BITS PILANI

APPLE SUPPLY
CHAIN
Supply Chain Management

MF F421
Mohit Kumar 2011A4PS151P
Rohit Bharvesh 2011A4PS262P
Vijay Jain 2011A4PS269P
Ameya Khisty 2011A4PS277P
Dinesh Hemnani 2011A4PS314P

5th May, 2014

 Index

 Introduction of the company. ………………………………... 3

 Supply chain and product configuration.…………………… ..4
 Achieving strategic fit…………………………………………8
 Logistical and cross functional drivers………………… …...11
 Coordination in supply chain……………………………. .....15
 Supply chain issues…………………………………………..16
 SWOT analysis of the supply chain……………………….. ..19
 Conclusions……………………………………………….. ...21
 References……………………………………………………22
 Introduction to the company

Apple Inc. is an American multinational corporation headquartered in Cupertino, California,

that designs, develops, and sells consumer electronics, computer software and personal
computers. Its best-known hardware products are the Mac line of computers, the iPod media
player, the iPhone smartphone, and the iPad tablet computer. Its consumer software includes
the OS X and iOS operating systems, the iTunes media browser, the Safari web browser, and
the iLife and iWork creativity and productivity suites.
Apple was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne on April 1, 1976 to
develop and sell personal computers. It was incorporated as Apple Computer, Inc. on January
3, 1977, and was renamed as Apple Inc. on January 9, 2007 to reflect its shifted focus
towards consumer electronics.
IT research firm Gartner ranks Apple Supply Chain as the best supply chain in the world for
6 years in a row is the world's second-largest information technology company by revenue
after Samsung Electronics and the world's third-largest mobile phone maker after Samsung
and Nokia. Fortune magazine named Apple the most admired company in the United States
in 2008, and in the world from 2008 to 2012. On September 30, 2013, Apple surpassed Coca-
Cola to become the world's most valuable brand in the Omnicom Group's "Best Global
Brands" report. However, the company has received criticism for its contractors' labor
practices, and for Apple's own environmental and business practices.
As of April 2014, Apple maintains 424 (254 in US/170 elsewhere) retail stores in fourteen
countries as well as the online Apple Store and iTunes Store, the latter of which is the world's
largest music retailer. Apple is the largest publicly traded corporation in the world by market
capitalization, with an estimated market capitalization of $446 billion by January, 2014. As of
September 29, 2012, the company had 72,800 permanent full-time employees and 3,300
temporary full-time employees worldwide. Its worldwide annual revenue in 2013 totalled
$170 billion. As of Q1 2014, Apple's five-year growth average is 39% for top line growth and
45% for bottom line growth. In May 2013, Apple entered the top ten of the Fortune 500 list
of companies for the first time, rising 11 places above its 2012 ranking to take the sixth
position.
 Product configuration of Apple Inc.

Apple products are grouped by their family type:

Mac

 MacBook Air: Consumer ultra-thin, ultra-portable notebook, $999-$1199

 MacBook Pro: Professional notebook, $1199-$2799
 Mac Mini: Consumer sub-desktop computer ($599) and server ($999)
 iMac: Consumer all-in one desktop computer,$1199-$1999
 Mac Pro: Workstation desktop computer, $2499-$4999

Apple sells a variety of computer accessories for Macs, including Thunderbolt Display,
Magic Mouse, Magic Track pad, Wireless Keyboard, Battery Charger, the AirPort wireless
networking products, and Time Capsule.
iPad
iPad is a line of tablet computers designed and marketed by Apple Inc., which runs Apple's
iOS. An iPad can shoot video, take photos, play music, and perform Internet functions such
as web-browsing and emailing. Other functions—games, reference, GPS navigation, social
networking, etc.—can be enabled by downloading and installing apps. As of October 2013,
the App Store has more than 475,000 native apps by Apple and third parties.
There have been five versions of the iPad. The first generation established design precedents,
such as the 9.7-inch screen size and button placement, that have persisted through all models.
The iPad 2 added a dual core Apple A5 processor and VGA front-facing and 720p rear-facing
cameras designed for FaceTime video calling. The third generation added a Retina Display,
the new Apple A5X processor with a quad-core graphics processor, a 5-megapixel camera,
HD 1080p video recording, voice dictation, and 4G (LTE). The fourth generation added the
Apple A6X processor and replaces the 30-pin connector with an all-digital Lightning
connector. The iPad Air added the Apple A7 processor, the Apple M7 motion coprocessor
and reduced the form factor for the first time since the iPad 2. iOS 5.1 added Siri to the third
and fourth generations and the iPad Mini.
There have been two versions of the iPad Mini. The first generation features a reduced screen
size of 7.9 inches and features similar internal specifications as the iPad 2. It also uses the
Lightning connector. The second generation features the Retina Display, the Apple A7
processor and the Apple M7 motion coprocessor, matching the internals specifications of the
iPad Air.

