Concurrent Product and Supply Chain Development - Apple Inc - Case Study Example

< Supply Chain Management> by Abstract Apple Inc. has the best supply chain management in the world. Still, can change the produce design or introduce new technology for better to save labour and cost in the process, the paper discusses this issue in detail. Introduction Supply Chain Management (SCM) deals with flow of goods. It starts with raw materials, processed goods, work in progress inventory and then finished goods and finally sending to consumers. Supply chain takes care of the journey from point of origin and point of consumption. Kumar (2010) mentioned that interlinked networks, channels are the key factors of the business. From supplier to manufacturer, it is upstream process and from manufacturing it is downstream. There are many stages in supply chain management, it includes transportation, logistics, inventory, customer, responsiveness, flexibility, custom and duties and many more Supply Chain Management process Source: Author (2014) Significance of supply chain management: This department is one of the most important sections of any business. It is also told that, it is not the competition among the products but among the supply chain of the companies. It improves the top line and bottom line of any business and also boosts the customer demand Fundamental Lessons from the case From the above case study of TechCo about Product designing in supply chain management it is clear that the design of the product, change in supplier and new technology helped TechCo a lot to reduce the time required in the supply chain and improved the process. Technological advancement (ERP Sollution): New technology such as ERP changed the picture of exchange of information in a big way. The case is based on (TechCo) Company, a high-tech electronics manufacturer which supplies products to the original manufacturers. Generally these equipment manufacturers package these products with other goods and services to the final users. Here TechCo played the role of tier 1 supplier. The company had an efficient engineering team, which used to design products and used to work closely with the customers of the product. It also used to take items from tier 2 and tier 3 suppliers and sub assemble the product. In the case, there were several stages in the engineering and supplying the product. Initial prototypes were made in the laboratories with the help of materials. The second step was small scale production. With the help of new product introduction (NPI) group in the operational process. A number of resources get involved in the NPI team. These were basically purchasing and project management. Lengthy paperwork process and other issues made it difficult for the engineers to get the information. Different teal used to use their own information exchange system but ultimately it did not help them. Finally they used Agile, the information record system. It used to provide specifications in detail. But still it needed the help of Oracle Enterprise Planning (ERP) in the operation management to generate orders in the process of supply chain management. That helped the business a lot. Jones (1996) also highlighted that information is the key component to get the competitive advantage in the supply chain. Now engineers and others can easily access the information as soon as an order is booked. Change in Design: The product Thixomoulded also helped to implement the design in a better way and finally the new supplier who delivered the products faster compared to the previous one helped to develop the business. New product development (NPD) or product design was basically the remit the product launch and engineering. There after Advanced Manufacturing operations was introduced to launch new product. The capacity of the assembling was 50 units a day on an average. If there was a demand from customers’ end automatically it geared up its production speed to large scale production worth the capacity of 100 units per day.During 2006 the importance of designing was admitted in the field of supply chain management. But it had some limitations too. Initially what happened Even if other parts of the product are ready for the delivery if one part is left due to some problem like product inefficiency. The designers of the product were searching for a hard product which would vibrate less compared to the current one. And the finalized item was Thixmoulded. The design of the part was more detailed. Up to this SCM was not involved only design engineers were making it. There after SCM was introduced to estimate the commercialization of the process. Beamom (1998) argued that there has been an increasing focus on the product designing in supply chain. Change is supplier: After the implementation of new product and technology it came out that the current supplier was unable to supply within this process. Identifying this as unviable option it searched for another option. It was found that the previous supplier did not maintain the tool properly. There after the production technology was also changed that took much lesser time. All these steps helped the production process and supply chain management. Within the first six months of product life TechCo increased from five customized product to eight customized product Concurrent Product development and supply chain management Concurrent product development strategies are taken to develop the product at a lesser time and at a lower cost. Here the work methodology is parallelization of tasks. A number of tasks are done simultaneously to cut down the production time. Manufacturing engineering, design engineering and other processes are integrated to reach the goal. There are many point of conflict between concurrent development and supply chain management. In supply chain management steps are dome one by one but in concurrent products steps are done simultaneously. That is the problem. But with the help of internet and ERP technology it is possible to flow information in all directions and to the all departments and get the work done simultaneously. According to Anderson (2014) by using Concurrent engineering low cost and high quality products can be manufactured and applied it into the supply chain. The concepts of design for manufacturability from concurrent engineering can play the key role here. The Application of Experience from TechCo to Apple Inc The supply chain of TechCo got befitted by changing