Apple products. Apple Inc. provide services through multiple sources such as online selling, in which products are sold from the origin of its manufacturing. The Apple Inc. also use direct selling services, in which the product is sold directly by Apple Inc. Apples services are also based on retailers, in which retailers provide services to its customers. The wholesaling services are also used by Apple customers.
The infrastructure includes core amenities, services and structure on which business is built. The business infrastructure of Apple includes the physical structure of the business plus the software and other internet services which help business to run its operation. Infrastructure of the Apple Inc. demonstrates its services, which includes, managing the quality of its products, handling the legal issues of the company, managing the financial data, making future plans for the business and making strategic decisions of the company. The infrastructure of the Apple is based on physical warehouses, online services, and using advanced technology such as cloud services digital content, and licensing. A good infrastructure of the business helps Apple Inc. to control its cost and hang over to the concept of competitive advantage which prevails in a market. The reason for producing top notch quality products and services to their end customers is only due to high potential infrastructure of Apple Inc which they possesses which in the end results in customers being loyal to the company and creating goodwill for the new customers and brand image in the eyes of customers (Spacey , 2017).
The infrastructure of the Apple Inc. also includes its successful distribution strategy. Apple sells its product mainly through a third party in it big markets rightly to its customers and use online services, direct selling and indirect selling through wholesalers and retailers. As per 2017, the company sold more than 72% of its products through direct distribution channels and 28% through direct distribution channels (View, 2017).These strategies helped Apple to be a market leader, and gain competitive advantage over its competitors. The efficient supply chain management strategy of Apple Inc. such as focusing on fewer but high quality products. For example, the company reduced its product from 350 to 10 during 1990; now a days the Apple has core five products with 15 varieties. Other advantages of the company include having advanced technology, trusted suppliers, and securing airspace (Barnes, 2014).
After analyzing the supply chain operations. Logistics and operation of the Apple Inc. we have reached to the conclusion that Apple Inc. use many theories of supply chain such as transaction cost economies, theory based on view of resources, theory of dependency, theory of agency and theory based on network. Along with successful business, Apple Inc. face some issues in its supply chain management such as advance payment to its suppliers, delayed products, managing operations in multiple cities, outsourcing the products which make them vulnerable to imitation and managing people from multiple cities. Apple Inc. manage its suppliers by defining code of conduct and standards for suppliers responsibilities, the services delivery of apple is managed though issuing authorized services. The Apple Inc. should focus on establishing its own plants that will help company to control its services better. This strategy will also help Apple Inc. to sustain its competitive advantage and reduce transportation cost of the company. The operation managers should focus on derivative contracts, which will help the company to control financial risk raise from the fluctuation of exchange rate of its operating countries. The Apple Inc must establish warehouses in other countries and most particularly in developing economies which will help them to minimize transit and shipping cost for Apple and may also results in less time taken to getting it delivered around the globe. Moreover, adding or opening of outlet in the big cities of each states and opening of outlets in developing economies would help in boost up the sales as customers not have to wait days to get their product as well as being locally situated as an outlet would increase promotional activities on festive season increases goodwill and reputation of the brand. The accurate forecasting of the market demand can reduce the risk of outdated products. Moreover, the use of Economic Order Quantity (EOQ) can also help the company to reduce the risk of overproduction and underproduction.it will help the company to review its demand in the future. To manage the operations and logistics, the company should focus establishing more strategic relationships with its suppliers, such as adding most trusted supplier in designing process of the business, which make supplier feel valuable source for the company and work hard to manage the standards of the company. The company should increase incentives for its suppliers such as regular bonuses, increasing wage rate etc. to increase the job satisfaction of its customers and make them feel valuable asset for the company.
As Apple Inc being the world’s top most corporate seems to be following the concept of triple bottom line effectively as they treat their employees and community fairly as well as they tend to protect the environment and use 96% of renewable energy in their corporate and they tend to gain more profits by recyclable production methodology where ever possible. Moreover, Apple has been top brand and highly likeable goods manufacturer, Apple Inc must consider the importance and value of developing economies. Starting up of operating as official outlet or warehousing may decrease their time of shipping and will ease of their operations.
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