 iPad(4th Generation): Available in 8 different configuration, ($499-$929)

 iPad Air: Available in 8 different configuration, ($499-$929)
 iPad Mini (1st generation): Available in 8 different configuration, ($329-$659)
 iPad Mini (2nd generation): Available in 8 different configuration, ($399-$829)
iPod
On October 23, 2001, Apple introduced the iPod digital music player. Several updated
models have since been introduced, and the iPod brand is now the market leader in portable
music players by a significant margin, with more than 350 million units shipped as of
September 2012. Apple has partnered with Nike to offer the Nike+iPod Sports Kit, enabling
runners to synchronize and monitor their runs with iTunes and the Nike+ website.
Apple currently sells four variants of the iPod:

 iPod Shuffle: Ultra-portable digital audio player, currently available in a 2 GB model,

introduced in 2005. Available at Rs 3,700.

 iPod Nano: Portable media player, currently available in a 16 GB model, introduced

in 2005. An earlier model featured the traditional iPod click wheel, though the current
generation features a multi-touch interface and includes an FM radio and a pedometer.
Available at Rs 11900.
 iPod Touch: Portable media player than runs iOS, currently available in 16, 32 and 64
GB models, introduced in 2007. The current generation, which released on September
12, 2012, features the Apple A5 processor, a Retina display, and dual cameras on the
front (1.2 megapixel sensor) and back (5 megapixel iSight), the latter of which
supports HD video recording at 1080p and Sir. Available at Rs 17800, Rs 22900 and
Rs 29900.
 iPod Classic: Portable media player, currently available in a 160 GB model, first
introduced in 2001. Available at Rs 18900.
iPhone
Phone is a line of smartphones designed and marketed by Apple Inc. It runs Apple's iOS
mobile operating system. The first generation iPhone was released on June 29, 2007; the most
recent iPhones, the seventh-generation iPhone 5C and iPhone 5S, were introduced on
September 10, 2013.
Models: The first-generation iPhone, 3G, 4, 4S, 5, 5C and 5S to scale.
Current models:

