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Identify the supply chain strategies. How could the company use inventory, transportation, facilities or information to increase the responsiveness of the company’s supply chain?
1. Supply Chain Strategy for Apple
2. More frequent inspections,
3. Greater time spent on inspections,
4. Renewed focus on managing costs and product quality.
It cut down the number of component suppliers from 100 to 24, forcing companies to compete for Apple’s business. Apple also shut down 10 of the 19 Apple warehouses to limit overstocking, and by September of 1998 inventory was down from a month to only six days.
Inventory
Apple once claimed that it was not because of the cheap labour in Asian countries, but those factories could produce much faster with quite a large scale and flexibility. One of Apple’s well-known suppliers is Foxconn, which is a Taiwan company. They can produce thousands of iPhones each day with relatively lower cost of labours. Apple also found another supplier, Pegatron which is also a Taiwan company, to produce iPad and some versions of iPhone. Apple has already had so much outsource suppliers, then why the scales of suppliers keep increasing?
1. Risk Diversification. With the aim to build a stable supply chain, multiple suppliers can help Apple react faster to problems or disruptions and become more flexible.
2. Capacity Management. The demand of Apple product has increased, especially from two large emerging markets, China and India. 10 million units of iPhone 6 and iPhone 6 Plus were sold in the first weekend. Apple needs to increase its capacity more quickly to meet the demand.
3. Margins Sustenance. With multiple suppliers, Apple could increase the bargaining leverage to maintain the low cost and high level of profitability.
4. Supplier Innovation. New suppliers are more willing to invest capital to improve operation efficiency and high quality of product to obtain reliance from customers. Apple can easily benefit from the growth of new suppliers.
Transportation
Looking back, you’d see that Apple has been historically extremely efficient with its inventory. Often when you order online, the product is shipped directly from China, so Apple doesn’t even have to look at it at all. When demand goes through the roof, Apple reacts quickly with huge hiring sprees over at Foxconn. The recent well-organized iPad launch only highlights one of the biggest advantages Apple has, which is to be able to deliver a product a few days within the announcement, while other companies might take longer.
Facilities or Information
Apple had 154 key suppliers which enabled them to have better relationships with suppliers and kept one central warehouse which was in perfect sync with the 250 apple owned stores. Having a small number of stock keeping units improves the accuracy of forecasting. In addition to this, the long product life cycle of apple products (more than 12 months) facilitates accurate forecasting. Apple forecasts demand not only for products but what technologies the customers would like to buy in the future. This allowed Apple to lock down suppliers in long term contracts and created enough demand for suppliers so that other competitors could not obtain the latest technology and parts which further decrease their competition.