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FULL NAME MATRICULATION NO.

1) GAN JIA PEI 1) I22022258

COURSE CODE AND

ONM4201E SUPPLY CHAIN MANAGEMENT
COURSE NAME

LECTURER’S NAME
Ah Huai Ah Chan
SECTION / GROUP  6S TERM JUNE 2022

 INDIVIDUAL

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2TH JULY 2022
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Table of Contents

No Content Pages
1 Introduction 4
2 Literature Review 5-6
3 Background of organization 7
4 Description of the organisation’s supply chain 8
management measurement system
5 Recommendations 8
6 Possible barriers that could prevent the 9
necessary recommended supply chain measures
from being implemented
7 Personal reflection  10
8 Conclusion  10
9 References & Appendix 11
Introduction

Supply chain management can be defined as the management of product and service processes. It
begins at the source of the product and ends at the consumption of the product. Supply chain
management is the practice of coordinating the various activities required to produce and deliver
goods and services to business customers. It includes the movement and storage of raw materials
related to work-in-progress, inventory and assorted goods.

The main objective of supply chain management is to monitor the production, distribution and
transportation of products and services. This can be done by a company with very good and tight
control over internal inventory, production, distribution, internal production and sales. It is
important because it can help to achieve business goals.

In this report, I would like to discuss about the supply chain issues of the iPhone. While iPhone
has the world's best product supply chain, they still have some issues that need to change. In
2018, iPhone sold 2 billion IOS devices. Manufacturing so many devices require an extremely
complex and far-reaching supply chain. Apple works with suppliers in 43 countries on six
continents to produce its products, and when you break it down into raw materials, the chain
becomes more complex.
Literature review

Moral hazard in supply chain Double moral hazard has also been studied in the literature.
Holmstrom (1999) examines the moral hazard in the team (partnership) and shows that any
sharing rule that is constrained by 4 budget balance cannot achieve the first best result in team
production. In the supply chain considered by Corbett and Delcroix (2001), the consumption of
indirect materials is determined by the efforts of suppliers and retailers. Suppliers and retailers
have counter subsidy incentives in an effort to reduce consumption as retailers save, but
suppliers lose less on consumption. They found that a simple shared savings contract can
increase channel profit. Lal (1990) studies the rights structure of the franchise environment and
the monitoring techniques for revenue sharing contracts. He found that contracts that collect
royalties can provide appropriate incentives for concessions and franchisees. Bhattacharyya and
Lafontaine (1995) have established a principal-agent problem model with dual moral hazard.
They show that in a simple linear contract, in addition to a fixed currency transfer, the principal
and the agent share the output, which produces sub-optimal results (complete information leads
to the first best result). Eswaran and Kotwal (1985) studied the use of revenue sharing contracts
under dual moral hazard. They found that when the class structure is polarized, the income
sharing contract is beneficial because the landlord lacks production capacity and the tenant has
little management capacity.

Internal Supply Chain Risks Companies face numerous potential supply chain disruptions from
the upper end of their supply chains. Risks exist in procurement activities, suppliers, supplier
relationships and supply networks. These risks include, in particular, supplier business risks,
production capacity constraints in the supply market, quality issues and changes in technology
and product design (Zsidisin & Wagner, 2010). Supplier business risks are related to
interruptions that affect supplier continuity and lead to the interruption or termination of the
purchaser/supplier relationship. This is closely related to the threat of supplier financial
instability and the possible consequences of supplier default, bankruptcy or bankruptcy (Wagner,
Bode & Koziol, 2009). Financial default by a supplier (for example, supplier failure) is a
common supply chain disruption that can have serious consequences for the buying company.
Another type of interruption occurs when the supplier is vertically integrated by a direct
competitor of the client company, forcing the relationship to terminate (Chopra & 5 Sodhi,
2004). In the relationship between buyers and suppliers, involving high switching costs of
purchasing companies, opportunistic behaviors of suppliers are also reported to be a source of
risks for suppliers (Spekman & Davis, 2004; Stump & Heide, 1996).
Background of iPhone

