Running head: LOGISTICS AND SUPPLY CHAIN MANAGEMENT

LOGISTICS AND SUPPLY CHAIN MANAGEMENT

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LOGISTICS AND SUPPLY CHAIN MANAGEMENT 1

Executive Summary

The accomplishment of any organization lies in the effective Logistics and Supply

chain management. Logistics is the detailed divisional explanation of an organization

and the application of the complicated operations that are executed and

implemented from within. To help in enhanced perceptive of the fundamentals and

the principles of Logistics and supply chain management, an organization has been

taken into consideration. Apple.Inc has been selected as the organization. The report

includes the Logistic Management and the supply chain management of Apple and

how its Logistics are related with the production, marketing and the finance of the

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organization. This report further discusses about the order cycle and the inventory

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management and how they influence the productivity of the organization. The

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purpose of this report is to closely analyze and provide a detailed output about Apple

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and its functionalities.

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 LOGISTICS AND SUPPLY CHAIN MANAGEMENT 2

Table of Contents

Introduction...................................................................................................................3

Interfaces......................................................................................................................4

Order cycle....................................................................................................................6

Inventory management.................................................................................................8

Conclusion..................................................................................................................10

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References.................................................................................................................12

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LOGISTICS AND SUPPLY CHAIN MANAGEMENT 3

Introduction

The efficiency of an organization not only lies in the thriving management of

the organization but the key to accomplishment lies in the effective management of

the diverse divisions in the organization. The most significant way of calculating the

productivity of an organization depends on the successful management of the

logistic and supply chain division of the organization. Logistics is the detailed

divisional explanation of an organization and the application of the complicated

operations from within the organization (Christopher, 2016).

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This report covers the details about the principles of Logistics And Supply

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Chain Management with reference to an organization has been considered. The

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organization taken into consideration is Apple.Inc. Apple is the world largest IT

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Corporation in terms of returns and asset and the world’s second largest cellular

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phone manufacturer. Steve Jobs and Steve Wozniak originally founded it. Apple has

about 115,000 employees from all over the world. Apple earn about $ 300,000 each

minute and has more in commission currency than the U.S treasury itself. Apple

iphone has higher sales than the entire asset that even Microsoft has to offer. The

entire brand is worth US$ 118.9 billion and is the world’s most esteemed brand, after

Microsoft and Google (Chan, Pun & Selden, 2013).

Apple has just about 475 Apple store in 22 countries. In the first quarter of the

year 2014, Apple generated returns more than Google, Face book and Amazon

combined. The distinctiveness of Apple lies its work culture that follows the principles

of top class brilliance, inventiveness, authentic innovations, confidentiality and

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LOGISTICS AND SUPPLY CHAIN MANAGEMENT 4

modern combativeness, that are taken into contemplation while making its products,

making it exclusive and prized. The company’s prolific manufacturing along with

logistics and supply chain help it introduce newer products with no need of having it

to maintain large revenue utilizing inventories.

The purpose of this report is to closely identify and analyze the logistics

management of Apple.Inc as well as identifies the operations and supply chain

management that makes it one of the most booming brands globally.

Interfaces

This section mainly emphasizes on the interpersonal and interfunctional

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synchronization between the logistics and the three core areas namely the

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production, marketing and the finance. The finished product requires achievement of

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raw materials, parts and components that sets off and influences the purchasing

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behavior and the activities (Slack, 2015.

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The quantity of the incoming resources and parts obtained by purchasing is

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often influential in determining the quality if the finished product regarding sales and

distribution. In this case, with reference to the logistics, the production and the supply

chain of Apple is exceptionally strong. The reason for this is Apple chooses to focus

in developing the hardware, software and the connected digital services rather than

just focusing in one aspect. This helps in providing an unparalleled user experience,

allowing Apple to capture higher boundaries in terms of its products and services.

