Supply Chain of Apple-Free-Samples for Students-Myassignmenthelp

Question: Critically analyse the challenges Apple face in managing their global supply chain? Answer: Introduction: Supply chain management forms the base of the productivity of multinational companies, their revenue generation and consequent market leadership. Supply chains have become empirical to the competitive advantages companies enjoy in the global market. The supply chains the MNCs maintain also pose certain challenges to their user companies. The assignment would view the challenges posed by the supply chains through the lenses of Apple, the leader in the IT industry. The paper would also delve into the importance and hardships the companies face in strategic sourcing of raw materials and their expectations from the suppliers. The discussion with proceed on these three topics with Apple as the substratum. Supply chain challenges Apple Inc faces: Apple owing to its high-end and diverse product line has to face several challenges while operating in the global market: Competition from other multinational companies: The greatest challenge which Apple faces as far as supply chain in concerned is competition from other multinational companies. The product line of Apple consists of smart phones, Mac, music applications and hardwares, Ipads, TV app, smart watches and accessories. This means the company competes with multinational companies like Samsung and LG in terms of smart phones and smart watches, Google in terms of TV apps and Microsoft in case of Mac OS. The company in order to maintain high quality of these products and meet the demands of the upper class customers, its main customer segments, has to compete with these MNCs to get best quality hardware and software for its products. Moreover, the main operations of the company is concentrated in North America while Asian market is experiencing rapid rise in demand for products like smart phones and smart watches. The suppliers in the Asian market prefer supplying materials to Asian manufacturers like Samsung and Sony. Hence, it can be pointe d out that Apple faces stiff challenge in gaining the high quality raw materials for its products. Dependence on competitors: The second supply challenge which Apple faces in the global market is its dependence on competitors like Samsung for raw materials. Samsung is the largest manufacturer of electronic components like chips and batteries used in the electronic gadgets like smart phones. The company also supplies Apple with various components for its high end devices. Thus, Apple becomes dependence on its toughest competitor, Samsung for components for its products (samsung.com, 2018). This would give Samsung the power to control the product strategies and business operations of Apple indirectly. This heavy dependence on competitors is a big threat because it can pose serious threats to its productivity. For example, Apple often enters into legal disputes with its competitors and suppliers like Samsung over product features (usatoday.com, 2018). These disputes breach the relationship between the two companies which ultimately hampers the productivity of Apple since is former is dependent on the latter co mpanies for the components for its parts. Shipping challenges: Apple faces shipping challenges in its supply chain owing to macroeconomic influences over which the company has no control. Apple acquires components from selected number of suppliers spread all over the world. The company has also spread its supply and manufacturing operations into Asian nations like China to tap the markets growing profitability. The company is increasing depending on these overseas units for its supply of parts and manufacturing of its finished products. The differences in laws pertaining of crucial areas like manufacturing, shipping and labour in these countries pose serious threats to the productivity of the company. For example, it often takes months to get clearance to ship supply of components from China to the US manufacturing facilities. Again, riots and other political disturbances in the foreign markets from where Apple sources its supply of components pose serious threats to its continuous supply of raw materials and production of finished goods (firstp ost.com, 2018). This shows that shipping challenges stemming of political and other macro economical influences pose serious supply challenge to Apple. Sustainability issues of supplies: As pointed above, Apple is dependent on a limited number of suppliers for its supply of components. The suppliers of the company are spread all over the globe like Taiwan Semiconductor Manufacturing Company manufactures the processors for Apple. Again, it obtains a large proportion of its components from local suppliers like China. These supplying companies are themselves coming under pressure like cost cutting and enforcement of sustainable production of parts. The governments of supplying countries like China today necessitate these companies to pay environmental taxes which add to their cost of production of parts they supply to Apple (xinhuanet.com, 2018). Thus, Apple has to acquire supply of raw materials at high prices which in turn adds to its own cost of production of its finished products. These financial sustainability issues faced by the suppliers often result them in supplying less amount of supplies to the company which in turn impacts productivity products (forbes.com, 2018). This fall in productivity results in delayed supply of finished products to the retailers and distributors, which are already reeling under increased expenditures just like the supplying companies. Thus, sustainability of the supply chains is one of the biggest challenges Apple faces while operating in the market. This issue is so serious