Supply and Chain Management of Apple
Supply chains have been a popular component of the international business for several decades. According to Boyer & Verma (2010), supply chain management (SCM) refers to the management of the flow of products or services. It includes the movement and storage of raw materials, the inventory of works-in-progress, and finished products from the point of manufacture to the point of consumption. From the management perspective, Dilger (2013) mentioned that there are always issues linked to the effective and efficient distribution of goods flowing across the supply chains. From the industrial perspective, there are certain questions concerning how the industry is organized with regard to ownership major manufacturers and their suppliers, and where these firms are located. Nations are also concerned about whether they can maintain and gain production, sales and research abilities required in making low-cost, high-quality or high tech products. In general, supply chains are of great significance and require strategic management. Apple Inc. is one of the global supply chain leaders. Current paper analyses the supply chain of the iPhone, which is Apple’s product.
Selection and Management of Suppliers
Apple Inc. has taken steps in managing the supply chain of iPhone, and the suppliers within it. Apple selects the suppliers of iPhone components based on the prices. The company aims at purchasing components, such as cameras, processors, interface sensors, fabrication assembly, radio frequency, and power management, at lower prices. The supplier power in the Smartphone industry is relatively low (Simpson 2013). As a result, Apple is capable of shopping for the best deals. Apple has established a formalized list of expectations for the suppliers and rapidly moved to exclusively agreeing with them in exchange for volume guarantees. Apple has also established relationships with suppliers of materials used in manufacturing iPhones. According to Simpson (2013), it has significantly assisted Apple in the scaling of operations to customer demands for iPhones. In collaboration with its supply chain partners, the company assisted in developing new manufacturing process of iPhones, some of which the company has patented.
The production and design of iPhone is a sophisticated process. Besides the senior executives who sign off on the final product, iPhone design is a compromise between the engineers, industrial design team, and the supply chain team. The industrial design team often designs the case of the iPhone, the materials used, and how it interacts with the customer. The engineers design the hardware and software aspects of the iPhone. Boyer & Verma (2010) pointed out that there seems to be back-and-forth between the teams in order to ensure that electro-mechanical and mechanical parts work in harmony with the design. The team of engineers generates a bill of materials. The supply chain personnel come handy at this point. The team assesses the bill of materials and cost out the iPhone. In addition, the supply chain personnel offer input to develop the final design. The duration between the design and production of the iPhone takes essentially 10 months. Bringing the iPhone to the market takes a significant portion of schedule. It comprises of sourcing the components, testing the iPhone, approving the iPhone, and piloting the dry runs in the factory, in order to ensure that the iPhones are produced in large numbers.
Boyer & Verma (2010) pointed out that distribution channel is a significant component of a firm’s development, and has a considerable impact on the production and sales. The production of iPhone is extremely professional, specific and scientific. Due to this, manufacturers of high-tech products, such as iPhones, have to specify when it comes to the distribution channels. Before the formal unveiling of iPhones, Apple shipped the products to distribution centres around the world, including China, Australia, Singapore, Japan, the US, the UK and the Czech Republic. Initially, Apple wanted to regulate the entire distribution of iPhones by itself. Nevertheless, the company gradually began adding channel partners, such as Wal-Mart, AT&T and Best Buy. The company has an advantageous chain of exclusive outlets that allow a direct approach to the consumers. According to Simpson (2013), Apple has reasonable amalgamation of distribution channels, including retail, stores, online stores, and tie ups with wholesalers.
Generally, the most frequent methods used by Apple in distributing iPhones are agency and personal selling. The company uses personal selling since manufacturing firms can directly trade with the customers. As a result, the company is capable of offering all-round service, such as product organization, transport, research, preservation and technical support. As such, Apple can guarantee the effectiveness of the operation of the channel. Direct selling implies that there is a single point between the final user and the producer (Boyer & Verma 2010). The personal selling approach is used abroad, though it is developing slowly in countries, such as China. In such regions, Apple used agency channel of distribution to distribute iPhones. The major advantage of agency channel of distribution is that it can cover a large number of users.
iPhones End Consumers
Apple targets a wide range of consumers of iPhones. Consumer reports have indicated that Apple targeted teenagers by introducing the iPhone Smartphone series. Teenagers use iPhones for several reasons, such as socializing with friends and listening to music. Another consumer group is the college and university students. Students use iPhones to record and organize notes (Dilger 2013). Corporate people also form a significant portion of iPhone consumers. iPhones have a business quality, which is extremely important. The iPhone is also very useful to adults for their daily needs, including phone calls, the Internet connections, map directions, cameras and documents. Having an iPhone makes lives much easier.
Current paper has analysed the supply chain of iPhones Smartphone series. Apple selects the suppliers of the components used in manufacturing iPhones based on the prices of these components. The bargaining of suppliers in the Smartphone industry is relatively low. The supply chain personnel offer input to develop the final design. The duration between the design and production of the iPhone takes essentially 10 months. The most frequent methods used by Apple in distributing iPhones are agency and personal selling. The end consumers of iPhones include teenagers, corporate people, adults and students.