«Managing the Supply Chain: Apple Inc» - Free Essay Paper

Managing the Supply Chain: Apple Inc


Efficient management of the supply chain not only ensures that product development is enhanced, but also that products meet standards and goals of the firm (Kleijnen & Smits, 2003). Many companies around the world spend a lot of their resources on supply chain management. This paper will focus on how Apple Inc manages its supply chain. Implementing the primary objective of this paper will require analysis of different elements. These factors include the history of Apple Inc, supply chain management efforts, new product development processes, inventory control measures, and supply logistics among other elements.

History and Background of Apple Inc

Apple Inc has established itself as one of the most successful business enterprises in the world. Since the inception of Apple Computer in 1976, the company has become renowned all over the world for its predominance in manufacturing of personal computers. It was formed by Steve Jobs and Steve Wozniak. The company became a leading manufacturer of personal computers in the 1980s (Lashinsky, 2012). Over the years, the company has become open to the production of software products just as much as producing hardware products. Currently, the company produces personal computers, music players, and mobile phones among others. The signature products of Apple Inc include iPhones, iPod, Macintosh computers, and iPad tablets (Lusted, 2012).

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Apple Inc’s Supply Chain Management Efforts

Apple Inc has an organized supply chain structure that helps enhance efficient processes in their production and innovation practices. The supply chain process at Apple Inc is characterized by the company obtaining its raw materials from different countries, including China, the US, the United Kingdom, Germany, and some Asian countries (Lashinsky, 2012). All these raw materials are then shipped to China where all the assembling is done. Assembling is done in different assembling plants that Apple Inc has purchased. Assembled products are then advertised and sold through the Apple Online Store. Goods are then shipped to consumers. Other products for retail are stored in warehouses (Ireland, Hoskinsson & Hitts, 2011).

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The organizational structure of Apple Inc has extensively enhanced the supply chain management efforts of the company. Suppliers at Apple Inc are given an important responsibility because their materials give rise to Apple’s signature products. The supply chain management unit is under the Operations Department in the general organizational structure of the company. The unit is under the Operations Department so that all operations and activities of the supply chain management process are integrated into general operations of the company.

Additionally, the supply chain management unit has close relationships with other departments in the organization. The sales and finance department is imperative to the supply chain management unit. It provides people in the unit with a budget to work with and financial resources to carry out supply chain operations. The unit also works closely with the retail department to ensure that supply chain processes mentioned earlier are implemented. Interconnection links between supply chain management and other departments are important in ensuring that there is integration of activities between these departments.

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New Product Development at Apple Inc

Like most product development processes, the process at Apple Inc begins with design. The design department at Apple is a very private unit that is only accessible to a few members. Lashinsky (2012) explains that the next step in product development at Apple is a start-up formation. This is a step that occurs after the design has been approved by executive directors. In this regard, the development team is secluded from the rest of the company. They are also bound by secrecy and confidentiality agreements to ensure that product designs are not leaked to competitors. The Apple New Product Process (ANPP) is then initiated. It is a document that has all the details of the product development process, including people involved in every stage. When products are finished, they are tested, evaluated, and built again to enhance their validity.

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The ANPP stage reveals the function of supply management in the product development. Supply management ensures that there are sufficient products for the design teams. The supply management also ensures that needed raw materials are controlled and checked within the organizational context of Apple.

Apple has an extensive and intensive monitoring and evaluation process that reviews current products. The monitoring and assessment process involves the use of customer evaluation techniques and market approval ratings for different products. The company also uses ISO 9000 guidelines to manage quality of its products (Ireland, Hoskinsson, & Hitts, 2011).

Procurement of Capital Equipment at Apple Inc

Capital equipment is purchased when new products are being developed. The equipment helps in planning, design, production, and testing processes of new products. Services needed in capital equipment purchasing are sourced from different departments of the company. Primary processes in procurement include planning for various purchases and determination of standards according to the benchmarks set by the goals of the company. Other processes include value analysis and supplier research. Price negotiation and contract administration are also in the procurement processes at Apple.

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Outsourcing at Apple Inc

Apple has become a global supply chain leader with respect to the manner in which it carries out its outsourcing activities. The company obtains its suppliers through a thorough a competitive tendering system conducted by the firm in different countries. The company has also ensured that it has several exclusivity agreements with manufacturing plants in China. These agreements are made in exchange for extreme volume guarantees. The company also places high volume preorders for products to its suppliers.

Using international suppliers to develop new manufacturing processes has led to the capability of the company to enter the international arena for purchasing. The company has worldwide customers who purchase different products that have been assembled in China (Lusted, 2012).

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Apple Inc’s legal department deals with the company’s contract issues. The legal department uses the judicial system to ensure that contract agreements are being upheld. It also uses courts to resolve contract disputes among clients and customers. The legal department in the company also uses lawsuits to protect the company from intellectual property theft and patent violations. The use of the judicial system to facilitate lawsuits ensures that the company can respect its contract agreements. It also ensures that the company resolves contractual disputes to enhance its position in the market (Lashinsky, 2012).

Inventory Control Measures

Apple has an efficient inventory control management system that has resulted in the inventory turnover and days of inventory reporting excellent numbers. One of the inventory control measures that the company has used is encouraging competition among its suppliers so that the number of suppliers can be cut down. Making companies compete healthily for Apple’s product development has reduced its warehouse costs (Axsaster, 2013).

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Due to the nature of demand for the company, the days of inventory have also been cut in the business. This reduction has been attributed to the nature of planning and control that the company has assigned to the inventory management system. In this regard, rules for checking inventory are established, controlling the amount of supplies in different warehouses and developing updating of inventory requirements. The company has also reduced its number of stock-keeping units to improve accuracy of forecasting for various Apple products (Kleijnen & Smits, 2003). Through accurate forecasting, the company has predicted trends and patterns for product development in the future. It has enabled them to lock down some suppliers by creating a high demand for their raw materials.

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The Relationship between Supply, Demand, and Logistics at Apple Inc

Apple Inc has established itself as a reliable and valid information technology firm through its products. For this reason, the company has massive advantages in the supply chain process. In this regard, Apple has no issues in securing efficient manufacturing capacity and capital equipment as a part of the supply chain. These advantages have also made it easy for the company to develop products that appeal to different customers. The brand loyalty that the company has created through having effective supply chain strategies creates a high demand for its products even before release dates are announced. In this regard, in terms of logistics, the company has been able to ensure that procurement issues relating to supplies and finished products are efficient enough to beat out competitors in the market.












The supply chain management process at Apple Inc shows its value in the market. The quality that the company has achieved in its supply chain management process is seen in the product development. Efficient inventory management control measures have also led to the quality of the supply chain management process. The primary strength of the company’s supply chain system is the ability and power that it has in locking down its suppliers through accurate forecasting measures. Locking down suppliers ensures that the company has a competitive edge over other firms in the industry. However, the primary weakness of the system is outsourcing. The company has failed to establish control over activities that these supplier companies are doing. These activities have collided with ethical practices of the company, tainting the brand name in the long run.

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