that it has breached the markets goodwill of Apple as customers complain due to delay in supply of finished (fortune.com, 2018). Benefits and limitations of sourcing strategies and their application in Apple: Strategic sourcing has several advantages and limitations to the companies, especially MNCs like Apple whose supply chains spreads across continents. Advantages: The following are the advantages of strategic sourcing particularly in case of companies like Apple: Cost savings: The strategic sourcing enable companies to curtail their costs of acquiring raw materials and their overall cost of production. The companies like Apple have to acquire their components from various countries having different market conditions like tax rates. Thus factors adds to the cost of acquiring raw materials which adds to the cost of production. These factors impacts the production of finished products in the company which ultimately culminates in delay in supply of finished products to customers (bloomberg.com, 2018). This delay in supply of raw materials often result in loss of customers to its competitors and reduces the revenue generation of the company. This fall in revenue generation also impacts the capital generation of Apple as show in its share index below. Strategic management of sourcing of its main components would enable Apple to plan its sourcing according to the various parameters like costs. For example, Apple can source components from Europe for its American manufacturing facilities while for the Asian market it can source components from China or Taiwan (Brindley, 2017). Thus strategic sourcing would enable the company to reduce cost of sourcing of raw materials which would in turn reduce its cost of production, thus increasing its profit margin. Figure 1. Figure showing stock index of Apple Inc. (Source: nasdaq.com, 2018) Alignment of sourcing with business targets: Strategic sourcing of raw materials would enable Apple to align its sourcing of components with its business targets. The apex management of company today plan the ordering of materials as per the demand forecast of finished products. This means they order appropriate quantity of raw materials using methods like economic order quantity from suppliers which ensures smooth production (Nia, Far Niaki, 2014). Moreover, ordering appropriate raw materials prevents the companies from holding huge amount of inventory. This ensures liquidity of the current assets of companies which they can channelize to address other business needs. Again, the companies like Apple do not have to hold immense amount of finished goods which again ensures liquidity of capital and reduction of warehousing expenses. Apple can as a result make finished products available to customers which generates huge revenue. This analysis shows that the strategic sourcing enables MNCs like Apple align their sourcing of mater ials with their business targets like high revenue generation (ft.com, 2018). Limitations of strategic sourcing: Strategic sourcing of raw materials and components have following limitations: Delays decision making: Strategic sourcing requires companies align their acquisition of raw materials with their business decisions like demand forecast of finished goods which delays decision making. MNCs like Apple have tall organisational structure which delays decision making. For example, the organisational structure of Apple shows that the company has no specific person delegated to supervise sourcing of raw materials from specific markets at the apex level, which is the main criterion of strategic sourcing (apple.com, 2018). This delays decision-making regarding sourcing of components which results in loss of productivity and business opportunities. These loss of business opportunities add to losses of the companies. Thus, strategic sourcing apparently aligns sourcing raw materials and reduces costs but in reality tall structure and delay in decisions making adds to business losses to the company. Complicated process adds to the costs of operations: Strategic sourcing involves multiplicity of documentation, legal complications and results in surges in the costs of operations. Multinational companies align their sourcing of raw materials from different markets to the business strategies formed by the apex management. This requires the apex management to gain information about the market conditions in various countries like China and Taiwan (Stadtler, 2015). This prolongs the time required to source raw materials from these countries which delays actual sourcing of components, delays productivity and results in business losses. Moreover, if raw materials are sourced by the headquarters of Apple in the US from sourcing countries like China and Spain, it would involve legal complications and increase in costs due to involvement of two countries (the US and the raw materials supplying country) as well. However, if the branch offices do the sourcing, it would save legal complications, reduce multiplicity of documents and save costs. F or example, if the European subsidiaries of Apple sources raw materials from the European markets, they would be able to avail rebate due to the EU rates between the European nations. Thus, sourcing of raw by headquarters using strategic sourcing increases the complications and costs to acquire the raw materials (Seidel et al., 2015). Performance objectives suppliers of Apple are expected to meet: Multinational companies expect their suppliers to meet the following objectives while operating in the markets and provide them with raw materials: High quality raw materials: The multinational companies expect their suppliers to provide them with high quality raw materials. For example, Apple expects suppliers of its components to provide it with high