Supply chain initiatives at Apple Inc

Supply chain initiatives at Apple Inc 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 labour, environmental, and business practices, 4 COMPETITIVE PRIORITIES AT APPLE INC. APPLE has managed to increase its market price by introducing new products to attract the customers. The recent products are APPLE Ipod and APPLE IPHONE 4G. Usability and Product design are the main key trends and competitive priorities of apple. The key element in manufacturing strategy are to identifying competitors manufacturing strategy research. In this study, Im gonna find which competitive priorities that APPLE used and which one helped APPLE the most in the areas of supply chain, quality and peformances. 1.1 COMPANY OVERVIEW APPLE INC. (NASDAQ: AAPL; previously APPLE COMPUTER, INC.) is an American multinational corporation, which produces consumer electronics, pc softwares and laptops. STEVE JOBS, STEVE WOZNIAK and RONALD WAYNE are the founder of APPLE INC, established in Cupertino, California on april1, 1976 and incorporated January 3 1977, and then the company was known by APPLE COMPUTER, INC. It leads the industry in innovation with its award-winning desktop and notebook computers, OS X operating system, ILife and its range of professional applications. Apple also spearheads the digital music revolution with its iPod portable music players and iTunes online music store. The company recorded revenues of 65.07 billion in the fiscal year ended March 2010, an increase of 34.06% over 2009. The companys operating profit was 18.27 billion in fiscal 2010, an increase of 35.74% over 2009. Its net profit was 14.01 billion in fiscal 2010, an increase of 41.23% over 2009. 1.2 OPERATIONS STRATEGY OF APPLE INC. The Operations Strategy of APPLE INC. Limited has changed as their business has evolved over time. The section below tracks the various key operations strategy such as the Manufacturing ( processes involved and locations), the Supply chain initiatives over the years, Inventory Management, Quality Management, Research and Development Initiatives, Procurement procedure, Vendor Management etc . The section highlights the key defining operational strategies adopted by the company during this period. 1.2.1 MANUFACTURING: When Steve Jobs launched the iMac in 1998, he was quoted as saying, these new product lines give people what they want most, a lightning fast laptop and a striking new consumer Macintosh. Is Jobs correct in this assessment? Is speed, look, and brand really the main drivers for consumers? Did Jobs strategy to capture market share in the personal computer industry focus on the right aspects? This paper will venture to say no and suggest the following alternative strategy: Apple should build a new business in Wintel PCs, while continuing to sell Macs to the design and publishing segment of the market. In order to support this conclusion, Apples competitive advantages and industry forces must be analysed. Apple has been in business since 1976, and released a number of new brands in competitive way. The four key tactis and differentiations are branding, new innovation in hardware design, high expectation in market shares and user friendly. In 1998, the consumers didnt want a MACHINTOSH. APPLES branding to the market is strong and has been since the1970s when APPLES customers waiting for their new innovations. The main component of apple is user friendly to the customers. Adding extra hardware and software to a Mac was almost easy as plugging speakers to the mobile phone. Because of this loyalty, apple was able to form a close relationship with its customers, particularly with the education and design publishing industries, which felt as 80% of APPLEs market position in 1998(Exhibit A). Furthermore, the 1998 Think Different campaign propagated Apples image as inventive and trendy. It enabled Apple to become a substitute based on design alone, giving it a particular edge over its khaki-clad competitors. Albeit these advantages, Apple still managed to lose a large amount of profit, and its market share dwindled from 8% to 3.4% from 1995 1998 (Exhibit B). The company also slipped in the education sector during this time by as much as 14% per year. In order to understand why Apple was losing so much ground, we must look into the power of suppliers and buyers in the industry. Most notably on the suppliers side are microprocessors and operating systems, where Intel and Microsoft are the dominant names. Because of their quasi-monopolies, which enable them to control commodities and manipulate pricing, these two suppliers have tremendous influence. Buyers, who also have strong influence because of the wide array of products available, were drawn to the Intel/Windows package (Wintel) because of the brand names, lower costs, and the wide proliferation of the products. Apple, however, chose to implement a