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Inventory Management
The Inventory System at Apple
The paper looks at the inventory system utilized by Apple Inc. According to the 10-k Apple account for the inventory using a first in first out (FIFO) system. The stock is fast moving and the efficiency which results in the company only having approximately five days worth of stock on hand at any point in time is facilitated through the use of a perpetual inventory system. This operates in real time. Inventory on hand is also minimized with finished products being shipped directly to customers from the outsource suppliers. There are alternate approaches Apple could have adopted, such as the last in first out (LIFO) entry system. LIFO assumes that the last deliveries into a firm will be the first infantry to leave a firm. The firm could also adopt a periodic inventory system, where stock levels would only be updated periodically, assessing...
Inventory management is argued to have played an important role in that success by ensuring the goods get to the consumers in the right manner in a highly efficient and cost effective manner (Berka, 2009). To appreciate the inventories system it is necessary to look at the way in which inventory is accounted for, as well as the underlying inventory management systems.
Apple Inc., account for inventory using the first in first out system (FIFO). This is one of the most common methods of inventory valuation, calculated based on the assumption that inventory will all be utilized in date order. As inventories received into the company, it is assumed that the older…
Apple Inc., is a highly successful firm. Inventory management is argued to have played an important role in that success by ensuring the goods get to the consumers in the right manner in a highly efficient and cost effective manner (Berka, 2009). To appreciate the inventories system it is necessary to look at the way in which inventory is accounted for, as well as the underlying inventory management systems.
Apple Inc., account for inventory using the first in first out system (FIFO). This is one of the most common methods of inventory valuation, calculated based on the assumption that inventory will all be utilized in date order. As inventories received into the company, it is assumed that the older stock will be utilized to fill the incoming orders (Elliott and Elliott, 2011). Therefore, valuation is relatively simple, using the most recent deliveries in reverse order to account for any inventory which remains the property of the company when the value is calculated. The FIFO is a theoretical approach, as the valuation will not always reflect the actual flow of the stock, although it will usually be rotated in line with the FIFO principles. The actual valuation given to the inventorying on hand will be based on the lowest of actual cost, or market value, whichever is lower (Apple, 2012).
The current inventory system was developed by the current CEO, and former COO, Tim Cook. Cook was brought in when Bill Gates return to Apple, at a time when the company was facing a large number of challenges (Nui, 2012). The Apple inventory system was a mess, and a great deal capital was tied up in the stock. The primary motivation in the changes created in the inventory management system were to eliminate the in-house manufacturing which would significantly reduce the amount of working capital tied up in stock. Furthermore, the systems were developed in order to streamline the inventories system to reduce the amount of goods that had to be held by the company. Tim adopted the view that "in the employee is evil," a term that has subsequently been widely cited (Nui, 2012). In order to hold minimal levels of inventory that still ensure there is sufficient to meet consumer demand, a perpetual inventory system had to be adopted. At any point in time the company can refer to the inventory system in order to know exactly what stock is held and where,
1. Privacy laws are continually in flux. The most recent blow to consumer privacy was the 2017 Congressional overturning of Internet privacy protections. According to the ACLU, those pro-privacy laws “would have prevented ISPs from sharing our browsing history with advertisers, forced ISPs to be clear about what information they’re collecting, and required ISPs to take reasonable steps to protect our data from hackers,” (ACLU, 2018). Several states, including Alaska,
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Apple Computer is one of the great corporate success stories of the past decade. On the back of a successive string of hit products, the company has experience rapid growth over the past several years. In its last fiscal year, ended 9/25/2010, Apple earned $14 billion on revenues of $65.2 billion (Apple Inc. Fiscal 2010 Form 10-K). These figures increased 70% and 52% respectively in fiscal 2010. Apple has a
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Table 2: Distribution of Revenue by Product Area Source: (Apple Investor Relations, 2008) (Prudential Equity Group LLC, 2006) Planning The cornerstone of Apple's planning processes is the continual development of products and services that compliment the product and services ecosystem shown in Figure 1 (Apple Investor Relations, 2008) (Prudential Equity Group LLC, 2006). Figure 1: Apple Product and Services Ecosystem Source: (Apple Investor Relations, 2008) (Prudential Equity Group LLC, 2006) For Apple, their future planning revolves