 iPhone4S: The iPhone 4S, retroactively re-stylized the iPhone 4s, is a touchscreen-
based smartphone developed, manufactured, and released by Apple Inc. It is the fifth
generation of the iPhone. Available at $649-$849.
 iPhone5C: iPhone 5C (marketed by Apple with a stylized lowercase 'c' as iPhone 5c)
is a touchscreen-based smartphone developed by Apple Inc. It is one of two
successors to the iPhone 5, along with its higher-end counterpart, the iPhone 5S.
Available at $549-$649.
 iPhone5S: iPhone 5S (marketed with a stylized lowercase’s’ as iPhone 5s) is a high-
end smartphone developed by Apple Inc. It is part of the iPhone line, and was
released on September 20, 2013. Available at $450.
Apple TV
At the 2007 Macworld conference, Jobs demonstrated the Apple TV, (previously known as
the iTV); a set-top video device intended to bridge the sale of content from iTunes with high-
definition televisions. The device links up to a user's TV and syncs, either via Wi-Fi or a
wired network, with one computer's iTunes library and streams from an additional four. The
Apple TV originally incorporated a 40 GB hard drive for storage, includes outputs for HDMI
and component video, and plays video at a maximum resolution of 720p. [207] On May 31,
2007 a 160 GB drive was released alongside the existing 40 GB model[208] and on January
15, 2008 a software update was released, which allowed media to be purchased directly from
the Apple TV.
In September 2009, Apple discontinued the original 40 GB Apple TV and now continues to
produce and sell the 160 GB Apple TV. On September 1, 2010, alongside the release of the
new line of iPod devices for the year, Apple released a completely redesigned Apple TV. The
new device is 1/4 the size, runs quieter, and replaces the need for a hard drive with media
streaming from any iTunes library on the network along with 8 GB of flash memory to cache
media downloaded. Apple with the Apple TV has added another device to its portfolio that
runs on its A4 processor along with the iPad and the iPhone. The memory included in the
device is the half of the iPhone 4 at 256 MB; the same as the iPad, iPhone 3GS, third and
fourth-generation iPod Touch.
It has HDMI out as the only video out source. Features include access to the iTunes Store to
rent movies and TV shows (purchasing has been discontinued), streaming from internet video
sources, including YouTube and Netflix, and media streaming from an iTunes library. Apple
also reduced the price of the device to $99. A third generation of the device was introduced at
an Apple event on March 7, 2012, with new features such as higher resolution (1080p) and a
new user interface.
Software
Apple develops its own operating system to run on Macs, OS X, and the latest version being
OS X Mavericks (version 10.9). Apple also independently develops computer software titles
for its OS X operating system. Much of the software Apple develops is bundled with its
computers. An example of this is the consumer-oriented iLife software package that bundles
iMovie, iPhoto and GarageBand. For presentation, page layout and word processing, iWork is
available, which includes Keynote, Pages, and Numbers. iTunes, QuickTime media player,
and Software Update are available as free downloads for both OS X and Windows.
Apple also offers a range of professional software titles. Their range of server software
includes the operating system OS X Server; Apple Remote Desktop, a remote systems
management application; and Xsan, a Storage Area Network file system. For the professional
creative market, there is Aperture for professional RAW-format photo processing; Final Cut
Pro, a video production suite; Logic Pro, a comprehensive music toolkit; and Motion, an
advanced effects composition program.
Apple also offers online services with iCloud, which provides cloud storage and syncing for a
wide range of data, including email, contacts, calendars, photos and documents. It also offers
iOS device backup, and is able to integrate directly with third-party apps for even greater
functionality. iCloud is the fourth generation of online services provided by Apple, and was
preceded by MobileMe, .Mac and iTools, all which met varying degrees of success.

Figure 1 Apple Products price range

Supply Chain of Apple Inc.

Supply Chain Planning at Apple Inc is the classic example of New Product Development
Process (NPD). It's the integration of R&D, Marketing and various function under supply
chain management. From the above graphic, Apple Inc accelerates the new product
introduction by acquiring the licensing and 3rd party businesses. The whole process looks
very similar to that of other industries. Interesting point is that Apple Inc has to make the pre-
payments to some suppliers to secure the strategic raw materials.
Apple Inc purchases raw materials from various sources then get them shipped to an
assembling plant in China. From there, assembler will ship products directly to consumers
(via UPS/FedEx) for those who buy from the Apple's Online Store. For other distribution
channels such as retail stores, direct sales and other distributors, Apple Inc will keep products
at Elk Grove, California (where central warehouse and call centre are located) and supply
products from there. At the end of product's life, customer can send products back to the
nearest Apple Stores or dedicated recycling facilities...
Figure 2 Supply Chain Planning at Apple Inc.

Figure 3 Supply Chain model of Apple Inc.

 ACHIEVING STRATEGIC FIT

COMPETITIVE AND SUPPLY CHAIN STRATEGIES:

A company's competitive strategy defines, relative to its competitors, the set of customer
needs that it seeks to satisfy through its products and services. A firm's competitive strategy
will be defined based on its customers' priorities. Competitive strategy targets one or more
customer segments and aims to provide products and services that satisfy these customers'
needs. Apple’s competitive strategy focuses mainly on ease of use, for instance they made
adding extra hardware and software to a Mac as easy as plugging speakers into a stereo
system. The relationship between competitive strategy and supply chain strategy is heavily
affected by other strategies like product development strategy and marketing and sales
strategy.
Product development strategy specifies the portfolio of new products that a company will
try to develop. It also dictates whether the development effort will be made internally or
outsourced. Apple provides almost 50 different products, on a strategy to narrow its product
variety.
Marketing and sales strategy specifies how the market will be segmented and how the
product will be positioned, priced, and promoted. As far as apple is concerned it cultivates an
air of secrecy, creates the illusion of scarcity to increase demand, focus on a "friendly”
customer experience, impress customers through design and packaging, create a passionate
brand community of fans as a part of its marketing and sales strategy.
Supply chain strategy determines the nature of procurement of raw materials, transportation
of materials to and from the company, manufacture of the product or operation to provide the
service, and distribution of the product to the customer, along with any follow-up service and
a specification of whether these processes will be performed in-house or outsourced.

