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Supply Chain Management of Apple Inc.

Discuss Supply Chain Management of Apple Inc. within the Elements Of Logistics forums, part of the PUBLISH / UPLOAD PROJECT OR DOWNLOAD REFERENCE PROJECT category; Apple Inc. (NASDAQ: AAPL; previously Apple Computer, Inc.) is an American multinational corporation that designs and markets consumer electronics, computer ...

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Netra Shetty
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Supply Chain Management of Apple Inc. - December 29th, 2010

Apple Inc. (NASDAQ: AAPL; previously Apple Computer, Inc.) is an American multinational corporation that designs and markets consumer electronics, computer software, and personal computers. The company's best-known hardware products include the Macintosh line of computers, the iPod, the iPhone and the iPad. Apple software includes the Mac OS X operating system; the iTunes media browser; the iLife suite of multimedia and creativity software; the iWork suite of productivity software; Aperture, a professional photography package; Final Cut Studio, a suite of professional audio and film-industry software products; Logic Studio, a suite of music production tools; and iOS, a mobile operating system. As of August 2010, the company operates 301 retail stores[5] in ten countries,[6] and an online store where hardware and software products are sold.

Established on April 1, 1976 in Cupertino, California, and incorporated January 3, 1977,[7] the company was previously named Apple Computer, Inc., for its first 30 years, but removed the word "Computer" on January 9, 2007,[8] to reflect the company's ongoing expansion into the consumer electronics market in addition to its traditional focus on personal computers.[9] As of September 25, 2010, Apple had 46,600 full time employees and 2,800 temporary full time employees worldwide[4] and had worldwide annual sales of $65.23 billion.[4]

For reasons as various as its philosophy of comprehensive aesthetic design to its distinctive advertising campaigns, Apple has established a unique reputation in the consumer electronics industry. This includes a customer base that is devoted to the company and its brand, particularly in the United States.[10] Fortune magazine named Apple the most admired company in the United States in 2008, and in the world in 2008, 2009, and 2010.[11][12][13] The company has also received widespread criticism for its contractors' labor, environmental, and business practices,



The supply chain of the new Apple iPhone and, at some point, the supply chain of the Apple TV, hoping that this might help to demonstrate the complexity involved in manufacturing the Apple iPhone — a feature-rich product I wish I could have, if I could afford it (update: I’ve had several iPhones now).

Supplier Code of Conduct, Apple Corporation; and, some speculative assertions from Ars Technica, Engadget, and New York Times.

Note: Some or all of my data may be wrong. One fact I do know for sure is that the Apple iPhone is assembled, staged, and fulfilled from Apple’s Shenzhen, China facility.
Apple Supply Chain: High-Level Map


From a high-level, we speculate that the following are the material suppliers of the Apple iPhone:

1. Samsung: The Singapore facility manufactures CPU and Video processing chips.
2. Infineon: The Singapore facility manufactures Baseband Communications hardware.
3. Primax Electronics: The Taiwan facility manufactures Digital Camera Modules.
4. Foxconn International: The Taiwan facility manufactures internal circuitry.

5. Entery Industrial: The Taiwan facility manufactures connectors.
6. Cambridge Silicon: The Taiwan facility manufactures bluetooth chipsets.
7. Umicron Technology: The Taiwan facility manufactures printed circuit boards.
8. Catcher Technology: The Taiwan facility manufactures stainless metal casings.
9. Broadcomm: The U.S. based facility builds touch screen controllers.
10. Marvell: The U.S. based facility builds 802.11 specific parts.
11. The Apple Shenzhen, China facility assembles the hardware, holds inventory, and handles the pick, pack, and ship steps of the fulfillment process.

If I am correct in any of my research and assertions above, it’s easy to see that if there is any disruption in material flow of any supplier into the Apple Shenzhen, China facility, then production either slows or halts altogether.
Apple Supply Chain: Taiwan Wins Big

Again, if I am correct in my research and assertions in this article, Taiwan supplies 6 of the 10 parts that comprise the Apple iPhone. This can be viewed as a strategic approach by Apple, concentrating sourcing the majority of the parts from one country, or this could be seen as a bottleneck or constraint — a potential risk: if there is any turmoil in political economy in Taiwan, then material and product flow might be disrupted.


Above are the sourced materials from Taiwan in the alleged Apple iPhone Supply Chain.
Conclusion

Again, if I am correct in my research and claims in this article, then to make one Apple iPhone, material comes from 3 countries, traveling to China to be assembled, inventoried, and then fulfilled to retailers and to customers via purchases from the Apple Store. Is it any wonder they are asking for $500+ per unit?

It is important to note, that the price has nothing to do with the costs structure — Lean and Friedman both teach us that the price has everything to do with what the market will bear. The firm has a target cost structure, a break-even point, but the price they go-to-market with is about the market demand, not internal cost structure. Assuming that I’m correct in my assertions in this article, I can only imagine that this complex supply chain is a challenging one to manage.1
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business logistics, distribution network, distribution strategy, finished goods, fourth-party logistics, logistics management, logistics of company, logistics outsourcing, materials management, point of consumption, point of origin, production logistics, raw materials, reverse logistics, scm of apple inc., scm of company, scm of us company, scm strategy, supply chain components, supply chain management, theories of supply chain, third-party logistics, trade-offs, united states logistics, warehouse control
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