the product design, material and supplier. Existing Supply Chain of Apple: The supply chain management of Apple is considered as one of the best in the world. According to IT research firm Gartner, Apple holds the number position for consecutively three years. The business success of iPhone or iPad not only goes to the technology or innovation but also to the process of supply chain management. Supplychainopz.com summarized the supply chain of Apple Inc. with the help of Annual Report (SEC Filing) of 2011 Apple collects it raw materials from various resources and send these to its assembling unit in China. The raw materials are collected United States, European countries, Asian countries and China also. Once the product is finished, the shipment is dome to the consumer. Especially for those who purchase it from the online store of apple. For the shipment of the items the company takes help from FedEx and UPS. For the common retail customers wholesaler, retailer and direct sales force is there. Apple also offers strong after sales services such as Warranty return, recycle reuse program and Trade in program. Supply Chain of Apple. Source: Supplychainopz.com The main challengers of Apple are timely delivery of the product with quality. Labor problems and marketing issues are also there. Apple Inc.’s challenges to supply chain are given below. High Product demand: As the demand for the Apple’s product is high, cases are there when the supply chain faces strong challenges to meet the demand with the given time. Lee Hau L, (1992) mentioned that Inaccurate Delivery Status Data and Ignoring the Impact of Uncertainties are a major challenge for the chain. SO addressing demand is difficult in the chain. Inventory management: Inventory management is the vital issue. If customers are coming in the shop and not getting the product and going back to home in empty hands then it is not good for the reputation of the company. Levy (2009) argued that outsourcing and off shoring are also the risk components of the business. So inventory management has to be very good. Labours are in pressure: Labours are given pressure in China to maintain the quality. Quality control is very strict here. Theirs time limits are also very tight. The problem from the labour rights group is also there. According to Kropp (2012) Apple committed to legal complained about labour health safety and work hours. Poor market: ‘According to the report of The Telegraph (2014) iPad Pro’ and the sapphire-screened iPhone 6 are not able to develop a good or expected market. This problem is putting the entire supply chain in from of a challenge. To get the idea about the marketing planning it is very important to conduct the market research. Application of lesson: In Apple the lessons from TechCo can also put into practice. Apple is always known for its attractive design and it is its key attraction apart from the technology. Research and Development can be done to develop such a product. If the product design can be developed in such a way it takes less time and less cost. Concurrent engineering can help them to address all these problems. If the product can be produced at a lower price the following the theory of demand it will be able to develop a new and strong market. A lower price will increase the customer base of the product. If the new product design takes lesser time, then there will be lesser pressure on the labours. In that case it will be easier for the company to address the labour issues. The company can also think of replacing the existing supplier to get better and timely performances. Design and supply chain management It is challenge for most of the organization to include the product design part in the process of supply chain. Once the product is launched, it becomes very difficult to insert any changes in terms of design in the product. Generally it is believed that the design of any product has hardly anything to do with the supply chain management of the product. But now designing is also a factor of supply chain management. It is represented as DFx (Here it is design for x. The value of x can be variable, for example C=cost, or M = manufacturability, etc.)  However  TechCo actually did it and took the advantages of it . Such advantages can be replicated in other companies such as Apple Inc. A large part of the Designing of a product depends on the nature of the demand Fisher (1997) argued that before deciding the supply chain device, it is important to know the nature of the demand. The design of a product gets changed according to market demand and the flexibility of the supply chain. One of the main objectives of change in design is to lower the cost structure. It is also important task is to plan the cost structure of the product according to the new design and supply chain. All types of cost data should be assembled and examines as ultimately everything is related to finance. Peterson et el. (2005) mentioned that Firms are seeking ways to cut cost and improve quality through supply chin technique. Apple always emphasizes product design as of the key component of supply chain process. Developing new technologies and new product designs are the Unique Sales Proposition of the company. One of the main reasons behind the success of Apple’s products is innovative technology and design. As a next step arranging a product testing is also very important. If anything is wrong with the product or the efficiency is not up to the mark then not only the products will not be sold in the market but a negative image will build. One has to remember that brand Apple is known for quality. Market research is extremely important to make the supply chain more effective and efficient. Through market research the company comes to know about the expected demand of Apple goods. Then only the supply planning to meet the demand can be done. A wrong forecast of demand will put the planning of the company in front of challenge. Getting feedback, defect identification and finally Product up gradation make the supply chain efficient. Product life cycle status has to be checked periodically for the feedback. The company needs to know the response from the customer. How is it performing, how long is it lasting, what are the short comings, etc.? On the basis of that the planning for the next step will be done. Identification of potential defects is also important so that these can be either rectified or minimized. Cause, if at this stage