Supply chain management is vital for firms that create a large fraction of their returns outside their domestic market since they need to locate an equilibrium between finding their merchandise out to the market swiftly and maintaining a low inventory. Apple’s supply chain is about more than simply effectively managing warehouses and distribution ties, but is also about the ability to recognize and appraise the impact of impending risks. Moreover, it is about the corporation’s ability to be flexible and responsive in cutting costs.
Apple uses its supply chain to gain competitive advantage. Seven years ago, its design guru Jony Ive illustrated this by making e light to shine through the metal casing of laptop that had no opening with the help of a modified laser apparatus. The corporation then entered into a contract with a laser manufacture and purchased hundreds of such lasers spending over $80 billion. The corporation can risk by spend a lot of money when undertaking long-term viable projects.
Additionally, Apple looks ahead in time for its resources and therefore has been able to deliver its products to millions of customers the world over with little delays. Tim Cook, the corporation’s new executive officer says that they have created a clogged ecosystem that manages the entire supply chain, from invention to vend supplies. Apple buys raw materials in large volumes and gets big discounts on airfreights, parts, and manufacturing capacity.
It has taken operational excellence to an extremely high level. The excellence enables the corporation to manage enormous product launches without necessarily maintaining large profit depleting supplies. Apple once sold its iPad at a price that many of its competitors could not beat but still earned a 25 percent margin on the appliance. It will start investing in the aggressive television market this year, 2013, due the confidence that it has on its supply chain system.
Apple takes risks when it is necessary. When the corporation wanted to stock blue IMacs for Christmas the subsequent year, Steve Jobs paid $50 million to purchase all the obtainable festival airfreight space. Later, when competitors such as Compaq wanted to buy air tickets, they failed and Apple had a competitive advantage.
Apple used a similar technique when iPod sales took off in 2001. During the period, it chose to pack thousands of very small music players on planes to cut costs while shipping them from China to the customers’ doors. An HP employee who purchased one tracked it on Apple’s website and obtained it within unexpectedly few days. The competitors did not pack their products in the same manner and incurred losses.
In conclusion, Apple’s supply chain is highly effective because the corporation has a mentality of spend exorbitantly whenever necessary and bring in the gain from larger volumes in the end. This approach is found in the entire Apple’s supply chain system. However, it starts on at the design phase. Designers of Apple work hard to understand the industrial processes that translate trial products into mass-produced appliances.
The designers work closely with suppliers to generate new working tools. In addition, Apple’s decision is to focus on a few product lines makes its supply chain outstandingly beneficial, as it shows that the company has a unified strategy and that the business conforms to the strategy. Apple’s supply chain has been the best globally for the last four years due to the unified strategy and the willingness to take risks.