Cai 1

Liji Cai
Kerry Walsh
MAN4504.023
2022-4-24
Apple Supply Chain
Introduction
Question 1
Every business organization has its supply chain unique to the kind of operations being
conducted. The characteristics of Apple’s supply chain are different from those of Amazon.
Inventory turnover is a standard financial measure to establish how efficiently an organization
utilizes its monetary resources to generate sales. The higher the figure, the more efficient the
company is.
Supply chain professionals at Apple and Amazon utilize this metric in their inventory
management processes. Inventory turnover at Apple is 59 compared to Amazon’s 10. The cost of
products sold is divided by the average inventory of the firm to arrive at this amount. The higher
figure for Apple shows that the company is more efficient when it comes to using resources to
create sales compared to Amazon. However, this difference is because Apple has no
manufacturing facility and is now a marketing company. The high inventory turnover for Apple
means that the company does not need to hold a lot of inventory. This minimizes the amount of
capital held up in inventory and the space required to store it.
For companies across the globe to achieve a competitive advantage, they have to work
closely with strategic suppliers. These relationships or partnerships will assist the companies in
efficiently managing their supply chain. Both Apple and Amazon have millions of customers
across the globe who are willing to pay more for quality products. These firms have to depend on
suppliers to source components for assembly to achieve this. Apple has approximately 156 key
suppliers globally, while Amazon has around 3 million. The small number of Apple's vendors
makes it easy to manage them. The company makes a lot of effort to monitor its suppliers, where
it releases a progress report annually, outlining its efforts toward supplier relationships. Apple's
key suppliers account for 98 percent of its procurement.
The central warehouse for Apple Inc. is located in California. On the other hand, Amazon
has roughly 28 warehouses spread from coast to coast. By efficiently automating its operations,
Apple can synchronize information between its California warehouse and its 246 stores. This is
because most devices from Apple are directly shipped from the producer in China to the
customer or the store if one places their order online. This makes it possible for the company to
keep very little inventory, thereby reducing storage risks and costs (Edwards, pg. 61). However,
Amazon's distribution environment has to be solved mathematically through the optimization
approach.
For this reason, the company has to recruit Ph.D. holders in operations research,
operations management, and industrial engineering. To increase service level and cut costs, these
recruits have to determine the number of facilities needed, the market they will serve, and how to
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directly transport from one warehouse to another and then to the customers (Bariso, 41).
According to Amazon's finance chief, the company plans to incur around $4 billion to attract
seasonal employees with rich benefits and paychecks and to make sure parcels arrive at the
customer's doorsteps and warehouses by shipping through less crowded ports. The finance chief
argues that the company is able to spend on warehouses and wages and withstand costs to
expand its operations.
Product lifecycle refers to the duration it takes an organization to sell its goods. It can
help promoters to select the most appropriate marketing strategy and define the product's
behavior on the market. An organization with a longer timeframe is better than the one with less.
Amazon deals mostly with seasonal products like summer wear. These items can only be sold for
a maximum of three months (Bylund 39). These products with short and seasonal lifecycles
make it hard for the firm to estimate or forecast their demand. This complicates Amazon's supply
chain.
On the other hand, Apple's product life cycle is more than twelve months. The average
life cycle of Apple smartphones is twenty-four months, and new models are unveiled once a year
(Edwards, pg. 84). Tablets produced by Apple have a life cycle of up to three years, while that of
laptops is also three years, with new models being unveiled annually.
Question 2
a) Challenges
One of Apple’s biggest supply chain challenges is that some components or resources
needed are obtained from a single source or can be scarce. In 2021, the company was forced to
reduce its business due to a worldwide shortage of semiconductors. The firm had to cut its
iPhone 13 production by as many as ten million units. While the supply chain crisis rocked the
automating, electronic, and commodity industries, Apple was still able to secure the chips it
required to continue manufacturing some of its products. This was attributed to its efficient
supply chain. However, the crisis deepened as supply disruptions were witnessed across the
globe. Companies such as Apple had to wait for up to nine months for their chip orders to be
filled.
Additionally, Apple faces supply chain disruption due to manmade events such as new
legislation from governments. TPK Holding Co., which is one of Apple's suppliers, indicated
that its branches within the Chinese province of Fujian were adjusting their production timetable
as a result of restrictions from the local government (Balu 112). Additionally, Pegatron Corp.,
which is an iPhone assembler, embraced emerging power-saving measures due to power curbs
imposed by the government.
b) Solutions
To solve these challenges, Apple needs to diversify its production base. Through this, the
company will be able to reduce the risk associated with disruption and ensure adequate
availability of products to satisfy customers. The corporation needs to ensure that its supply
chain is also flexible to any unforeseen challenges. Apple can use just-in-time inventory
management to maintain low inventories within the company while utilizing flexible, short-term
contracts that can be changed quickly according to demand changes.
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Question 3
Amazon has to hold more stocks since it is a supplier of general merchandise. However,
Apple has no manufacturing facility and is now a marketing company. For this reason, Amazon’s
supply chain has to use a mix of advanced information technology, multi-tier inventory
management, a substantial network of warehouses, and efficient transportation to ensure it is
efficient in every part of the world.
Amazon’s e-commerce site is also a forum that facilitates dealings between sellers and
buyers while at the same time allowing sellers to utilize their delivery and warehouse services.
Due to this reason, it depends on distributed logistics stack, where products from millions of
sellers find their way to millions of buyers through a range of transport combinations. This
strategy is very complicated compared to Apple, which has a central warehouse located in
California.
I will employ inventory management techniques such as just-in-time inventory
management and safety stock inventory to reconcile these complications. Just-in-time inventory
will allow Amazon to minimize storage costs and risks while sourcing only the products required.
Safety stock inventory will prevent stock-outs in case the supply chain is interrupted.
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Works Cited
Balu, Nivedita (January 3, 2022). "Apple becomes first company to hit $3 trillion market value,
then slips". Reuters.
Bylund, Per (August 29, 2017). "Amazon's Lesson About Disruption: Rattle Any Market You
Can". Entrepreneur.
Bariso, Justin (May 30, 2021). "Life at Google vs. Life at Amazon: From Hiring to Firing (and
Everything in Between)". Inc.com.
Edwards, Benj (January 18, 2013). "30 years of the Apple Lisa and the Apple IIe". Macworld.
International Data Group.