Apple Inc.

Livia Hejlova - Robert Gerstenmaier - Di Chang - Mohammed Ali A Alsharidah - Oleksandr Sydorenko

Agenda:
Introduction
5 Performance
objectives
4Vs model
Apple Supply Chain
Purchasing
Distribution
CRM
Conclusion

Livia Hejlova - Robert Gerstenmaier - Di Chang - Oleksandr Sydorenko

Apple: Introduction

Production
Computer HW, computer SW, consumer electronics, digital
distribution

Area served: Worldwide

Number of employees: 73 000

Number of locations
393 retail stores in 14 countries (as of August 2012)
online Apple Store
online iTunes Store

Worldwide annual revenue of $156 billion in FY 2012 (ended

30.9.2012)

Publicly traded company extreme market influence (NASDAQ:

AAPL, NASDAQ100, S&P 500)
Livia Hejlova - Robert Gerstenmaier - Di Chang

Apple: Performance Objectives

Supply Chain - Current
Situation

Cost Optimization of supply and assembly - global trade (Example: iPhone: 34%
Japan, 17% Germany, 13% South Korea, 3,6% China,27% Others Assembly in
China) Product cost ~ 170 $

Flexibility Due to problems with main supplier Foxconn, Apple places 60% of
iPad mini orders at the competitor Pegatron

Speed 8 weeks delivery time for iPhone 5

Dependability Unpredictable demand, no stock and Quality Control Program

affect Dependability

Quality Strict quality control Program affects Speed (Example: material

problems
with
iPhone
5 scuffgate
directly
toAlsharidah
production
stop at
the
Livia Hejlova
- Robert
Gerstenmaier
- Di Changleads
- Mohammed
Ali A
- Oleksandr
Sydorenko

Apple: 4 Vs model
low

Volume

high

low

Variety

high

low

Variation

high

low

Visibility

high

Volume Huge amount of products and additional facilities sold worldwide

(17 million iPads,
26 million iPhones, 4 million Macs in year quarter ending 30.6.2012)
Variety Products of the same product category (desktops, laptops,
netbooks, music players, smart phones, servers, monitors, software, tablet
computers, television box sets)
Variation Demand for products increases rapidly in times of new product
launching; (Different price sensitivity iPad as consumer entertainment niche
is more price sensitive than iPhone as a communication device)
Visibility Apples
strong branding secures good visibility of their products
Livia Hejlova - Robert Gerstenmaier - Di Chang - Oleksandr Sydorenko

Apple: Supply chain

Purchasing of raw materials and components from suppliers
Apples global supply chain
1. US
All semiconductor components with the exception of baseband chips
(supplied by Infineon in Germany) and memory (supplied by
Samsung in Korea)
2. Korea
Flash memory storage and a portion of LCD panels
3. Taiwan
Touch screens, casings and passive components
4. Japan
Critical materials and core technologies
5. China
Low added value acoustic components and battery modules

Livia Hejlova - Robert Gerstenmaier - Di Chang - Oleksandr Sydorenko

Apple: Supply chain

Purchasing of raw materials and components from suppliers
Characteristics of Apples supply chain management
Control over the supply chain: buying of components in bulk (keeping the
price lower than its rivals but enormous bargaining power on its suppliers;
Intel as a rare exception)
Apple keeps product design, software development, product management,
marketing and other high-wage functions in the U.S.
Apple focuses its efforts further up the value chain
Apple model: taking advantage of worldwide manufacturing resources
while creating well-paying jobs at home
There is little value in electronics assembly n U.S.
Among countries, Chinas economy continues to play a surprisingly small
role in comparison to the U.S., Korea, Japan and Taiwan
Apple managers need to beware of relying too heavily on single customers
The iPad for instance contains more than 400 individual parts
Livia Hejlova - Robert Gerstenmaier - Di Chang - Oleksandr Sydorenko

Apple: Supply chain

Purchasing of raw materials and components from suppliers

Added value (margin distribution):

Approximately 58% of the sales price of a typical iPhone 4 goes to
Apple
Livia Hejlova - Robert Gerstenmaier - Di Chang - Oleksandr Sydorenko

Apple: Supply chain

Distribution
Selling of an integrated hardware/software product
Apple retail stores network (gives it a major advantage in distribution,
direct customer experience of brand values)
393 retail stores in 14 countries (August 2012)
Apple Online Store (products, accessories)
Resellers
Retail Stores (AT&T, Best Buy, Wal-Mart)
Online Resellers (computer- and consumer electronics focused eshops)
Mobile services providers carriers (play a gateway role in choosing
and
distributing handsets)
Apple Mac-expert staff provided to selected resellers' stores
Co-branding or distributing Apple's products and services with other
companies (e.g. HP was selling a co-branded form of iPod and preLivia Hejlova - Robert Gerstenmaier - Di Chang - Oleksandr Sydorenko