ACHIEVING STRATEGIC FIT

Strategic fit means that both the competitive and supply chain strategies have aligned goals.
It refers to consistency between the customer priorities that the competitive strategy hopes to
satisfy and the supply chain capabilities that the supply chain strategy aims to build. There
are three basic steps to achieving this strategic fit, which we outline here and then discuss in
more detail:
1. Understanding the Customer and Supply Chain Uncertainty : First, a company must
understand the customer needs for each targeted segment and the uncertainty the supply chain
faces in satisfying these needs. These needs help the company define the desired cost and
Service requirements. The supply chain uncertainty helps the company identify the extent of
the unpredictability of demand, disruption, and delay that the supply chain must be prepared
for.
2. Understanding the Supply Chain Capabilities: There are many types of supply chains, each
of which is designed to perform different tasks well. A company must understand what its
supply chain is designed to do well.
3. Achieving Strategic Fit: If a mismatch exists between what the supply chain does
particularly well and the desired customer needs, the company will either need to restructure
the supply chain to support the competitive strategy or alter its competitive strategy.
The following table shows how apple alter the various factors influencing customer needs
and supply chain performance, in order to achieve strategic fit.
 Logistical and cross-functional drivers

1. Sourcing

In 2012 alone, Apple sold more than 120 million iPhones, 60 million iPads, 35 million iPods,
15 million Macs – staggering numbers, to say the least. The success of the world’s biggest
technology company has come on the back of a robust supply chain network. Foxconn, a
Taiwanese company, is one of its strategic supply partners that churn out tens of thousands of
its flagship products each day. Manufacturing for Apple isn’t easy. Sales estimates are
difficult to forecast, and for such complex products, the time to market is extremely short. As
Apple needed Foxconn and Foxconn needed Apple, the relationship was mutually beneficial.
It was a fine example of procurement playing an instrumental role in managing growth.
Recently, news surfaced that Apple is planning to award more business to a relatively
unknown company called Pegatron. This company already manufactures iPad Minis and
some versions of the iPhone. It is perceived as a step towards achieving better stability in
Apple’s supply chain. Though the jury is still out on the success of such a move, it
nevertheless provides some pointers on the procurement’s alignment with overall
organizational goals.
 Risk Diversification: Many analysts feel that the motivation behind the addition of a
new supplier is to diversify supply chain risks. A bulging product portfolio,
burgeoning growth from the much anticipated “cheaper” iPhone, increasing design
complexities and ever decreasing time to market necessitate frequent revisits to
supply chain strategy and supply partners. Addition of a new supplier will provide a
greater flexibility and Apple can react faster to supply chain disruptions, should they
arise. As a result of its strong commitment towards safe and ethical manufacturing
practices, Apple needs to be in a position to sever ties with any supplier that doesn’t
 comply with its Code of Conduct. It doesn’t mean non-compliance from Foxconn but
a mere option to exercise—if needed.
 Capacity Management: Apple has a history of competing with multiple companies
across the value chain. Unlike Google, Apple cannot afford the luxury of working
with multiple handset partners such as Motorola, Samsung, LG, etc. Since Apple’s
proprietary OS is closely linked to its hardware design, it needs to manage handset
capacity issues as well. To succeed in emerging markets such as China and India (one
the world’s largest user base), Apple needs to ramp up its production capacity rather
quickly. Having a second supplier will ease some of the capacity constraints and help
Apple focus on its core business – developing groundbreaking technologies.
 Margins sustenance: With the advent of Android and successful market penetration of
Samsung and other competitors, Apple is planning to introduce stripped down
versions of its flagship products at reduced prices to increase market share. Increasing
freight costs, both due to market pressures and Apple’s product choices, do not help
either. To maintain the high levels of profitability as the company embarks on the
next phase of growth, it needs its suppliers to help reduce costs. Positioning Pegatron
as a reliable supplier will help Apple gain strong bargaining leverage. Given the steep
manufacturing learning curve that Apple has gained in the last five years, it will be
relatively easier to replicate these manufacturing practices for its simpler and cheaper
products – at a relatively lower cost.
 Supplier Innovation: A new supplier will also be more willing to invest in capital to
fund growth as opposed to a long serving incumbent who may have reservations on
the returns on such an investment. In order to increase its share of Apple’s business,
Pegatron may strive to improve operational efficiencies in an effort to differentiate
itself from its competitor. As a customer, Apple will stand to gain from such an
arrangement.
The company has used its deep pockets to ensure adequate production capacity by placing
high volume pre-orders with suppliers. This has also had the effect of preventing competitors
from gaining access to the same manufacturing resources. Outsourcing can leave a company
vulnerable to disruptions in key links of its supply chain, potentially caused by anything from
natural disasters to changes in international trade agreements. Apple also has been criticized
over working conditions in its suppliers’ factories and warehouses. Over time, the company
has developed relationships with suppliers, which has helped Apple quickly scale operations
to customer demand for existing and new products. Working with its supply chain partners,
Apple helped develop new manufacturing processes, some of which have been the subject of
patents filed by the company.
2. Information
Apple has a centralised information network. APMS (Apple product management solutions)
is POS(Point of sale) and inventory management software. It was designed and customised
especially for apple retailers.
3. Facilities
Share of production cost of an Apple 4G iPhone assembled in China