quality electronic goods components and software. One of the product strategies of Apple is to produce limited number of high quality products to upper class customers and maintain leadership in the market. This means that the company needs to source high quality components from its suppliers. The company requires its suppliers to provide it with high quality components in conformity with its central quality standards (Chan, Pun Selden, 2016). Ethical business behaviour: The suppliers are expected to aim to operate in ethical manner while operating in the market. The suppliers are expected to abstain from using unethical means like discrimination among their employees on basis of gender and use of child labour while operating in the market (apple.com, 2018). Conclusion: One can sum up from the discussion that strategic management of supply chains bear great importance to companies. However, global supply chains cannot be controlled efficiently from the headquarters of the companies alone. The companies must delegate power to their branch offices to take decisions regarding supply chain management. The aim of the companies while controlling their supply chain management should be sourcing of quality raw materials to enable production of high quality finished products which are able to meet the expectations of the customers. The companies should ensure that they control their supply to ensure maintaining just the correct amount of stock of raw materials and finished goods. They must also ensure that their suppliers not only supply them with high quality materials but also operate ethically in the market. The companies like Apple must impose ethical obligations on their suppliers to enforce ethical business conduct. References: Apple Inc. (AAPL) Stock Chart. (2018).NASDAQ.com. Retrieved 27 March 2018, from https://www.nasdaq.com/symbol/aapl/stock-chart Apple Leadership. (2018).Apple. Retrieved 27 March 2018, from https://www.apple.com/leadership/ Apple Swallowed a Fly. (2018).bloomberg.com. Retrieved 27 March 2018, from https://www.bloomberg.com/gadfly/articles/2017-10-23/apple-losing-its-supply-chain-mojo-is-a-major-threat' Asgary, N., Li, G. (2016). Corporate social responsibility: Its economic impact and link to the bullwhip effect.Journal of Business Ethics,135(4), 665-681. Big Tech Has the Supply Chain Blues. (2018).Fortune. Retrieved 27 March 2018, from https://fortune.com/2016/12/21/big-tech-has-the-supply-chain-blues/ Brindley, C. (Ed.). (2017).Supply chain risk. Taylor Francis. Chan, J., Pun, N., Selden, M. (2016). Apple, Foxconn, and Chinas new working class. ILR Press, an imprint of Cornell University Press. China starts collecting environment tax - Xinhua | English.news.cn. (2018).Xinhuanet.com. Retrieved 27 March 2018, from https://www.xinhuanet.com/english/2018-01/01/c_136865174.htm Fahimnia, B., Sarkis, J., Davarzani, H. (2015). Green supply chain management: A review and bibliometric analysis.International Journal of Production Economics,162, 101-114. Forbes Welcome. (2018).Forbes.com. Retrieved 27 March 2018, from https://www.forbes.com/sites/jwebb/2017/10/30/apples-supply-chain-attracts-criticism-for-performance-but-also-praise-for-sustainability/#10b959cb7398 Foxconn profits tumble on iPhone X supply chain challenges. (2018).Ft.com. Retrieved 27 March 2018, from https://www.ft.com/content/a7421056-c9d4-11e7-ab18-7a9fb7d6163e Home, T., Analysis, N., 2018, M. (2018).Workers riot in China factory of Apple supplier Foxconn- Technology News, Firstpost.Tech2. Retrieved 27 March 2018, from https://www.firstpost.com/tech/news-analysis/workers-riot-in-china-factory-of-apple-supplier-foxconn-2-3608881.html. LeBaron, G., Lister, J. (2015). Benchmarking global supply chains: the power of the ethical auditregime.Review of International Studies,41(5), 905-924. Monczka, R. M., Handfield, R. B., Giunipero, L. C., Patterson, J. L. (2015).Purchasing and supply chain management. Cengage Learning. Nia, A. R., Far, M. H., Niaki, S. T. A. (2014). A fuzzy vendor managed inventory of multi-item economic order quantity model under shortage: An ant colony optimization algorithm.International Journal of Production Economics,155, 259-271. Porter, M. E., Kramer, M. R. (2019). Creating shared value. InManaging Sustainable Business(pp. 327-350). Springer, Dordrecht. Ptak, C. A., Schragenheim, E. (2016).ERP: tools, techniques, and applications for integrating the supply chain. Crc Press. Samsung Semiconductor Global Official Website | Samsung | Samsung Semiconductor Global Website. (2018).Samsung.com. Retrieved 27 March 2018, from https://www.samsung.com/semiconductor/ Samsung wins Supreme Court fight with Apple. (2018).USA TODAY. Retrieved 27 March 2018, from https://www.usatoday.com/story/news/politics/2016/12/06/supreme-court-samsung-apple-smartphone-iphone-design-patent/94570296/ Schleper, M. C., Blome, C., Wuttke, D. A. (2017). The dark side of buyer power: Supplier exploitation and the role of ethical climates.Journal of business ethics,140(1), 97-114. Seidel, K., Kahl, J., Paoletti, F., Birlouez, I., Busscher, N., Kretzschmar, U., ... Baiamonte, I. (2015). Quality assessment of baby food made of different pre-processed organic raw materials under industrial processing conditions.Journal of food science and technology,52(2), 803-812. Stadtler, H. (2015). Supply chain management: An overview. InSupply chain management and advanced planning(pp. 3-28). Springer, Berlin, Heidelberg. Thorlakson, T., de Zegher, J. F., Lambin, E. F. (2018). Companies contribution to sustainability through global supply chains.Proceedings of the National Academy of Sciences, 201716695. Voegtlin, C. (2016). What does it mean to be responsible? Addressing the missing responsibility dimension in ethical leadership research.Leadership,12(5), 581-60