CEO Tim Cook once compared his business to diary business and accordingly, the company tries to keep minimum inventory in their warehouses. Apple management recognises this critically important aspect of the business. For technology items such as smartphones, tablets and laptops inventory depreciation rates are very high due to short product life cycles.
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Specifically, only some models of Mac computers are manufactured in USA and Ireland and the majority of Apple products are outsourced to manufacturing units based in Asia.Īpple outbound logistics involve warehousing and distribution of ready iPhones, iPads, Mac computers and other products produced by the company. Outsourcing of manufacturing to locations with lower costs of resources is the main source of value for Apple operations. Īpple operations are conducted by 147,000 full-time equivalent employees worldwide. Rest of Asian Pacific Sales in this segment have increased by 10% and 2% in 20 respectively. Japan Sales in Japan segment did not change in 2020 compared to the previous year.ĥ. Specifically, sales have declined by 8% in 2020 and 16% in 2019 compared to respective previous years.Ĥ. Sales in Greater China segment has been declining for the past few years mainly due to intensifying local competition. Greater China segment consists of China, Hong Kong and Taiwan. However, the situation has improved the following year and in 2020 sales reached USD 68, 64 billion, an impressive increase of 14%.ģ. In 2019 sales in Europe segment had declined by 3% compared to previous year. Europe segment comprises European countries, India, Middle East and Africa. In 2020, the sales in Americas segment increased by 7% compared to previous year to exceed USD 124,55 billion.Ģ. This is the largest segment for the tech giant in terms of sales. Americas segment includes North and South America. The world’s largest IT company by revenue tries to keep operations lean, but it does not apply six sigma principles like its competitor, Samsung.Īpple operations are divided into the following reportable operating segments:ġ. Specifically, outsourcing makes the company brand image vulnerable to labour issues at supplier facilities which has been the case with Apple a number of times. While this strategy provides advantages such as focus on core competence of the business such as research and development and designing new products, it also has disadvantages. exercises an immense bargaining power in dealing with its suppliers and as a result, the company is able to secure cost advantage in the purchase of resources.Īpple does not own any manufacturing facilities and prefers to outsource manufacturing of its hardware to other companies in developing countries, notably China. The main sources of value in Apple inbound logistics relate to the economies of scale due to the massive scope and scale of business operations as discussed below and the development of strategic relationships with suppliers. CEO Tim Cook is known for his strategy of getting suppliers to compete with each-other and he has reduced the numbers of suppliers considerably after becoming CEO in 2011. The multinational technology company’s purchase commitments typically cover its requirements for periods up to 150 days.
Apple works with hundreds of suppliers around the globe and maintains a highly sophisticated supply-chain management as illustrated in Figure 2 below.Īlthough the tech giant does not apply Just-in-Time principle in inbound logistics, Apple supply chain practices is a benchmark for efficiency for global businesses. Inbound logistics primary activity refers to receiving and storing of raw materials for their consecutive use in manufacturing. Figure 1 below illustrates the essence of Apple value chain analysis.įigure 1 Apple Value Chain Analysis Apple Primary Activities Apple Inbound logistics Apple value chain analysis is an analytical framework that assists in identifying business activities that can create value and competitive advantage to the business.
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