Apple's supply chain management and retail service operations

Operations Management

Slide Presentation on the Supply Chain and an Internal Process at Apple

Apple is a technology company well-known for having a highly effective supply chain. The supply chain is managed to reduce the level of stock held by the firm; at any point in time the firm has only 5 days worth of stock in its inventory (Niu, 2012). This model requires an effective supply chain; if any delays occur they could result in lost sales as there is only a small buffer.

The efficiency is gained by the use of outsourcing to large, offshore, suppliers, with Apple benefiting from comparative advantages due to the lower costs. The company exercise a great deal of control over the supply chain, supplying exact specification to the component manufactures and often having exclusive, long-term contracts with the tier 1 suppliers. In both cases suppliers are expected to sign confidentiality agreements.

Slide

Apple has a number of different outlets; this is the supply chain for the firms own retail outlets or 'Apple Shops'. The supply chain starts with the tier two suppliers who manufacture and supply the components which will be used to make the Apple products. There are a large number of tier two suppliers, who send their products to the tier one suppliers. The tier one suppliers receive the goods from the tier two suppliers and manage the relationships, with the tier two suppliers after the contracts are established.

The tier one suppliers manufacture and assemble the goods. Apple is highly secretive regarding many of the suppliers in their supply chain. It is known that the major supplier for iPads and iPhones was Foxconn, but there appears to be a shift in the strategy as Apple is now shifting towards the use of more suppliers, including Pegatron, reducing the reliance on a single supplier (Dou, 2013).

A major source of efficiency in the supply chain is the distribution methods used for the products; they are sent to their destinations rather than moving through Apple (or supplier) warehouses. The amount of inventory needed is assessed based on existing sales and projected sales allowing for expected seasonal or promotional variations. The information is communicated from Apple, where there is an amalgamation of the data, to the suppliers, who are then responsible for the manufacturing, assembly and distribution of the goods needed to meet the orders for the shops. Once in the shops the products are available for the customers to purchase, with the shop having no more than 5 days worth of inventory (Niu, 2012).

Slide 5

The process is being measured by looking at what is done, with the process flowchart written for the tasks undertaken by a member do the sales staff. The process starts when the customer walks into the store. They are greeted by a member of staff at the door, and allowed to browse. After they have browsed for a while a member of staff will ask them if they would like some help. If the customer wishes to continue 'just looking' they are then left to browse, after which they may leave to look for help. Those customers who are looking for help, or answer yes, will then be asked if this is for a new product or an existing product, if it is for a product they already own they will be taken (in person) to an member of staff that deals with the existing purchases.

If the customer is enquiring about a new product, the member of staff will help them in an appropriate manner, if they do not wish to make a purchase the staff member makes sure they have all the information needed and assures them of future help if they need it. This process occurs often, as customers may visit several times before making a purchase. The high quality service helps to encourage a future purchase (Kotler and Keller, 2011). If a purchase is made the sales person will process the payment on a wireless hand held device, and ask the customer if they want the receipt printed or emailed. If it is to be emailed, the email address is collected and receipt sent, if the