if these are not addressed in future customers will complain about these defects. This is not good for the reputation of the company. Apple keeps on developing new products and also updates the existing products on a regular basis. The grievances and the other feedbacks should be addressed in the process in the next stage of product development Assemble to Order at different part of the world Assemble to order is a kind of supply chain management where services and good are being assembled after getting order confirmation from the customer. The key factors of the process are that, bulk semi-finished goods are kept in the finishing process inventory in anticipation of the demands from the customer. This strategy becomes more fruitful when a huge number of end product can be assembled at one go for each assembling unit. In this case it is easier to deliver customized products. Christopher (1996) also argued that marketplace requirements are the key determinants of the supply chain Postponement is the strategy where the risk gets minimized and benefit gets maximized. In the context of supply chain management, according to postponement theory where products can be modified at the final stage as well, just before the final shipment of the product to the end customer. With the help of this technique, cost and labour can be saved in a big way. Push based model or build to stock model is a forecast based model. It is depended on the best guess or estimation of demand of products. Here generally products are generally pushed to the customer. Pull based model or build to order or demand driven model. It is internet based supply chain tool. Here actual demand or purchase orders determine the supply chain. The supply chain is pulled from the customers demand. In case of Apple the practice can also be followed. Here also requirement is there to store semi-finished goods at inventory and distribute it to the customer at the final stage. Novak et al.(2001) argued that that in-house production is more meaningful option when product complexity is really high. As Apple has network all over the world then there should be different assembling units at different locations such as North America, South America, Europe, Africa and Asia. If each and everything is made in China and shipped to the different parts of the world then it becomes difficult. So it is better to set up assembling unit at every place. After seeing the response, the demand of the product should be forecasted for both short term and long term. The short term can be considered as 150 days and the demand in the short term need to be addressed immediately. In case of assembling unit short, term demand gets priority over long term demand. It is important to keep a track on the sales figure. Current sales level needs to be monitored simultaneously. Sales is an essential component of supply chain and depending on the sales figure the other factors such as raw materials , etc. of supply chain will vary. Along with the sales figure the cost components has to be monitored. If there is any significant differences happed or not between the actual costs incurred and the estimated cost structure. Measures should be taken if there is anything happened like this. It has to be done properly because the cost structure is the directly related to the revenue structure and profit margin of the industry. Conclusion: from the about discussion it is clear that there are many factors which can change the scenario of supply chain management. The design of the product is the tilting factor in the case of TechCo. After changing product , technology and supplier the company got benefitted. The same concept can be replicated for Apple Inc. Though the supply chain management is world best but still rooms are there for improvement. References Anderson David M, (2014), Design for Manufacturability: How to Use Concurrent Engineering to Rapidly Develop Low-Cost, High-Quality Products for Lean Production available at, http://www.crcpress.com/product/isbn/9781482204926, Retrieved on May 12, 2014 Apple’s supply chain in trouble? (2014), available at. http://www.telegraph.co.uk/technology/apple/10714935/Apples-supply-chain-in-trouble.html, Retrieved on May 12, 2014 Apple vs. Amazon, Available at, http://www.supplychainopz.com/2013/01/is-apple-supply-chain-really-no-1-case.html, retrieved on May 12, 2014. Beamon Benita M, (1998), Supply chain design and analysis: Models and methods, http://www.sciencedirect.com/science/article/pii/S0925527398000796, retrieved on May 12, 2014. Christopher Martain (1996), Supply Chain Management: An International Journal, http://www.emeraldinsight.com/journals.htm?articleid=858210&show=abstract, retrieved on May 12, 2014. Fisher M L (1997), what is the right supply chain for your product, available at, http://www.computingscience.nl/docs/vakken/scm/Fisher.pdf, retrieved on May 12, 2014 Jones Mason R (1996), Information enrichment: designing the supply chain for competitive advantage, available at, http://www.emeraldinsight.com/journals.htm?articleid=858139&show=abstract, Retrieved on May 12,2014 Kropp Robert (2012), Learning from Apples supply chain management mistakes, available at, http://www.greenbiz.com/blog/2012/04/12/learning-apple-supply-chain-mistake, retrieved on May 12, 2014 Kumar K M Sarath (2010), Definition, Nature and Principles of Supply Chain Management (SCM) Supply Chain Management (SCM) Available at, http://www.unidoicamt.org/Resources/SDP_Past_Programs/File4/50_File4_Annex_2.4-SCM.pdf, Retrieved on May 12,2014 Lee (1992), Managing Supply Chain Inventory: Pitfalls and Opportunities, available at, http://sloanreview.mit.edu/article/managing-supply-chain-inventory-pitfalls-and-opportunities, retrieved on May 12, 2014 Levy Simchi, (2009), Designing N Managing Supply 3E http://books.google.co.in/books?hl=en&lr=&id=n8eht9bJ47QC&oi=fnd&pg=PR7&dq=+Product+designing+and+supply+chain&ots=dEoDaipEdf&sig=C-sO88Ydw6U8HnylH-sBwF7SXAw#v=onepage&q=Product%20designing%20and%20supply%20chain&f=false, Retrieved on May 12,2014 Novak et al., (2001), sourcing by Design: Product Complexity and the Supply Chain, http://pubsonline.informs.org/doi/abs/10.1287/mnsc.47.1.189.10662, retrieved on May 12, 2014 Peterson et el (2005), Supplier integration into new product development: coordinating product, process and supply chain design, available at, http://www.sciencedirect.com/science/article/pii/S0272696304001056, Retrieved on May 12, 2014 Read More