Global Supply Chain Management - Essay Example

Individual Essay of Global Supply Chain Management Task 02: Evaluating practices in managing Global Supply Chain Management in Apple Inc. Introduction In the market of mobile phones, one cannot ignore the reputation and share rate of the Apple Inc. Apple is one of the giant organizations in mobile handsets business that has become widely acceptable, both nationally and internationally. One of the reasons for Apple’s enormous success is its global supply chain management approach, ensuring that the product is perfected in all sectors. Competing with the fierce market and expanding globally required the company for establishing several distinct functional units and efficient management of all the units to ensure success(CNN Money 2012). Apple’s Strategies to Manage Its Global Supply Chain 1. Ecosystem creation Apple was the pioneer in the mobile industry to give the facility of an Ecosystem to their customers. An ecosystem is connecting the company and its features with customers by means of computer network. By using this technology, Apple was able to be connected with its remote vendors and buyers, and giving them flexibility and choice in acquiring the company’s facilities and products. An important purpose the ecosystem serves for the Apple Inc is in the inventory management by keeping a check of the demand to supply ratio of the product. To reach the global market, company has to have a very good estimation of number buyers interest and the number of suppliers or distributors. In addition to this, it also helps in maintaining customer trust and loyalty, by keeping in direct touch with the merchandisers. Apple included the features of apps download, iTunes and many other logistics in its cloud computing network. Again this was the management strategy which saved the company from investing in help centers or customer service departments. This simplifies the process of supply chain, where the management can easily access the data of customer visits, downloads, complaints and feedback. This speed up the process of filtering of information and enabled managers to make decisions regarding product advancement or improvement before customers are bored or annoyed with the product(Blaisdell 2012). 2. e – Procurement It is certain that the growing fame and wide acceptance of Apple iPhones and their other devices brings the challenge of delivering devices to various distributors, and not knowing exactly how many have been sold. Moreover, the procedure for purchase for high consumers is also complicated and slow, where the supplier first reports to the main distribution unit before making a large order. Managing the supply and purchase rate efficiently is one of the prime challenges a company faces in launching the product globally. For managing the global demand and supply of its product, Apple came up with the strategy of e- Procurement and e- Purchasing. The benefits of this management approach are as follows: i. Easy Access to the Sales Report Purchasing online has not only facilitated customers in getting the product at their door steps it has helped the management in supplying form one central point. This enables the company to focus more on customer demand than on reaching distributors. Moreover, assessing the sales report becomes far easier when selling is performed from one central point and recorded in company’s database before the order is delivered(Wisner 2012). ii. Easy Track ability The e-procurement system enables buyers and suppliers to track the availability, demand and report of pending sales electronically. By this, the company gets a clear vision of their product sale and demand in different parts of the world(Wisner 2012). iii. Dealing with more people in less time The marketing step in the Apple’s chain of Global Supply Management starts with addressing the target market and ends at customer complaints management. Hence, it’s easier to cross boundaries of nations, targeting bigger mass and catering needs of more people in less time(Wisner 2012). 3. Global Sourcing Theories and examples of global sourcing can be best linked with the Apple Inc, where its avails services of a number of organizations to come up with a complete product. Apple Inc. is on it route towards advancement and innovation. This requires the company to master in the area of research and development and maintain customer interest, to attain the full value of its product. Because of this purpose, it outsources various services of production, Information Technology and logistics from other independent companies. For example, in the manufacturing of its latest iPad and iPod devices, Apple changed the production location from U.S to China. The reason was to decrease the labor cost and to expand the profit margin. Report from the New York Times tells that Apple’s devices being designed in US, but assembled and finalized in china, enjoyed a far greater work force than Apple could have acquired in any US city. Therefore, global sourcing helped in producing a larger quantity in less time and low cost, exceeding over other market competitors(Rawson 2012). Another smart move of Apple in this regard is the outsourcing IT services from India. This serves two great purposes for the company which helped in acquiring much greater sales in all over Asia. India being a heavily populated country and closely connected to other Asian states, hence choosing India for IT outsourcing helped the management in not only reaching Indian market share, but also the other Asian regions faster. This again helped in building cost efficient internet and communication networks, due to low labor cost and taxes in India as compared to the U.S(Richardson 2006). 4. Independency of the Supply Chain Management Unit Uniqueness in nature of supply chain management carried in the Apple Inc is its independency and network of responsibilities. The supply chain management in Apple has its own head and carries the right of control decision making at several levels. A report by AMR Research presents the supply chain management of the Apple group as the best in the business. It can be justified by the structure with which the supply chain is carried out in the organization. The supply management has to report to the manufacturing or marketing department heads. However, there responsibility and visibility has augmented over the past, and it is most prominent in Apple where the supply chain is in direct touch with the CEO. By the increase in responsibility and control division of the supply chain, managers in this unit have a better control in solving the company’s problems in the national and global market(Allen 2010). 