Share of production cost of an Apple 4G iPhone assembled in the US.

Although Apple is headquartered in California, has main markets in America, Europe, Its
main facilities are located in Asia. Apple inc has the central warehouse in California but
Amazon has approximately 28 warehouses from coast to coast. What Apple has to do is to
synchronize data between the central warehouse and its own 246 stores + customers.
4. Inventory
Apple Turns Over Its Inventory Once Every 5 Days.
Apple adjusts OEM operating model
On the positive side, there’s no longer the pressure of managing inventory. In the past, Apple
has required its manufacturing partners to maintain certain inventory levels of all
manufacturing components. This has placed added pressure on manufacturers whose strength
is in production.
Second, just like the mechanic, some of the profits came from marking up the cost of parts
and materials. Apple has reportedly agreed to let its manufacturers raise their prices to
maintain margins. According to Digitimes, it will increase profits for Apple’s manufacturing
partners by as much as five percent while also better controlling cost and quality for Apple.
On the negative side, manufacturers no longer have the ability to negotiate lower materials
prices to control their margins.
In our highly complex, technology driven business environment, lean manufacturing has
become a key driver. Excess inventory ties up capital and creates risk for companies in terms
of theft, write-downs, and storage. With the integration of technology into supply chain
management, we’ve seen the birth of a new beast: Just in Time (JIT) supply chain
management. Its premise is simple: maximize profits by optimizing supply chain efficiency.
It’s a very lean and efficient manufacturing process which minimizes costs, but requires
complete precision in coordinating the components of the supply chain and accurately
projecting market demand. Because it’s such a highly efficient process, holding large
quantities of inventory isn’t required to fulfil market demand; however, if actual market
demand outpaces expected demand, companies typically won’t be able to fulfil most orders
immediately because of reduced inventory holdings.
Number of Key Suppliers
Working closely with strategic suppliers will bring competitive advantage to the firm.

Number of Items (Stock Keeping Unit)

Stock Keeping Unit aka SKU is another indication of supply chain complexity. One model of
phone but different software inside is considered a different item/SKU.

5. Transportation
Even as far back as the launch of the Bondi blue iMac in the late 90s, Apple's Steve Jobs paid
$50 million to buy up all available holiday air freight space at a time when most of its
competitors were shipping by sea. This reportedly handicapped rivals such as Compaq who
later wanted to book air transport.
The lower transportation costs and faster time-to-market associated with U.S.-based
manufacturing may also help sway companies to return stateside, where they can unite their
design, engineering and production operations.
 Electronic monitors are placed in part boxes to discourage leaks and completed products
shipped in non-descript boxes to avoid detection.
6. Pricing
Apple ignores the standard by not only pricing their technology more than 2x what their
competitors charge, but doing so without blinking.
There are two main reasons -
1) They build beautiful and desirable products for an audience that loves them passionately.
2) They justify their price with features and benefits that can’t be matched.
They use their Brand image very intelligently. No other computer can match the display of a
27” mac. No other software can match what iTunes brings to the table. No laptop is as thin as
the Macbook Air.
Price-decoys 
Apple has started to build smaller, 7-inch versions of its iPad tablet, timed to hit U.S. shelves
before Christmas. If you wonder why in the world Apple would add yet another potentially
cannibalizing product to its line up of iPods, iPod Touches, iPads, laptops and computers,
realize that this gadget is likely a decoy.
Decoys, in marketing, are products, services, or price points that a business doesn't really
want you to take, but rather use as a reference to make another product look better.
Minimum advertised price (or MAP)
Minimum advertised pricing policies prohibit resellers or dealers from advertising a
manufacturer’s products below a certain minimum price. MAP is usually enforced through
marketing subsidies offered by a manufacturer to its resellers.

