Apple.Inc Pros and Cons

Apple Inc. is the best in the world at innovative merchandise development. Because the keep company develops hardware, software, and associated digital services rather than just focusing on one dimension, it can provide an unmatched user experience. This al brokens Apple to capture high margins from its products and services. however by my definition, product development is not sum up chain management procurement, manufacturing, and logistics are. That said, Apple Inc. has a fascinating supply chain that is very different from conventional supply chains.This supply chain brings with pre-built advantages and disadvantages. On the advantage side, demand management is easier. Apple doesnt have to get the demand forecast for a mod product right. As long as it underestimates demand for a hot new product, Apple will have loyal customers clamoring for the new devices and unstrained to wait. In fact, the projected backlog leads customers to line up for hours before stores open to se cure a new product. This helps to create marketing buzz. Because Apple Inc. has become so outsize, it has procurement advantages smaller rivals cant match.Financial analysts are beginning to focus on Apples supply chain. Samsung lost $10 billion in market value when Apple placed a huge order for flash memory with Elpida, securing more than half of that companys supply. Apple reportedly has price advantages in securing key components, manufacturing capacity, capital equipment, and airfreight capacity. Like other companies that have huge procurement clout, when Apple asks a supplier for a price quote, it demands a detailed accounting of how the manufacturer arrived at the quote, including estimates for labor and material costs and projected profit.Manufacturers can get hit with penalties for quality issues and warranty claims. Apple is become so big that blush though it has a number of customized components that it has to pay extra for, the companys cost structure is starting to re semble that of close to of its rivals that only source common components. But other parts of the supply chain become more difficult for a company that differentiates itself based on product excellence. Apple Inc. works to lock up the supply of key components, particularly custom components, with exclusivity agreements.This serves to protect the uniqueness of its products. In some cases, Apple invests in capital equipment to make these special components (the company lends the production equipment to its manufacturing partner). At times this production machinery becomes Apple exclusive either because of exclusivity agreements or because Apple is so large that a backlog for the equipment becomes horrifically long. Managing new product launches is also more important for a fashion manufacturer. The process from design to production launch typically takes 10 months.Read more about Pros and Cons Of ReligionThis includes sourcing, testing, government approvals (like FCC approval for an i Phone), and factory dry runs. For weeks prior to the launch, factories work extra time to build hundreds of thousands of devices. Then they work more overtime to clear the backlogs. According to Apple Inc. s supplier responsibility progress report, the companys standard labor policy is for workers to work a uttermost of 60 hours per week and to get at least one day off per week. And yet, at 93 of its suppliers, more than 50 percent of their workers exceeded these rather low limits.In fact, working conditions at Foxconn, Apples partner for final assembly and some core components, have been bad enough that Apple has gotten a molybdenum of a black eye from press reports of accidents, suicides, and labor strife. While the existing customer base has largely ignored these labor relations problems, the demographics of the people that buy Apple products indicate a concern for social responsibility. Further, the Chinese market is becoming very important to Apple, and closer Chinese governm ental scrutiny could discover shipments. What is different about Apples launch planning is the extreme secrecy attached to it.Apple places electronic monitors in some boxes of components to track them from Apples headquarters in Cupertino. The goal is to discourage leaks and ensure customer delight and surprise when the products hit the market. One article claims that Apple has shipped devices in plain boxes, even tomato boxes, to avoid detection. But Apple Inc. , like many companies in the electronics industry, has a supply chain with a high-risk profile. Many of its key components come from northern Taiwan, the company sole sources several customized components, and it relies on massive factories located in Shenzhen, China for final assembly.Any sort of man-made or natural incident at any of these sites could potentially grind Apples supply chain to a halt. In conclusion, Apple Inc. s new CEO, Tim Cook, is a supply chain guy with a strong reputation. He is working to improve the companys reputation for social responsibility. But if I were Apple, Id rather have another product development guru like Steve Jobs. To drive continued growth and margins, the company needs to continue to excel at product development, but only needs to be competent in supply chain management.