On the Apple I-Phone packaging it states : Designed in California, USA : Manufactured in China - Essay Example

Wisner et al (2008, p. 8) indicates that supply chain management (SCM) is concerned with coordinating product related activities among the participants in the supply chain in order to improve operating efficiencies, quality and customer service so that sustainable competitive advantage can be achieved by all participants. This task involves managing the flow of inputs and components from suppliers into the company’s production processes to minimize inventory holding and maximize inventory turnover (Charles and Jones (2007, p. 121-122). What is Supply Chain Management at Apple?

Apple users a number of components in its various products and these components are sourced from various companies manufactured in various parts of Asia. According to Anderson et al (1997) the seven principles of supply chain management are as follows: i. developing customer segments based on service needs ii. customizing the logistics network iii. listening to signals market demands and making plans accordingly iv. differentiating products closer to the customer v. sourcing supplies strategically vi.

developing a technology strategy that spans the entire supply chain; and vii. adopting performance measures that spans the entire channel In accordance with the principles of SCM Apple has adapted its supply chain to produce iPads at a price which cannot be beaten by any of its competitors - at least, not right now. The company has also customized its logistics network to the requirements and profitability of its customer segments. Apple pays attention to the market signals of its customers as indicated by the third principle of SCM and provides them with the products in a timely manner.

Its products are differentiated from its competitors in terms of how they are designed and by way of the quality that they have become accustomed to. Apple like no other manages the sources of supply strategically in order to ensure that ensure that the company can provide a constant supply of high quality products to its customers at the lowest price possible and the products are designed at its headquarters in California and Manufactured for the most part in China which has an abundance of cheap labour.

In so doing every participant supplier in the company’s supply chain can achieve greater profitability. The company has also developed a technology strategy that span the entire supply chain. There is a clear view of the flow of products, services and information which is very critical to efficient and effective supply chain management. The company has also adopted performance measures that span the entire supply chain so that the ultimate customer (end user) is served in an efficient and effective manner.

The make-or-buy decision According to Besanko et al (2010, p. 120) a firm may choose to perform an activity itself or to purchase it from an independent firm. This is the make-or-buy decision. In deciding whether to make components or buy them Apple will consider the benefits and costs of the two alternatives. Besanko et al (2010) has provided a number of benefits and costs that Apple faces in their choice of buying instead of making various components are detailed in the table below. Benefits and Costs of Buying Components Instead of Making Them Benefits Costs 1.

Firms which produce for the market such as Samsung and Toshiba can