Co-ordination in the Apple Supply Chain

Apple Inc. is an example of a vertically integrated company. It controls many elements of the
ecosystem for the iPhone and iPad, such as the processor and hardware designs, operating
system and application software, and related cloud services. Hardware itself is not typically
manufactured by Apple, but is outsourced to contract manufacturers such
as Foxconn or Pegatron who build Apple's branded products to Apple's specifications.
Apple's hardware and software are sold directly to consumers primarily through the
company's own brick-and-mortar and online retail stores, while cloud services are
available through the devices themselves.
By reserving all air freight during the Holiday season, Apple squeezed out competition.
Apple allows multimillion dollar credit lines and almost gave a supplier USD 1 Billion in
cash up front to meet Apple’s excessive demand for electronic parts.
Apple fully utilizes its contractors and suppliers and has highly efficient inventory
tracking mechanisms: When Apple asks for a price quote for parts such as touch screens, it
demands a detailed accounting of how the manufacturer arrived at the quote, including its
estimates for material and labor costs, and its own projected profit. Apple requires many key
suppliers to keep two weeks of inventory within a mile of Apple’s assembly plants in Asia,
and sometimes doesn't pay until as long as 90 days after it uses a part.
To track efficiency and ensure pre-launch secrecy, Apple places electronic monitors in some
boxes of parts that allow observers in Cupertino to track them through Chinese factories, an
effort meant to discourage leaks. At least once, the company shipped products in tomato
boxes to avoid detection, says the consultant who has worked with Apple. When the iPad 2
debuted, the finished devices were packed in plain boxes and Apple employees monitored
every hand-off point—loading dock, airport, truck depot, and distribution center—to make
sure each unit was accounted for.
Apple reduced the number of its key suppliers from 100 to 24, forced them to cut better deals
to keep the business, convinced many to locate next to Apple's plants, closed 10 out of 19
warehouses, thus reducing the Coordination cost which also helped cut inventory from one
month's worth to 6 days (in the period from Jan-September 1998). By September
1999, Apple managed to bring this down further to 2 days’ worth of inventory. Further,
Apple cut the production process for making an iMac computer from 4 to 2 months.

Key supply chain issues

ENVIRONMENT & SUSTAINABILITY:

In the most recent reports by Greenpeace (a non-government environmental organization),

Apple was ranked 6th out of the 16 companies rated. Apple scored just 2.7 out of 10.
According to the report the company failed to embrace the precautionary principle, withheld
its full list of regulated substances and provides no timelines for eliminating toxic polyvinyl
chloride (PVC) and no commitment for phasing out all uses of brominated flame retardants
(BFRs). Apple performed poorly on product take back and recycling, with the exception of
reporting on the amounts of its electronic waste recycled. The image below shows ratings of
issues in detail. Other issues concerning environment were over dependence on coal as major
power server of Apple. The report estimated dependence on coal for Apple's data centres at
54.5%, followed by Facebook at 53.2%, IBM at 51.6%, HP at 49.4%, and Twitter at 42.5%.
Apple continues to face criticisms over its environmental record; a report claimed that one of
its suppliers in China polluted a river so badly that it turned milk-white, while in the same
month Friends of the Earth (a non-government environmental organization) accused it (along
with Samsung) of "trashing tropical forests and coral reefs in Indonesia" due to the use of tin
in the iPhone and iPad.

SHORT LIFE CYCLE:

In addition to the increasing variety of product types, the life cycle of products has been
shrinking. Today there are products whose life cycles can be measured in months, compared
to the old standard of years. These are not just niche products, either. PCs now have a life
cycle of several months. Shorter life cycles increase uncertainty while reducing the window
of opportunity within which the supply chain can achieve fit. Increased uncertainty combined
with a smaller window of opportunity has put additional pressure on supply chains to
coordinate and create a good match between supply and demand.
As Apple is into consumer electronics, computer software and personal computers
manufacturing and selling, the average life cycle of these products is almost 6 months. Apple
has to continuously keep high demand by limiting its product variety while continuing to
introduce new products. Hence the variety is limited to what truly adds value to the
customer.

