Inventory

Management
Techniques of
Apple Inc.

Manav Rao 21020746

 1. Apple Inc. was founded by Steve jobs and Steve Wozniak in
1976.
2. Apple Inc. is one of the leading company in the world and it is
global company that originated in California USA. As of
January 2021, apple is the most valuable company is the world.

Apple Apple is the 2nd largest phone manufacture company in the

world after Samsung. It operate nearly 517 store. Apple became

Overview
the world 1st largest company on Jan 3,2022.
3. For a variety of reasons, ranging from its philosophy of
comprehensive aesthetic design to their advertising campaigns,
Apple has engendered a distinct reputation in the consumer
electronics industry and has cultivated a customer base that is
unusually devoted to the company and its brand.
Inventory Management System

◦ Tech giant Apple has also leveraged JIT principles to make its manufacturing process a success.
Apple’s approach to JIT is different in that they leverage their suppliers to achieve JIT goals.
◦ Apple has only one central warehouse in the US and about 150 key suppliers worldwide; they
developed strong and strategic relationships with their vendors. This outsourcing of production made
Apple leaner and resulted in slashing costs and reducing overstock.
◦ With only one central warehouse in the US, most of their inventory is at their retail stores. Adding
further to the JIT mix, Apple began to take advantage of drop shipping . As a result, this reduces
shipping costs, wastage, and storage costs.
SUPPLY CHAIN MODEL
Apple supply chain
challenges
◦ The global economy could affect the Company.

◦ Some re-sellers may also distribute products from competing

manufacturers.

◦ Inventories can become obsolete or exceed anticipated demand.

◦ Supply chain disruption such as natural and man-made disasters

can be serious.

◦ The company depends on logistical services provided by

outsourcing partners.
Inventory Turnover

◦ Inventory Turnover is the traditional financial measure

to determine how efficient company uses its financial
resources to create sales, the higher number is the better
◦ Inventory turnover of Amazon and Apple is 10 and 59
respectively (cost of goods sold of digital
content/downloadable products are excluded). From the
face value, Apple seems to be more efficient.
◦ Anyway, there is a reason for this. Apple Inc is now a
marketing company with no manufacturing facility, but
Amazon is a distributor of general merchandise. It’s
natural that Amazon must keep more stocks than
inventory turnover can be much lower.
Number of Warehouse
◦ Apple Inc. has a central warehouse in California, but Amazon has approximately 28
warehouses from coast to coast. What Apple must do is to synchronize data between
the central warehouse and its own 246 stores + customers. With the appropriate level
of automation, this kind of operations can be done efficiently.

◦ For Amazon, the thing is more complicated than that. Amazon is known to employ
many Ph.D. graduates in operations research/industrial engineering. The reason is
that Amazon distribution environment must be mathematically solved through
optimization method.

◦ Typically, they must determine how many facilities they should have, where serves
which market, items/quantity stored in each location, how to manage transportation
between warehouse-to-warehouse and warehouse to customers in order to minimize
cost and increase service level.

◦ Cook’s inventory management mechanism have also provided the company with a

strong competitive edge, reducing the number of suppliers and warehouses and
helping to hold partners accountable for their quotes.
 ◦  Amazon has about 170 million items on its catalo. About 135 million items are
physical products. For Apple, they have about 26,000 items (rough estimate, subject
to change). The point is that if you must make a demand forecast, which one will be
more difficult for you, 135 million items or 26k items.
◦ Apple keeps as little inventory as possible providing them with the agility they need
should a competitor release an innovative new product, thereby decreasing the value
of any items in stock at that moment. Furthermore, having fewer SKUs to keep track
of allows for more accurate forecasting.
Stock Keeping ◦ Cut down the number of SKUs to predict the demand more accurately and ensure

Unit lightning-fast Apple inventory turnover.

Product Life Cycle

◦ Put it simple way, the product life cycle is how long

you can sell products (the longer is the better).
◦ From a rough estimate, Amazon has some seasonal
products such as summer wear. They can only sell
it for 3 months max. The life of Apple’s key
products is way more than 12 months. It goes
without saying that demand forecast of seasonal,
short life cycle products is very very difficult to
estimate. Focus on non-seasonal products with life-
cycles that exceed 12 months.
Conclusion
◦ The results from the analysis of Apple’s processes, challenging issues, and complexities indicate that the
success of its supply chain operations depends on how well they manage supplier relationship. This
includes early supplier involvement in new product development, close communication, and supplier
performance improvement/evaluation. Then, Apple Inc is dubbed as “King of Outstanding ”.
◦ A willingness of suppliers to keep inventory on hand allowing Apple to be free of this responsibility.
◦ Holding inventory at their retail stores.
◦ Drop shipping arrangements for online purchases.