PowerPC/MAC OS combination over the standard Wintel package. The main fallacy in Jobs o utlook was following this proprietary strategy. As a result, Apples reach to customers diminished. In 1998, Macintoshs operating system market share was at 5% compared to Microsofts dominance of almost 90%. Furthermore, this strategy can aid in the foreign arena, where Apple has the recognizable brand name and Wintel is the dominant platform. With analysts predicting the largest increases in growth rates through 2005 to be in the Asia/Pacific and the rest of the world , Apple will have a greater outlook for global success. Overall this strategy calls for Apple to focus on their competencies and move away from inefficient practices of the past. Allowing themselves to think outside of their proprietary boxes will no doubt increase their abilities to see ahead on the road to profitability. 1.2.2 Supply Chain Initiatives at APPLE INC. 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 labour, 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: Ive had several iPhones now). 1.2.3 Linking the supply chain to the business strategy The supply chain improvements described indicate that supply chain management has the potential to improve a firms competitiveness. Supply chain capability is as important to a companys overall strategy as overall product strategy. Supply chain management encourages management of processes across departments. By linking supply chain objectives to company strategy, decisions can be made between competing demands on the supply chain. Improvements in performance are driven by externally-based targets rather than by internal department objectives. Managing the supply chain means managing across traditional functional areas in the company and managing interactions external to the company with both suppliers and customers. This cross-boundary nature of management supports incorporating supply chain goals and capabilities in the strategic plan of the company. This focus on integration can then lead to using the supply chain to obtain a sustainable competitive advantage over competitors. The impact of managing overall product demand and the supply of product will impact the profitability of the company. The supply chain strategy can be viewed as the pattern of decisions related to sourcing product, capacity planning, conversion of finished product, deployment of finished product, demand management and communication, and delivery. Linking supply chain strategy to the business strategy involves defining the key business processes involved in producing a companys product or service. 1.2.4 Procurement Apple is known for its innovative thinking. They have developed a product line that is both functional and attractive. Their product line has recently expanded to another level. Their iPods will soon be able to communicate with specially designed Nike running shoes where you could receive data such as calories burned and distance ran. This project can benefit both companies and boost the demand for iPods. Apples iPod line will have a clear advantage over all the other mp3 players in the market. In addition to Apples integration with other products, many cars models from all major automakers have equipped their new models with iPod connectivity. In regards to their desktop and notebook sectors, Apple has developed new lines that are less expensive while maintaining its high quality standards. These less-expensive computers should help increase sales in the future. Apple has also changed its chip supplier from IBM to Intel. This change would make Apple more compatible with other systems. It enables Apple to run the Windows operating system, which gives the user more flexibility. 1.2.5 Quality Apple Computer Inc. is one of the oldest hardware manufacturers that control over the product by manufacturing both computers and their operation system. It is known that Apple has a high Quality product which makes Apple different than its competitors. Apple creates its product with unique designs to attract the consumers eyes and increase its market share because Apple success is based on fulfilling customers desires. Apple has one of the top brand names within the technology industry all over the world, and 54% of their profits are from foreign markets. Apple is dedicated to develop new products which will make the use of technology easier and more efficient. Apple always provides easy-use product to the hand of the consumers. Most of its products are light, small, and easy to carry around which make them more competitive. One of the great things about Apple is product diversification; Apple has a large number of product lines to target everyone in the world. In addition, there ar e a huge number of consumers who are loyal to Apple even though the prices of Apple products are higher comparing to its competitors. 