CHANGING TECHNOLOGY AND BUSINESS MODELS:

As customer needs and technology change, firms are forced to constantly rethink their supply
chain strategy. A strategy that may have been very successful in one environment can easily
become a weakness in a changed setting. As it’s evident from shift in paradigm from PC’s to
laptops, Apple changed its product line from Macintosh to iMac, and introduced iPod,
iPhone, iPad
Like product life cycles, competitors can change the landscape, thereby requiring a change in
the firm's competitive strategy. As competitors flood the marketplace with product variety,
customers are becoming accustomed to having their individual needs satisfied. Thus, the
competitive focus today is on producing sufficient variety at a reasonable price. As more
firms increase the level of variety offered, supply chains have been forced to develop the
ability to support a wider range of products. One of the Apple chief competitors is Samsung.
As Samsung has introduced a large variety in smartphones Apple has been forced to improve
its product line and reduce prices.

CORPORATE SOCIAL RESPONSIBILITY:

In 2012, a report named “The other side of Apple” by Friends of nature, revealed that:

 62% of its suppliers do not comply with the limits of 60 hours per week in the factory.
 35% do not meet Apple’s standards of workplace safety.
 32% do not comply with Apple’s management practices.
 72.5% of workers worked overtime exceeding the limit, with each worker working 28.01
more hours than the legal overtime limit.

Apple's Commitment is to ensure that working conditions in Apple’s supply chain are safe
and the workers are treated with respect and dignity but in contrast its suppliers violate most
of the labour rights and safety norms, adding to miseries in workers’ lives.

SWOT Analysis

SWOT Analysis is a useful technique for understanding your Strengths and Weaknesses, and
for identifying both the Opportunities open to you and the Threats you face. Used in a
business context, a SWOT Analysis helps you carve a sustainable niche in your market.
Originated by Albert S Humphrey in the 1960s, SWOT Analysis is as useful now as it was
then. You can use it in two ways – as a simple icebreaker helping people get together to "kick
off" strategy formulation, or in a more sophisticated way as a serious strategy tool. What
makes SWOT particularly powerful is that, with a little thought, it can help you uncover
opportunities that you are well placed to exploit. And by understanding the weaknesses of
your business, you can manage and eliminate threats that would otherwise catch you
unawares. More than this, by looking at yourself and your competitors using the SWOT
framework, you can start to craft a strategy that helps you distinguish yourself from your
competitors, so that you can compete successfully in your market. Strengths and weaknesses
are often internal to your organization, while opportunities and threats generally relate to
external factors. For this reason the SWOT Analysis is sometimes called Internal-External
Analysis and the SWOT Matrix is sometimes called an IE Matrix.
 One of the most talked about stories of 2013 is the “fall” of Apple (NASDAQ: AAPL).
Falling from their 52 week high of $705 down to $419 has got everyone talking about the
future of Apple. You cannot read or watch investing news without hearing about where
Apple’s stock price could eventually end up; estimates range from to below $400 to $1000.
One of the best ways to cut through the hype and develop a clear picture of a company is to
use a SWOT analysis. Here we go through the strengths, weaknesses, opportunities, and
threats of Apple.
1. Strengths
Apple is one of the most recognizable brands in the world. Inter-brand ranked Apple’s
brand at No. 2 most valuable brand, behind only The Coca-Cola Company, valued at $76.5
billion.
Most discussion surrounding Apple today is the large amount of cash holdings it has
stockpiled. As of right now Apple has over $40 billion in cash; coupled with no debt Apple
has the power to, under much speculation, purchase other companies, institute stock buyback
programs, or to increase its dividend yield. Apple has been regarded as one of the most
innovative companies in technology. Starting in 1984 with their Macintosh personal
computer Apple continues to produce market disrupting products like the iPod, iPhone, and
iPad. Forbes named Apple the 5th most innovative company in 2011 and the No. 26 in 2012.
Starting in 2001 Apple started to build retail stores. As of 2012 there are 395 retail stores
worldwide. Apple stores are the most profitable stores earning $5,647 per square foot. Focus
on research and Development, Loyal user base, Control over manufacturing of its product as
well as O.S. High quality products leading to customer satisfaction are some of the strengths.

