MGMT4230 - CASE 1
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School
University of North Georgia, Oconee *
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Course
4230
Subject
Industrial Engineering
Date
Dec 6, 2023
Type
Pages
2
Uploaded by caseincorvaia
Dear Dr. Troy A. Montgomery,
Apple currently implements a global just-in-time supply chain process and along the way to the success that
the company has seen now, has spent millions of dollars ensuring that their small range of products can get into
the hands of consumers and in a timely manner. The company operates with risky implications for its supply
chain due to the fact that negotiating tactics leave suppliers with slim profits, significant responsibility is placed
on suppliers, and assembly operations are labor-intensive.
Recommendations:
After observing Apple’s supply chain processes and sales history, I strongly recommended continuing
with Apple as a key holding part of BXE’s fund. Though there are skepticisms around the company’s potential
new product ventures and supply chain processes, Apple is clearly reinvesting heavily back into its R&D,
operations, and supply chain in order to continue its growth and refine its internal business practices.
Analysis and Evaluation:
●
Apple is an innovative product with a R&D cycle of about a year meaning that Apple has adopted a
just-in-time supply chain system to coordinate production in real time
●
Apple prefers to control the entire supply chain internally, so rather than outsourcing manufacturing and
development Apple has facilities in Asia, specifically China, that are producing goods. And Apple
coordinates with suppliers for goods and materials
●
Apple keeps close relationships with its suppliers. Apple constantly is sharing its demand forecasting
information to suppliers starting 150 days in advance of product launch giving suppliers adequate time
to adjust for shifts in production. An example of this is Foxconn once produced 10,000 iPhones in 96
hours due to a redesign of phone screens
●
Forward integration: Despite using retail partners in distribution Apple also has stores and online sites
that are all directly responsible for around 70% of all sales
●
Integrated R&D: Apple has reintegrated all R&D and the profit and loss accountability to the entire
company meaning all people within are held responsible for the success of products
●
Downside: Apple has developed a reputation for being the frontrunner in technological advancement,
thus creating the expectation for the newest and greatest update every time something new is released.
Customers have become spoiled and lose interest in the current product in anticipation for a new
product faster and faster with every model. This can be a problem as it stretches the supply chain very
thin because creating a new product requires coordination with many different suppliers and requires
lots of investment into R&D making the management of all these items very difficult given everything
in Apple is centralized and connected
●
See
Exhibit A
for data evaluation
Link to Course Learning:
Apple's choice to internally control its supply chain relates to Chapter 1 when we learned about
the advantages of vertical integration within a company. Rather than relying on external manufacturers
and suppliers, Apple’s vertical integration streamlines its operations by having complete control over
each segment within its supply chain. In Chapter 1a, the textbook discusses how leverageable value
can be added through the supply chain. In the case of Apple, its vertical integration allows the
company to have a direct link to the market, improving customer satisfaction and product value. The
article references this idea by discussing how Apple’s reverse logistics allows the company to receive
information on defective products and issue customer returns within a few days. Apple achieves
coherence by providing high-quality products with a response time that customers can tolerate.
Though this remains true today, as technology continuously advances, competing with innovative
products will inevitably become a developing challenge for the company.
Exhibit A
Samsung Inventory Turnover
7.19
Blackberry Inventory Turnover Ratio
28.09
Apple Inventory Turnover Ratio
60.43
Samsung Days Inventory
48.50
Blackberry Days Inventory
22.55
Apple Days Inventory
4.37
Samsung ROA
15.53%
Blackberry ROA
-56.69%
Apple ROA
19.34%
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