Frequently the equipment that are used in production are exclusive in nature due to

the special contracts or because Apple is large enough for a accumulation for the

machines and equipments becomes extremely long.

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LOGISTICS AND SUPPLY CHAIN MANAGEMENT 5

Apple makes itself exceptional in terms of production since it asks its supplier

for a price quote and a detailed accounting for how the manufacturer would meet the

quote, which includes the labor, material charge and the projected profit. The

suppliers can be probably hit with a penalty concerning about the quality related

issues and the warranty claims.

On the brighter side, owing to this strategy Apple does not gets demand

predictions for new products and they have a section of loyal clientele who are willing

to wait for the new products. This is tremendously decisive in creating huge

marketing buzz (Chandler & Werther, 2013). In terms of logistics with the production,

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Apple works in confidentiality in terms of the supply of the key element and in

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of the products in order to avoid outflow.

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particular the tailored components that are being used to protect the distinctiveness

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The main objective of this technique is to protect the design and ensure an

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enormous marketing sensation when the product in reality hits the market. In this

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manner, Logistic management is interconnected with the marketing strategy of Apple

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(Eden & Ackermann, 2013).

Theoretically, Logistics and finance of any organization are completely unlike

sides, where logistics is an entirely customer centralized management whereas the

finance is the management that does not believe in blocking the flow of cash through

creditability and inventory.

Apple has made a status through its management and logistics so almost

certainly the finance management would not be much affected by the Logistics

management due to the brand name it has earned through marketing and

manufacturing quality (Hill, Jones & Schilling, 2014). Apple has always maintained its

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LOGISTICS AND SUPPLY CHAIN MANAGEMENT 6

stand by the worthy pricing of its products and the customers are also keen to

purchase its products at any price tag and administer the favorable cash flow by its

well maintained management and pricing strategies (Chen, Li, & Zhou, 2012).

From the point of view of cost efficiency, with an effort to subordinate logistics

operating expense by consolidating smaller consignment and using a slower mode

of hauling would amplify the lead-time and accordingly augment the inventory

incurring costs. This would in turn injure the client services due to the delayed

delivery. Therefore, it can be justified that the modification in logistics behavior

directly influences the efficiency and competence of production and marketing. In

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particular, logistics are closely related to marketing through their involvement in client

services.

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Order cycle

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The cluster of the distribution network has been formulated in such a

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approach that the warehouses and the retail store of Apple get enough supply to

meet soaring levels of order at times. The stocking up of the inventory in the retail

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stores in a 24 hours window foster an proficient technique of eliminating the out of

stock crisis in the retail outlets. Apple obtains the key resources from its vendors and

transports the components to the manufacturing plant in China that carries out

assembling actions (Mangan & Lalwani, 2016).

On receiving orders from the customers, Apple ships and delivers the product

straight to the clients. The idea or concept of supplying through online portal is about

quicker delivery of the products to the customers who are not able to reach out to the

retails stores. In order to help perform better in terms of supplying its products, Apple

has invested heavily in websites, to facilitate in this technique of easier availability.

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LOGISTICS AND SUPPLY CHAIN MANAGEMENT 7

Apple is questionably one of the best companies in terms supply chain

management (Stadtler, 2015). Apple makes every promising attempt to deliver its

products to the customers who order their products via online. This process is

facilitated by one click feature that has been integrated by Apple. Customers who are

ordering their products via online can avail the mentioned facility by signing into the

Apple account that is necessary to be created. This feature needs to be activated

and the selection of the desired product to be made, then in order to purchase click

the “Buy with one click” option. With no valid Apple account in existence, the

customers cannot avail this special and rapid facility.

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Apple tries to make its order dispensation in time and prompt and in spite of

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that, it faces repercussion due to weighty ordering and climax times surrounded by

holidays that results in the delay. Apple makes every probable exertion to transport

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its products to the customers in time, to uphold a excellent relation with the

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customers. Even though the lead-time of the delivery is provided at the time of

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ordering, the delivery time may vary depending upon the stocks and availability of

the products. To make the process efficient, the customers are appropriately

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informed about every step of processing and progress in the order (Tayur, Ganeshan

& Magazine, 2012).