2. Weaknesses
Apple’s iPad has been the undisputed king of the tablet computer market. In 2010 the
iOS operating system accounted for 83.9% of the tablet market. Fast forward to 2012 Apple
is still on top with 53.8% of the tablet market; a respectable majority of the market but a
quickly declining share. Who was responsible for the decline of
Apple? Google (NASDAQ: GOOG) with their Android operating system has started to
challenge Apple in the tablet market. In 2010 the Android OS accounted for only 14.2% of
the market, by the end of 2012 it has skyrocketed to 42.7% of tablet computers sold.
Since 2011 Apple has been going through major management changes. In 2011 Apple
lost its famous visionary CEO Steve Jobs, himself an icon of the company, to cancer. Tim
Cook became the new CEO and has had mixed responses during his tenure. In 2012 retail
chief John Browett and iOS chief Scott Forstall both announced they would be leaving the
company. John Browett left immediately and Scott Forstall will stay as an advisor and leave
in 2013.
Lack of debt creates risk of stock acquisition by other corporations. Forcing users to
switch to the latest product by reducing support for previous products created bad image
among many customers. Struggle to ensure consistencies with products are a few weaknesses.
3. Opportunities
Apple is in a good position to capitalize on the increasing demand for smartphones. The
smartphone market is estimated to have a compound annual growth rate of 12.56% from
2013 to 2016. With the iPhone the top selling smartphone Apple has an opportunity in
emerging markets like China and India.
With the $40 billion in cash that Apple has reserved they have the potential to buy up
companies with patents that would allow Apple to grow past the limit that their current
patents restrain them to. Also with the potential for increasing iPhone and iPad sales comes
more earning potential for Apple's mobile advertising model iAd. iAd allows for third party
developer of apps on the iOS OS to embed iAd and earn revenue from advertising, while
Apple takes 70% of the ad revenue which gives a large potential of earnings for Apple. Apple
must continue to create opportunities through new, innovative software markets and strive to
introduce its ground-breaking hardware into these markets. Easy integration with iCloud can
help boost the appeal for other Apple devices.

4. Threats
Google’s Android operating system is currently the biggest threat to Apple. As of 2012 the
Android OS has claimed 42.7% of tablet sales. Android smartphone sales have increased
from 57.5% of total smartphones worldwide in 2011 to 75% of smartphone sales in 2012.
The Android OS seems to be growing too fast for Apple to keep up with.
Samsung currently provides Apple with components for most of their products including
NAND flash memory, mobile processors, displays and more. Apple’s dependency on
Samsung for their high tech components can become a problem for Apple. In 2011 Apple
spent $7.8 billion on Samsung components; by the end of 2012 that number increased to $11
billion. Apple is expected to increases its expenditure to Samsung over the next two years
which leaves Apple exposed to price increases from Samsung which Samsung has previously
pressured Apple over Uncertain global economic conditions, Low customizability, HP and
Dell’s low price computers with similar capabilities are some of the dangers Apple might
face.
 Conclusions
Apple "dominates because it consistently brings both operational and innovation excellence
to bear in some of the most competitive markets in the world. From a supply chain
perspective, the company's ability to ramp volumes both in hardware and software while
redefining what a mobile telephone is supposed to be has been impressive."
The new buzzword in supply chain management is the concept of "value chains," and Apple
is all over it, states the AMR report.
"Apple has broken new ground in the area of transforming its supply chain into a value chain,
starting with the consumer experience and designing its network to serve that master first and
foremost," the report notes. "This means demonstrating some of the behaviors we look for in
Top 25 companies, including embedded innovation, networked supply and demand shaping."

References-
1. Guide to greener electronics by Greenpeace www.greenpeace.org/electronics
2. http://www.macworld.co.uk/news/apple/why-apple-was-bad-environment-why-changing-green-3450263/
3. “The other side of Apple” by Friends of nature http://www.ipe.org.cn/Upload/Report-IT-V-Apple-I-EN.pdf
4. Supply Chain Management by Sunil Chopra and Peter Meindl
5. http://www.scribd.com/doc/11983566/A-Strategic-Analysis-of-Apple-Corporation
6. http://www.supplychainopz.com/2013/01/is-apple-supply-chain-really-no-1-case.html
7. http://www.telegraph.co.uk/technology/apple/10714935/Apples-supply-chain-in-trouble.html
8. http://info.oxford-consulting.com/blog/bid/139115/Problems-in-Apple-supply-chain