Global Operations Management/MGMT415
Apple Inc. is a multinational company that concentrates operations in the manufacture of a variety of technology products. The company is headquartered in California, U.S.A. Its product line can be divided in three major categories namely consumer electronics, online services and software applications. The hardware segment includes products such as personal computers, smartphones, smartwatch, iPods, and tablets. In the software segment, the company prides has developed iOS operating systems, OS X, iTunes media software, iLife, and among others. Apple Inc. delivers a number of online services such as iTunes Store, App Store, iCloud, Mac App Store, and among others. Apple has the largest revenue base compared with other information technology companies worldwide. It is also the largest in terms of the assets held. The company delivers its products and services worldwide, making it suitable for evaluation in this study.
Components of Apple’s supply chain
Apple Inc. has one of the best supply chain strategies which has earned the company multiple awards. The company’s supply chain is ranked among the top ten worldwide. There are six components of supply chain that can be associated with Apple Inc.
The first component in Apple’s supply chain is production. Production focuses on key issues such as market demand of the products and services, customer needs, capacity issues, and quality of final products (Schlickman, 2003). Apples must always ensure that the products reflect customer needs. Changes in consumer preferences may have an impact on the type of products the company provides in the market. Also, introduction of new technology may change the way Apples produces its products. A potential problem related to this component is changes in tastes and preferences of consumers which may change the demand of a particular product. Another issue concerns raw quality of raw materials which may affect the quality of the final product. To solve the first problem, the organization should engage in research and development in order to develop new and innovative products that appeal to consumers. The issue of quality of raw materials can be solved by employing strict quality control policy.
The second component of Apple’s supply chain is supply. In this component, Apples must establish whether it has the capacity to produce in an efficient and economic manner while maintaining quality of products. This requires the company to outsource important inputs and materials required in production. Apples picks suppliers of various inputs based on the quality they provide rather than a focus on the price. The company focuses on production of high quality products meant for the high-end consumers. A potential problem that can arise from this component is supplier failures. A supplier may fail to deliver important inputs used in production. This problem can be solved by maintaining trusting relationship with one or few of the suppliers.
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The next component of the organization supply chain is the inventory. Inventory is important in supply chain management since it helps the management to establish the appropriate inventory levels (Schlickman, 2003). It is important to ensure effective inventory management so as to avoid overstocking and understocking which may have high cost implications on the company. In 2012, Apple achieved the highest turn inventory in its history which was five days. Potential problems related to inventory include overstocking and understocking. In order to solve these problems, Apple should focus on using an inventory management system that is capable of establishing orders and reorder points and hence maintain appropriate stock levels.
The next component of the organization’s supply chain is location. Decisions on location are guided by customer satisfaction and market demands. Strategic decisions in organizations take into consideration the location of production plants, their distribution, stocking, and placement with regard to strategic locations of the markets served (Rumane, 2010). Apple buys materials and inputs from a variety of suppliers. These are then shipped to China for assembling. Products are kept at California where a central warehouse is located. Customers can return products to a number of Apple stores around the country.
The fifth component is transportation. Transportation decisions are closely tied to inventory decisions and meeting customer demands. The company can opt for a variety of transportation means such as through air, sea, or land. Apple uses air transport since it is cheaper and faster to transport the products (Worstall, 2013). A potential problem in this component is the likelihood of strikes in the aviation industry which may impact the delivery of final products. To overcome this challenge, Apple should develop alternative transportation such as use of ships. Use of water transport may take a relatively longer period but may actually be cheaper compared to air transport.
The last component of Apple’s supply chain is information. It is important for the company to obtain crucial information regarding the end users of its products. In addition, the company should also be able to provide crucial information to consumers throughout the world. Apple accomplishes this task through the use of the internet. A potential problem related to the information component is lack effective communication to consumers. The solution to this lies in employing multiple communication channels to reach consumers (Worstall, 2013).
Quality management is an important aspect since it helps an organization differentiate itself from the rest of the competition. Organizations that employee quality management stand a better of chance of beating the competition due to high quality products and efficiency in production. Quality management ensures that the organization provides superior products and services. The quality of products is usually determined by its durability, performance, and reliability in use. Quality management tools are important since they bring changes to the systems and processes used in production and hence better quality products. Quality management contributes to customer satisfaction which is a critical aspect in business. Satisfied customers develop loyalty for the organization and its products hence ensuring future sales (Lehman & Haslam, 2013).
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Quality management and measurement help organizations develop products that thee customers actually desire (Rumane, 2010). As such, there is a ready market available for the company’s products. This also contributes to higher revenues and productivity. Quality management is also important in reducing waste and inventory levels. This is because it enables employees and suppliers to work in harmony and to use the just in time philosophy in managing inventory. Quality management and measurement helps in raising employee morale. Accountability in management, clear understanding of roles, and good training systems which are part of quality management can also help to increase job morale among the employees. Lastly, it helps in international recognition by making the company appear trustworthy and reliable in the eyes of the customers.
An enterprise resource planning system can help organizations in great ways to manage operations and increase efficiency across departments in an organization. As such, it is important to implement the system on organizations. Specifically, an enterprise resource planning (ERP) system integrates multiple functions of different departments onto a single system that caters to all the departments’ needs (Sumner, 2005). The system is important since it enables the organization to automate business processes and achieve integration in a majority of the business processes such as inventory control, purchasing, product planning, production control, tracking orders, delivery of customer service, and among other business processes. ERP systems can deliver numerous benefits to the organization. Some of these benefits include: increased inventory turns, improved customer service, more effective control on account, high inventory accuracy rate, improved feedback to customers, and others. In the same line, it leads to a reduction in inventory costs, amount of paper work, and setup times. As such, the ERP system would help in streamlining operations and achieve higher efficiencies (Sumner, 2005).
The major concerns that should be addressed relate to the risks associated with the ERP system. For instance, the ERP system may face various challenges such as high maintenance costs, high integration costs, high update costs, lengthy integrations, high training expenditures, inflexibility when it comes to adapting business processes.
Control chart showing global operational processes of Apple Inc.
Lehman, G., & Haslam, C. (2013, December). Accounting for the Apple Inc business model: Corporate value capture and dysfunctional economic and social consequences. In Accounting Forum (Vol. 37, No. 4, pp. 245-248). Elsevier.
Worstall, T. (2013, Dec 24). Why Apple sends all iPhones and iPads by air: It’s cheaper. Forbes.
Rumane, A. R. (2010). Quality Management in Construction Projects. CRC Press
Schlickman, J. J. (2003). ISO 9001:2000 quality management system design. Boston: Artech House.
Sumner, M. (2005). Enterprise resource planning. Upper Saddle River, N.J: Prentice Hall.