One of the major backfires that Apple face is disruption of the online order

supplying system. This incident usually takes place due to the failing of the AT&T’s

online system due to congestion, account security breaches and due to the

fluctuations in the server. This usually results in a total pandemonium where the

orders cannot be taken online, thus disrupting the entire order processing system.

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LOGISTICS AND SUPPLY CHAIN MANAGEMENT 8

The order processing systems can be enhanced by dividing the servers

through which the order process can be channeled instead of one central server,

which can be venerable to unethical hacking and viral attacks. System crashes can

be rectified with periodic debugging measures and creating an extra-secured

platform. Rapid system of order dispensation and delivery can be facilitated by

maintaining an excellent and vital connection with the suppliers. Proper action and

efficient measures must be taken after the products have been supplied to the

clientele to maintain a fine after sales report and a excellent relationship with the

patrons (Goddard et al., 2012). Improvising older dispensation systems are essential

to increase the efficiency of the company.

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Inventory management

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The crucial key to accomplishment of Apple is its inventory management.

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Apple has created a vast range of products and devices that were meant for diverse

purposes. Some of the inventories include the ipad, Mac book, Mac book pro, I

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phone, smart covers and much more. Even though some of the products did not

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stand a possibility to thrive itself in the global market, yet it left its mark in the course.

The principle motto of Apple is to believe that humans and technological

innovations are indivisible. In order to accomplish such a goal Apple emphasizes and

takes an unlikely approach, the implementation of new innovative marketing

methodology to set its mark in the global market. Apple applies the design concepts

in an inventive way that is influential in determining the appearance of all the devices

underneath the same brand. This concept focuses on the brand significance that is

attained through the user orientation as Apple believes and follows the same value

up to date.

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LOGISTICS AND SUPPLY CHAIN MANAGEMENT 9

Apple’s furtive to triumph lies with the sophistication of its inventories. Apart

from meeting the customer demands, the performance of the company depends on

the ability to create user-friendly interface that are demanded by the consumers

(Osterwalder et al., 2014).

Apple in the current period has cut down its inventories, the reason being,

inventories are depreciates quickly and tends to drop about 1% to 2% every week.

The present CEO of Apple, Tim Cook adopted the similar tactic to cut down the

inventories in order to help achieve better in the market struggle and slash down the

warehouse cost (Myerson, 2012).

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The theory at the back is to maintain the stocks at a lower rate. This is

beneficial since the technology manufacturers cannot afford to keep many products

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in stock due to the highly competitive nature of the technology industry (Hitt, Ireland

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& Hoskisson, 2012). An innovation from a competitor organization can alter the

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dynamics of the entire industry and bring down the value of products in inventory.

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Apple has one of the most flourishing inventories in the electronics industry. In

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order to achieve such the majority of the warehouses have been shut down. Almost

ten warehouses have been locked out with only nine remaining. With the lesser

number of warehouses and high number of key suppliers,

Apple was able to maintain a good strategic rapport with its vendors (Lambert

& Schwieterman, 2012). This tactic has been used to make the company leaner by

cutting the extra incurring expenses and plummeting the inventory overstocks, by

keeping in mind the expiry date of the products. Keeping the inventories lesser

ensure the entire selling of the goods without any depletion (Coelho & Laporte 2014).

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LOGISTICS AND SUPPLY CHAIN MANAGEMENT 10

The efficient ways to boost production is to reduce the inventory days and

lesser number of days to sell out its products. This is achievable by having only one

central warehouse with most of the inventory limited in the retail outlets. By taking

the advantage of drop shipping or directly transporting the products from the

producer to the consumer, online purchase can efficiently trim down the transport

cost along with the depletion and the storage cost.