5. Managing Supplier Relation Managing supplier relations cannot be ignored in the context of companies which depends majorly on outsourcing resources. The reputation of Apple build on its quality product, and timely service has a big contribution of the quality of services it is availing for its various sectors. This shows the efficient supplier management skill Apple has carried out throughput its product supply chain. Apple’s primary suppliers of microprocessor, flash memory and screens etc. reports about the change in technology and improvement tactics, which saves the company in carrying out massive customer surveys globally for the improvement of the product(Scanlon 2009). This shows the strong connection of Apple’s supply management with their primary distributors and suppliers. Another advantage the company gets from this management strategy is that their product reaches their customers without supplier interruption, which badly influences the inventory control and on-hand distribution process of a company (Mohebbi, 2001, pp.411-412). Problems in Apple’s GSCM The fact that Apple’s product rates and reputation are higher than any other mobile hand set in the market leads many to the halo effect that everything is working properly in the company. However, from the perspective of global supply chain management there still exist some serious issues by which other competitors are getting advantage of(Scanlon 2009). The trend started in many parts of the world to change cell phones twice or thrice in a year, open rooms for other competitors to do good business during the period when Apple’s new product is in its production stage. The high dependency of Apple from global sources to make a complete i-product, not only prolongs the delay in new product launch it also complicates the reviewing, testing and management process. Moreover, the management at times are not in a position to make decisions or give customer complaint replies as they are dependent on the management system of their outsourcing companies(Scanlon 2009). Targeting the global market also brings the challenges of competitors within that region and other market characteristics of economy, security and need. The first iPhone of Apple experienced the shortage of production as the company does not have a very good idea about its demand in the international market. Contrary to this, the later versions of their products of iPad and iPhone-5 experienced excess of production, as the company failed in anticipating the growth and usage of other brands in those regions(Kropp 2012). Moreover, outsourcing several resources and services from the development countries have created several environmental and social problems in these countries, due to the usage of contaminated materials in production, without providing safety measures. This has caused further cause problems for the supply chain management to improve their company status and follow human regulatory laws when off shoring resources(Kropp 2012). Conclusion From the above facts and management strategies followed in Apple Inc, it can be concluded that in managing the GSC, there are many aspects that need to be dealt with. A company no matter how innovative or efficient is in its designing and product advancement, but lacking in supply chain management can limit the success and growth of the company. Apple enjoys the top spot globally, in mobile handset manufacturer ranking because they have succeeded in improving their supply chain. However, the raise in market share of Samsung and HTC, asks Apple to look at the grey areas of their internal and external management. In addition to this, ensuring safety measures and that the cultural values of people from all over the world are not disrespected, also comes under the responsibility umbrella of the supply chain management. By focusing on these aspects of GSCM, there is a high probability that Apple will continue to attract more customers than before and will acquire wider share in the global mobile market. List of References Allen, A., 2010. Apple's supply chain judged best in world again. [Online] Available at: http://www.supplymanagement.com/news/2010/apples-supply-chain-judged-best-in-world-again/ [Accessed 24 December 2012]. Blaisdell, R., 2012. Apple’s Fantastic Supply Chain Management. [Online] Available at: http://www.rickscloud.com/apples-fantastic-supply-chain-management/ [Accessed 24 December 2012]. CNN Money, 2012. World's Most Admired Companies. [Online] Available at: http://money.cnn.com/magazines/fortune/most-admired/2012/snapshots/670.html [Accessed 24 December 2012]. Kropp, R., 2012. Learning from Apple's supply chain management mistakes. [Online] Available at: http://www.greenbiz.com/blog/2012/04/12/learning-apple-supply-chain-mistake [Accessed 24 December 2012]. Mohebbi, E., 2001. Supply interruptions in a lost-sales inventory system with random lead time. Computers & Operations Research, 30(2003), pp.411-26. Rawson, C., 2012. Why Apple's products are 'Designed in California' but 'Assembled in China'. [Online] Available at: http://www.tuaw.com/2012/01/22/why-apples-products-are-designed-in-california-but-assembled/ [Accessed 24 December 2012]. Richardson, D., 2006. Will Apple Outsourcing to India Equal Lost Jobs and Frustrated Customers in America? [Online] Available at: http://www.applematters.com/article/will_apple_outsourcing_to_india_equal_lost_jobs_and_frustrated_customers_in/ [Accessed 24 December 2012]. Scanlon, R., 2009. Aligning Product and Supply Chain Strategies in the Mobile Phone Industry. Thesis Report. Cambridge: Massachusetts Institute of Technology Massachusetts Institute of Technology. Wisner, J., 2012. Principles of Supply Chain Management: A Balanced Approach. Mason, USA: Cengage Publications. Read More