Apple (Apple Inc.) is a high-tech company in the United States, by Steven. Jobs, Steve Wozniak,
and Ronald Wayne founded on April 1, 1976, was called the United States Apple (Apple
Computer Inc.), after due to the expanding business, especially the iPhone and after the
interview, on January 9, 2007, changed its name to Apple headquarters in Cupertino, California.
Apple Inc. IPO on December 12, 1980 has been ranked No.1 in global market capitalization for 7
consecutive years. Apple overtook Coca-Cola as the world's most valuable brand in 2013,
according to various rating agencies. In 2014, apple surpassed Google to become the world's
most valuable brand. In a word, apple is the most powerful company in the world in terms of
market value and brand value. Apple first procured raw materials from a variety of different
sources and then sent them to assembly plants in China. There, the assembler then sends the
finished product directly via UPS or FedEx to those consumers who purchase it from the Apple
an online store. For other distribution channels, such as retail stores, distributors or distributors,
Apple will store in Elk Grove, Calif. (where the central warehouse and call center are located),
and where to supply the product, at the end of the hx field rate life cycle, Consumers can send
the product back to the nearest Apple store or the recycling gate of the gate.
System used in iPhone

Today, there are many companies that implement a corporate group strategy through supply
chain management, but Apple is unique in that it is deeply involved in the supply chain process.
In other words, Apple does not simply give the production and assembly tasks to the supplier and
then sit back and wait for the acceptance of the product. It is to help suppliers develop financially
and technically. First, Apple moved the funds forward to provide sufficient funding for the
suppliers. On the other hand, Apple has cooperated with Foxconn, Samsung, LG, TPK and other
manufacturers for many years, and has cross-licensed on many technologies, and jointly
developed some short-term production processes leading the competition. Finally, starting with
the selection of foundry manufacturers, Apple has always been extremely cautious and super-
high standards.

Recommendations

The success of the iPhone is inseparable from their unique supply chain, but for the issue of
employee and supplier bribery, I think Apple should implement a method of splitting power,
such as dividing the procurement department into two pieces, one responsible for finding
suppliers and contacting The supplier, to the supplier to visit, but has no right to place an order,
called sourcing, need to let the supplier know that it has no right to place an order, the other has
the right to place an order, but does not meet the supplier at all, called buyer. Another method i is
to have a high degree of centralization, so that t suppliers understand that power is only in your
hands and that your subordinates do not have any rights.
Possible barriers that could prevent the necessary recommended supply chain measures
from being implemented

Through the problems that Apple mentioned above, I found that Apple still has aspects that can
be improved. In order for consumers to favor Apple's products, they need to take on more social
responsibilities. Because this is also in line with their environmental philosophy.

For companies, social sustainability covers the company's impact on people and society, but it is
well known that this is the most difficult of the three pillars, and you can't manage things that
cannot be measured. In the public eye, Apple has always been good at connecting 10
environmental concepts with its own products. Apple CEO Cook has come to China twice for
environmental issues, which is a good testament to Apple's willingness to contribute to
sustainable social development. At the same time, they want to create more environmentally
friendly technology. On the other hand, they want to strengthen communication with employees,
especially the foundries of other countries. Prevent employees from negative behaviors caused
by excessive stress.
Personal Reflection

Through this assignment, I learned about the iPhone background, some of the issues that might
arise in the supply chain, and how the iPhone supply chain works. On the other hand, I also
learned the difficulties of some foundries. Although the iPhone is already a very successful
company, they also have problems that need improvement. They should pay more attention to
the interests of employees and assume corresponding social responsibilities. For me to study
business, it is important to know how a company's supply chain works, which will be helpful for
future work.

Conclusion

Apple's success is inseparable from their unique supply chain. Apple strengthened its
management of suppliers and compressed response time. They have customized a system of
assessments for suppliers to ensure they can deliver on time. On the other hand, Apple handed
over some R&D and design work to the foundry, so that the entire supply chain is more closely
cooperating. But for problems in the supply chain, they can't ignore it. Apple should divide
power to reduce or even avoid bribery. For the problem of crushing and innovation, Apple must
first consider the issue of sustainable social development. To do this well, I believe that their
problems will be solved.
References and Appendices

1. Investopedia. (2022). Supply Chain Management (SCM): What You Need to Know.
https://www.investopedia.com/terms/s/scm.asp
2. Zhou, J. et al. (2012) ‘Double moral hazard in a supply chain with consumer learning’,
Decision Support Systems,
https://www.sciencedirect.com/science/article/abs/pii/S0167923612001947
3. Wenku.baidu.com. (2018). BaiDuWenKu - Apple’s supply chain.
https://wenku.baidu.com/view/350b2eccc67da26925c52cc58bd63186bdeb9211.html?
from=search