Assignment 2

Submitted To:

Lecturer Israt Jahan Dina

Course:

Principles of Supply Chain Management (SCM-3601)

Submitted By:

Md. Mahraj Munjarin Al Moti

Roll no: 19231004

Wednesday Bangladesh University of Professionals

Nov 10th, 2021 Mirpur Cantonment, Dhaka-1216
5 Supply Chain Risks of Apple Inc. and their Risk Mitigation Strategies

Apple is one of the largest multinational technology companies in the world. However, even they are
prone of certain supply chain risks. Here are five of the supply chain risks they faced will serving in the
global market and how they handled those risks:

1. Trade Wars (Disruptions)

The biggest fight has been between the United States and China has caused massive disruptions in the
supply chain of many businesses. Apple was affected by these trade wars as well. They imported various
parts from China and the trade wars forced them to look elsewhere.

To mitigate this risk, they got redundant suppliers. New flexible suppliers from different countries meant
they were not over dependent on China for parts. As a result, they will not fall behind on production due
to trade wars with any specific countries.

2. Economic Uncertainties (Disruptions)

The recent COVID-19 pandemic has caused massive disruptions for all businesses as well. Apple Inc. has
faced several complications caused by the economic uncertainties due to COVID-19. From import and
export restrictions to price hikes, the pandemic has challenged businesses in a lot of ways.

The risk mitigation strategy they used to fight these economic uncertainties was to increase flexibility and
aggregate demand. As the market became more and more unpredictable, Apple had to make these changes
to keep up.

3. Container Ship Delay (Delays)

The Ever Given was blocking of one of the most important river container crossings in the world can
affect the supply chain of any product worldwide, either by stopping production due to lack of
components, or delayed delivery of finished items ready to reach distribution centers. Apple was affected
as well because it halted chip distribution.
This was an unforeseen delay and Apple had already taken steps to mitigate these uncertainties
beforehand. They had increased inventory so that the extra materials and products act as a buffer for any
such uncertainties.

4. Raw Material Shortages (Procurement Risk)

While companies are increasingly pursuing local or regional manufacturing strategies for finished
products, the production of many key raw materials remains highly globalized. For Apple, it is the same
story, they depend on the global market for chips and other important components.

They have previously faced raw material shortages and have increased capacity as a risk mitigation
strategy to fight these shortages. The COVID-19 pandemic, trade wars, blockage, etc. all leads to some
form of shortage in raw materials or finished goods. So all of the previous risk mitigation strategies apply
for raw material shortages in one way or another.

5. Industrial Unrest (Disruptions)

Industrial action is a perennial risk in transport operations. Strikes, overtime bans, or "work to rule" can
affect any transport mode, almost anywhere in the world. Apple has factories all over the world, and this
includes India. In December 2020, the iPhone factory in India witnessed an aggression from the workers
because of late payment.

As the factory was run by Wistron Corp., a Taiwanese tech contract manufacturer, Apple underwent an
investigation to find out whether they had violated Apple’s supplier rules. Apple has strict policy regarding
the rights of workers to ensure such incidents does not occur.