Apple Supply Chain Management, Research Paper Example

Apple Inc. (Apple), based in Cupertino, CA, is a leading manufacturer and distributor of a wide range of digital products including mobile communication and media devices, computers, software, and third-party applications (The New York Times). The company is probably the only player in the personal computing sector that has established a leading market position by focusing on both the hardware and software side of the business where as competition usually focuses on specializing in either software or hardware but not both. Apple maintains tight control over all aspects of its business operations including supply chain and distribution management which has enabled the company to achieve profit margins that are the envy of the competition.

Apple’s supply chain network is so ahead of the competition that Gartner has awarded Apple with the best supply chain network title for the sixth consecutive time in a row this year (Ellinor, 2013). A critical look at the Apple’s supply chain network reveals the company has embraced globalization in every possible manner. The company scouts almost every continent in search of the most reliable suppliers though the common notion is that most of them are located in Asia, particularly China which is only partially true. The suppliers in Apple’s supply chain network also come from North America, South America, Europe, and Australia (Bostic, 2013). The benefit of this strategy is that it gives Apple substantial negotiation power against individual suppliers and it also ensures that Apple gets the best quality and most competitive prices, no matter where the supplier may be located.

Despite an extensive and complex supply chain network, the company has taken several measures to maintain tight control and minimize risks that may hurt its profitability and/or reputation. First of all, the company provides training and education to its suppliers on a wide range of topics including technical skills, labor laws, and Apple’s Supplier Code of Conduct. The company also conducts audits on regular basis to identify potential problems and fix them on priority basis such as excessive work hours and sourcing conflict-free materials. Similarly, the company also studies the health and safety standards at suppliers’ facilities and takes corrective measures where necessary (Apple Inc.). In addition to maintaining tight control, the company also continuously strives to improve efficiency of its supply chain network through innovations such as reduced packaging material and environmentally-friendly business practices (Apple Inc.).

Apple’s focus on innovation, efficiency, and control also extends to its distribution strategy. This may be why Apple’s preferred distribution channels are internet and company-owned retail stores though the company also utilizes third party distribution systems for certain products such as smart phone and tablet devices. The company invests a great deal in training sales associates at its retail outlets (Frankel, 2007) which is another example of Apple exerting tight control on overall user experience. Another benefit of direct control or minimum number of players in the distribution network is that it helps Apple earn record profit margins (Tabini, 2013). Apple follows this strategy at both local and international levels as indicated by CEO Tim Cook’s remarks that while India is an attractive market, Apple is not impressed with the bureaucratic and inefficient distribution networks in the country. This is why Apple has not placed the same emphasis on India that it would like to (Anwer, 2012).

The theme shared by Apple’s supply chain and distribution network is the company’s tight control over its operations and continuously seek out new ways to improve operating efficiency. This simple strategy explains why Apple earns profit margins that are the envy of the competition.

Works Cited

Anwer, J. (2012, July 25). Apple CEO loves India but doesn’t see much business here. Retrieved July 28, 2013, from http://articles.timesofindia.indiatimes.com/2012-07-25/hardware/32847364_1_smartphone-market-market-share-ceo-tim-cook

Apple Inc. (n.d.). Supplier Responsibility. Retrieved Julyl 28, 2013, from http://www.apple.com/supplierresponsibility/

Apple Inc. (n.d.). The story behind Apple’s environmental footprint. Retrieved July 28, 2013, from http://www.apple.com/environment/#manufacturing

Bostic, K. (2013, February 15). Supply chain visualization shows how Apple spans — and impacts — the globe. Retrieved July 28, 2013, from http://appleinsider.com/articles/13/02/15/supply-chain-visualization-shows-how-apple-spans-and-impacts-the-globe

Ellinor, R. (2013, May 24). Apple named world’s best supply chain. Retrieved July 28, 2013, from http://www.supplymanagement.com/news/2013/apple-named-worlds-best-supply-chain/

Frankel, A. (2007, November 1). Magic Shop. Retrieved July 28, 2013, from http://www.fastcompany.com/magazine/120/magic-shop.html

Tabini, M. (2013, January 14). How Apple sets its prices. Retrieved July 28, 2013, from http://www.macworld.com/article/2024257/how-apple-sets-its-prices.html

The New York Times. (n.d.). Apple Incorporated. Retrieved July 28, 2013, from http://topics.nytimes.com/top/news/business/companies/apple_computer_inc/index.html