Apple: Supply chain

Distribution Apple Retail Stores
Independent Stores
A prototype store designed around customer needs rather than
products
Significant Stores
Located in prime locations of major cities (New York, London, Paris,
Shanghai, etc.), amazing architecture, staff trained not to sell rather
to respond to customer queries and provide solutions to customers
problems
Offering The Genius Bar specially trained staff offer one-on-one
training on how customers can maximize their use of a Mac or their
iPhone
Branding
Apples stores as a part of the companys branding strategy,
reflecting the companys now-popular minimalist design philosophy
and offering clutter-free zones
Apple Store visit
Experiencing a stimulating, no-pressure environment,
DiscoveringLivia
more
the Apple
family,
Hejlovaabout
- Robert Gerstenmaier
- Di Chang
- Oleksandr Sydorenko

Apple: Supply chain

Distribution Branding Strategy
Customer focus
Strong focus on customer satisfaction, trust and good feeling
(solving problems and advising approach to customers rather than
selling)
Emotional connect
Apple customer partnership
Advertising Iconic product
Initially as free-thinking and non-conformist
Later on as creative (e.g. the Think Different campaign) and
intelligent (e.g. the Get a Mac campaign)
Today highlighting qualities such as hip and cool (e.g. the iPod
silhouette),
obsessed with perfection and minimalism
Logo
Reflects the minimalist design philosophy
Brand architecture
Monolithic brand
identity everything being associated with the
Livia Hejlova - Robert Gerstenmaier - Di Chang - Oleksandr Sydorenko

Apple: Supply chain

Customer Relationship Management
Apple works as an integrated service provider model takes ownership
of the entire customer experience
Apple products are designed as an integrated system only hardware
and software developed or approved by Apple will work with them
Provide their customers with highly-personalized experience
Staying on the top of the American Customer Satisfaction Index for eight
years, topping its own record from 86 to 87 on 2011

Livia Hejlova - Robert Gerstenmaier - Di Chang

Apple: Supply chain

Customer Relationship Management
Online/Retail Store Apple Care Services
Financing/Leasing options (for consumers, businesses, schools and
universities)
Personalized assistance from Apple employees in the Apple Shops
Valuable IT lifecycle services for integrating and managing customized
Mac and multi-platform solutions in your existing environment
Comprehensive implementation and integration services for audio,
broadcast, film, photography, publishing, and video professionals
Certified technology consultants
Apple fully understands that all aspects of the customer experience are
important and that all brand touch-points must reinforce the Apple brand
Livia Hejlova - Robert Gerstenmaier - Di Chang

Apple: Supply Chain

Customer relationship management
Strategies for improving loyalty:
A store just for Apple
Complete solutions
Varied products
Consistency
New innovations
Attractiveness

Apple: Conclusion

While the iPhone and iPad, including most of their components, are
manufactured offshore, the most value from these products goes to
Apple.

Livia Hejlova - Robert Gerstenmaier - Di Chang

References
Offline
Research and Practical Issues of Enterprise Information Systems II Volume
2: IFIP TC 8 WG 8.9 International Conference on Research and Practical
Issues ... in Information and Communication Technology). 1 Edition.
Springer.,2007.
Slack Nigel/ Chambers Stuart/ Johnston R, 2010. Operations Management. 6
Edition. Pearson College Div.
Linstone, H.A. and Turoof, M.(1975) The Delphi Method: Techniques and
Applications, Addison-Wesley.

Livia Hejlova - Robert Gerstenmaier - Di Chang - Mohammed Ali A Alsharidah - Oleksandr Sydorenko

References
Online
Channeling Steve Jobs:
http://ezproxy.napier.ac.uk:2334/docview/1024159625
BROWN, B., 2011. Surveys find Apple most admired, most satisfying
company. Network World (Online), . Available:
http://go.galegroup.com/ps/retrieve.do?sgHitCountType=None&sort=DASORT&inPS=true&prodId=EAIM&userGroupName=napier&tabID=T003&sea
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vancedSearchForm&currentPosition=1&contentSet=GALE|
A267972228&&docId=GALE|A267972228&docType=GALE&role=
http://www.thestreet.com/story/11731645/1/heres-why-the-next-3-months-wi
ll-be-huge-for-apple.html
http://www.saleschase.com/blog/2012/04/09/apples-innovative-distributionstrategy-revealed/
http://www.saleschase.com/blog/2012/04/17/how-apples-branding-strategymade-it-an-icon/
http://www.apple.com/supplierresponsibility/
http://cmuscm.blogspot.co.uk/2012/02/two-sides-of-apples-supplychain.html
http://www.ausmt.org/index.php/AUSMT/article/view/155/136
Livia Hejlova - Robert Gerstenmaier - Di Chang - Oleksandr Sydorenko

Thanks for your attention.

Livia Hejlova - Robert Gerstenmaier - Di Chang - Mohammed Ali A Alsharidah - Oleksandr Sydorenko