1.2.6 Research and Development Apple can definitely expect a prosperous future especially in the near future. Over the past five years, net sales have been steadily increasing with almost a 200% increase from 2004 and 2005. Correspondingly, net earnings have been increasing as well. Apple owns over 80% of the market share with its iPod product. With such favorable trends, it is reasonable to assume that Apple will continue to increase in its sales, earnings, and market share just as long as it keeps developing and acquiring new strengths. For example, Apple has established its name as one of the leading, innovative forces in the computer industry that has a much diversified, high quality products that appeal to many markets. Competitors will find it difficult to compete against the company if Apple continues to strive for innovation, as it is its mission, continuing its well-developed marketing plan, further developing more high quality products, and taking advantage of its opportunities. Thus, the threat of produ ct substitution and high levels of competition would be decreased. However, although it seems that Apple is not in a position where its favorable future outlook is threatened, it is best that Apple works on its weaknesses so as to further increase its sales and decrease the possibility of losing its customers to its competitors. For example, Apple is known for its high quality products, which puts them into a competitive advantage. However some components of its products such as the iPod batteries and the iPod Nano screens are of lesser quality. Apple must increase its RD efforts to really minimize the number of products with faulty components. Thus, customers would not be lost and customer loyalty would be maintained. Another weakness that must be addressed is the high prices of its products. For example, the iPod nano ranges from $150 to $250 depending on the size, the iPod ranges from $300 to $400, and a Mac desktop is at least $1300. Such high prices discourage potential customers from purchasing Apples products. The solution to this weakness is to decrease the prices to the point where profits are still increasing. Likewise, the cost of sales should be decreased but only to the point where the quality of the products is not sacrificed. 1.3 CONCLUSION: With its already well-established name brand and its positive sales/market share growth, Apple will without a doubt continue to increase their earnings and market share. However, by working on at least some of its weaknesses through minimizing the number of faulty components in its products, decreasing its prices, and paying dividends, Apple can tremendously gain a competitive advantage over its competitors II CORPORATE STRATEGY AT RELIANCE RETAIL LIMITED 2.1 INTRODUCTION The Reliance group is founded by DHIRUBHAI H. AMBANI(1932-2001), is Indias one of the largest private sector enterprise, with businesses in energy and materials of value chains. Reliance Retail Limited (RRL) is one of the business sectors in retail chain division of RELIANCE INDUSTRIES OF INDIA, which is headed by MUKESH D. AMBANI. The company is strongly focused on future growth in Indian economy and planned to invest Rs. 25000 crores in the next 4 years in the retail divisions and plans to begin retail stores in 784 cities across the country. RRL launched its first store in November 2006 through its convenience store format Reliance Fresh. Since then RRL has rapidly grown to operate 590 stores across 13 states at the end of FY 2007-08. In each of these store formats, RRL is offering a unique set of products and services at a value price point. Overall, RRL is well positioned to rapidly expand its existing network which operates in 57 cities. 2.2 Corporate strategy CORPORATE STRATEGY is the direction an organization takes with the objective of achieving business success in the long term. Recent approaches have focused on the need for companies to adapt to and anticipate changes in the business environment, i.e. a flexible strategy. The development of a corporate strategy involves establishing the purpose and scope of the organizations activities and the nature of the business it is in, taking the environment in which it operates, its position in the marketplace, and the competition it faces into consideration; most times analyzed through a SWOT analysis. 2.2.1Operation Support Systems: 2.2.2.1 ERP System Various ERP vendors have developed retail-specific systems which help in integrating all the functions from warehousing to distribution, front and back office store systems and merchandising. An integrated supply chain helps the retailer in maintaining his stocks, getting his supplies on time, preventing stock-outs and thus reducing his costs, while servicing the customer better. 