Conclusion

With the help of this report, the principles and theories of Logistics and Supply

management are used to rationalize the tactic that is adopted by Apple.Inc in terms

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of Logistics, its production marketing, finance, order cycle, supply and the inventory

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management thus enhancing its productivity in the global electronics market. Apple

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productively administers the principles and strategies to influence the production,

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marketing, distribution and financial divisions. Apple maintains its manufacturing

quality by controlling the supplies and the superiority of the parts that are being used

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in the gadgets, making it so unique and esteemed. Apple’s concept of maintaining

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uncertainty in terms of its products manufacturing is one of the sturdy marketing

strategies, helping it maintain a anonymity and eagerness among it loyal set of

patrons. The burly logistics management is influential in the never-ending flow of

cash despite the fact that Logistics and Finance management are two different ends

within the same organization. The logistics and the brand status do the work of

amplifying the selling of the products. The supply management of Apple is one of the

paramount features and in spite of that, the order processing system of Apple face

major backlash due to uncertain factors like crashing and corruption of online

ordering systems, hacking and faulty network servers, improper order placed,

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LOGISTICS AND SUPPLY CHAIN MANAGEMENT 11

overdue in deliverance due to unavailability of products. Clashing of the lead-time

with holidays is also one of the factors of delayed delivery of the products. Apple has

one of the strongest inventory management that is channeled through tactical

development of invariable innovation and efficient diminution of the transportation

cost, stockroom-incurring cost and effective reduction in product depletion due to

over stocking. These factors are influential in an even revenue making.

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LOGISTICS AND SUPPLY CHAIN MANAGEMENT 12

References

Chan, J., Pun, N., & Selden, M. (2013). The politics of global production: Apple,

Foxconn and China's new working class. New Technology, Work and

Employment, 28(2), 100-115.

Chandler, D., & Werther Jr, W. B. (2013). Strategic corporate social responsibility:

Stakeholders, globalization, and sustainable value creation. Sage

Publications.

Chen, X., Li, L., & Zhou, M. (2012). Manufacturer's pricing strategy for supply chain

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with warranty period-dependent demand. Omega, 40(6), 807-816.

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Christopher, M. (2016). Logistics & supply chain management. Pearson UK.

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Coelho, L. C., & Laporte, G. (2014). Optimal joint replenishment, delivery and

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inventory management policies for perishable products. Computers &

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Operations Research, 47, 42-52.

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Eden, C., & Ackermann, F. (2013). Making strategy: The journey of strategic

management. Sage.

Goddard, M. G. J., Raab, G., Ajami, R. A., & Gargeya, V. B. (2012). Customer

relationship management: A global perspective. Gower Publishing, Ltd..

Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an

integrated approach. Cengage Learning.

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2012). Strategic management cases:

competitiveness and globalization. Cengage Learning.

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LOGISTICS AND SUPPLY CHAIN MANAGEMENT 13

Lambert, D. M., & Schwieterman, M. A. (2012). Supplier relationship management as

a macro business process. Supply Chain Management: An International

Journal, 17(3), 337-352.

Mangan, J., & Lalwani, C. (2016). Global logistics and supply chain management.

John Wiley & Sons.

Myerson, P. (2012). Lean supply chain and logistics management. New York:

McGraw-Hill.

Osterwalder, A., Pigneur, Y., Bernarda, G., & Smith, A. (2014). Value proposition

design: How to create products and services customers want. John Wiley &

Sons.

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Slack, N. (2015). Operations strategy. John Wiley & Sons, Ltd.

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Stadtler, H. (2015). Supply chain management: An overview. In Supply chain

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management and advanced planning (pp. 3-28). Springer Berlin Heidelberg.

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Tayur, S., Ganeshan, R., & Magazine, M. (Eds.). (2012). Quantitative models for

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supply chain management (Vol. 17). Springer Science & Business Media.

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