Review Apple’s Supply Chain for Its Iphone Product. What Differences Set It Apart from Competitors?

1、Review Apple’s supply chain for its iPhone product. What differences set it apart from competitors?

Apple iPhone supply chain differences

1. New product development

a. Kept a short new product development cycle

Apple: closer to 1year,/others 4or 5 years(traditional product lifecycle )

Exhibit 2&3

b. They don't outsource their supply chain, apple keep the entire supply chain under control internally

c. the designer worked in proximity with suppliers

2. Procurement

Apple’s insistence on exclusivity and its high volume of purchases make the other competitors wait for key components.

3. Product assembly

Crisis sharing supply chain placed significant responsibility on the shoulders of suppliers.

4. Retail experience

Monitor the product sales by store by the hour and relied on this information to tweak its production forecasts on daily basis.

2、What are Apple’s key advantages in how it manages its supply chain operations? Support your analysis with data from the case.

1. Apple was highly integrated, with centralized R&D and accounting for entire company.

E.g.: In 2013, apple continued to invest heavily in research and development to ensure that it would have innovative products in its pipeline. R&D spending was $4.5 billion in 2013, up from $3.4 billion in 2012 and $2.4 billion in 2011.

2. Purchase suppliers’ production capacity in advance in order to ensure the steady supply of key part.

eg:product demand was forecast 150 days in advance and updates were continually sent to suppliers to allow adjustments in production schedules.

3. The “closed ecosystem” enabled it to negotiate large discount on components. This gave the company access to flexible manufacturing volume in the event that demand was high, and savings on other supply chain costs, such as air-freight.

4 Logistics

A、 faster logistics, even use air-freight when other competitors using ship;

B、 ship product directly to consumers form its suppliers’ assembly plants in China

C、 have many intermediate warehouses to ensure its many sale outlet

D、 had a reverse logistics system to let customer return item rapidly and improved the customer satisfaction ,lower the call of technical support

3、What are the challenges that Apple faces in the future, and what are the implications for its supply chain?

Challenge:

1）Over-reliance on several major suppliers.

(Most of key suppliers want to maintain their independence, so they would rather abandon a lot of orders, even 1 billion, from Apple to gain other companies’

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