Global supply chain refers to the dynamic network which is worldwide in which a company purchases goods and services and uses them. It involves trans-national global companies. Management of the supply chain entails planning on how the whole supply chain is likely to perform as an integrated unit with the intention of enhancing higher customer service level and at the same time trying to be cost-effective. This paper looks at the Apple Inc. in particular on how it rose from likely down fall to being much successful by looking at how it manages its supply chain distinctively from that of its competitors.
Apple had undergone a lot of suffering when IBM entered the market and dominated it. Apple's suffering was mainly because of the cost related problems of the machines which were higher than that of window PCs. The suffering could also be attributable to the low inventory and operating managing control, its inability to estimate precisely the initial demand of consumers hence leading to overload list and stock-outs. By the year 2001, Apple made an announcement that has opened a retail store which were intended to provide education to its clients and gain a competitive position in the growing market share. As at 2004, Apple had gained better and precise control of its supply chain through working with various new suppliers in which it would present capital which was upfront in return for price per units which was lower.
Apple's supply chain was global. Development and various researches were being conducted in the United States, having over 156 suppliers while assemblage operations are done in China. Apple maintained a product development cycle which was short and the expansion subdivisions of the new product was well coordinated by various stakeholders such as internal groups like software, hardware, and production. Engineering and creative design were being handled from California Apple came up with new technologies for its products and also got licenses for its various intellectual properties.In 2013, Research and development spending went up to $4.5 billion from $3.4 billion in the year 2012 indicating the great desire by Apple to produce the best for the market Most frequently, the supplier at Apple could be short of supply due to the overwhelmingly increasing demand. To counter this, Apple purchased the suppliers' production capacities to ensure a stable supply of the critical parts. The iPhone 5 last assembly took place in China. Apple faced a 1 billion backlog in terms of the orders which frustrated the management (Mark, 2014).
Apple's principal focus was on improving its supply chain even if it meant using software or high inventory. The management revised the logistics that in turn contributed to the success in terms of the customer experience and cost. The control of the logistics system was extended to incorporate packaging of the devices in the open boxes with the aim of avoiding detection and monitoring every point of handoff. The firm uses air freight means for the goods to reach customers on time at the moment when most computer firms relied on sea freight. For instance, in 1998 the firm paid $ 50 million for the pre-purchased air freight to ensure that its new iMac was delivered to the stores hence outdoing the rivals.
The challenges that Apple is likely to face in the future include the changing technology for the company to maintain its brand image and at the same time outperform competitors. Competitors like Samsung are continuously trying to come up with products that can rival Apple products. A considerable time gap exists when the product is launched and the time it takes to reach the customer, and this diminishes the company's image. They are assembling of products in China due to reduced labor cost changes consumer in regards to technology choices.
Apple Company, therefore, needs to attract various new suppliers who are not linked with the competing firms like Samsung and Huawei to reduce their backlogs. Proactive decisions should be made to make delivery before the time for the distributors and retail stores to rely on various Apple products and not for the competitors. The company should have in place an in-stock facility that will enable the concentrate and advance its supply chain which is critical for its success.
Ken Mark (2014). Apple Inc.: Managing a Global Supply Chain. Retrieved on 9th March 2019.
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