2.2.2.2 Advanced Planning and Scheduling Systems APS systems can provide improved control across the supply chain, all the way from raw material suppliers right through to the retail shelf. These APS packages complement existing (but often limited) ERP packages. They enable consolidation of activities such as long term budgeting, monthly forecasting, weekly factory scheduling and daily distribution scheduling into one overall planning process using a single set of data The major reasons behind the development of new trends are:  Ã‚ ¶ Scalable and profitable Retail models are well established for most of the categories  Ã‚ ¶ Rapid Evolution of New-age Young Indian Consumers  Ã‚ ¶ Retail Space is no more a constraint for growth  Ã‚ ¶ Partnering among Brands, retailers, franchisees, investors and malls  Ã‚ ¶ India is on the radar of Global Retailer Suppliers 2.3 Proposed Supply Chain Strategies for Retail Industry 2.3.1 Supply Chain Strategies in Retail 2.3.1.1 Breaking Bulk-: can be done in smaller lots with a good understanding with the supplier. This can be achieved by following ways: Spatial Convenience: Strategically locating the outlet with distribution networks and warehouses located proximally. Supplier holds inventory. 2.3.1.2 Vendor Managed Inventory: In this case, the vendor himself is given the responsibility to handle the inventory. A space for the vendor is rented in the outlet, and he takes care of the shelves and the space. It is a 2-way agreement wherein the vendor gets the space to market his product by interacting one-to-one with the customers. 2.3.1.3 Point of Sale Information System: As soon as one stock keeping unit moves out of the store when purchased by a customer, the information readily flows to the supplier. He is given access to the inventory database. A re-order point can be imposed based on consumption pattern and the supplier is asked to fill the shelf upon inventory reaching the re-order point. 2.3.1.4 SRM Supplier Relationship Management: Relationship with supplier should not be a marriage of convenience. Supplier has to act in ways more than what is required. By providing special offers, discounts and incentives, the supplier savors the relationship. This also serves as a promotion strategy for the outlet. 2.4 Competitive Areas of Importance 2.4.1 Fulfillment: Stock filling is taken care of at both customer end (end product) and at the end of shelves at the shop. Reaching the customer at the right time and constant check on stocks and making sure right quantity is ordered at the right time. 2.4.2 Logistics: Safe and reliable transport at as much low price as possible. Constant contact with distribution teams (trucks, trains, etc.) and track where material is. Partnership with transportation firms so that cost and transport can be shared if the shipment does not occupy the whole truck space. 2.4.3Procurement:  (Vendors side points to take care) Strong Relationship Information sharing and updating plan change Combine vendors by minimizing transportation cost Choose vendors in proximity Optimum lot size taking vendors into confidence 2.4.4Production: Line should run smoothly without delays due to ordering and transportation (fulfillment and logistics have to be met first). 2.5 7 PS OF SERVICES 1st P: PRODUCT Product- refers to the merchandise i.e. the range of clothes. Supplementary services -include a component of fashion, life style and Ambient shopping as an addition to the core product. Today, customers buy experiences and not brands or products. 2nd P : PRICING Cost plus price and Percentage method pricing: Most widely used technique to price apparels. Ex:- COLOR PLUS and IN-HOUSE brands like those of SHOPPERS STOP or WESTSIDE use this technique. 3rd P : PLACE Apparel Retailing Business is driven by one crucial factor: Location Approachable Parking 4th P: PROMOTION Print medium. Loyalty programs In-store Visual merchandising 5th P: PEOPLE Every second a customer spends inside the store has to be viewed as Moment of Truth People is that aspect of the marketing mix which adds tangibility to the service of creating an experience 6th P: PROCESSES 7th P : PHYSICAL EVIDENCE Managing Appearance of the building Location Maintaining Temperature , Music, Lighting and Fragrance inside the store Availability of services like Prams, Wheel Chair, Valet Parking etc Stylish Stocking of Merchandise 2.6 CONCLUSION: The benefits of time-phased inventory planning are numerous. The bulk of benefits contribute to improved gross margins by minimizing inventory carrying costs, reducing lost sales through improved in-stock, reducing markdowns and store-to-store transfers with more timely product availability, and improved productivity at the distribution centers and stores. It is not uncommon for retailers to experience double-digit percentage reductions in inventory while sustaining or improving service levels. Additional benefits are increased sales and customer service as the inventory plan more readily responds to changes in the demand forecast.