Fortune 500_Apple Supply chain analysis
- 1. FB 500 Company Analysis Team 1 Ankur Kale Abhi Rampal Nitin Maurya Rajagopal Srinivasan Rekha Masilamani Sumita Das
- 2. Agenda • An Introduction • Financial Information and Supply Chain Laurels – Consolidated income statement/Spend – Organization Reporting • Supply chain goals & objectives : iPhone – How Supply Chain works? – Supplier Selection – Worldwide Supplier Base • SWOT Analysis • Challenges • References
- 3. An Introduction • 1971: Started by Steve Jobs, Steve Woznaik, Ronald Wayne as Apple Computer Inc. • 1980 : Went Public, Worth $1.8bn in 1980 • 1983: Entered into Fortune 500 companies • 2013: Valued at $171 bn, most valuable company in the world • Revolutionized the world 4 times: – 1982: Lisa, World’s first PC – 2001: iPod, First Hard Disk Based Music Player. – 2007: iPhone, first capacitive touchscreen based Phone – 2010: iPad, Not the first, but revolution in tablets. • Leading markets with largest shares are America, Europe and Greater China. • USP: hardware and software products are tightly woven together for a seamless experience • Earns $300,000 per minute * Source: Apple Annual report 2014
- 4. Financial Info & Supply Chain Laurels • Revenue: $183bn (7%) • Profit: $39.5bn ( 6%) • Gartner Best Supply chain for last 8 years (since 2007) • Inventory Turns: Every 5 Days, 73 Inventory turns per year. • Dell: Every 10 days, 36 Inventory Turns per year. • McDonalds: Every 2.75 days, 142 Inventory turns per year. • When Tim Cook joined, he said –“ Slash Inventory, Cut Down warehouses -> let suppliers compete” • CENTRALIZED SUPPLY CHAIN STRUCTURE (HQ: CUPERTINO) • CEO – TIM COOK – SVP: OPERATIONS – JEFF WILLIAMS » DIRECTOR, VENDOR STRATEGY – MICHELLE BROWN » DIRECTOR, OPERATIONS – TARA BUNCH » VP, Apple Care – Susan Gallagher 36% 22% 16% 8% 6% 12% 2014 Sales Mix by Operating Segment America Europe Greater China Japan Asia Pacific Retail 56% 17% 13% 1% 10% 3% 2014 Sales Mix by Product Segment iPhone iPad Mac iPod iTunes, Software services Accessories *Source:AppleAnnualreport2014 • ONLY 154 suppliers
- 6. Design & Development Sourcing USA , China, Europe , Asia China (50/50 split between Foxconn & Pegatron) Manufacturing/ Assembling Warehouse in, California Intermediate warehouses via UPS/FEDEX for online stores. Supply Chain - iPhone
- 7. iPhone 1 | iPhone3 | Iphone 3gs | iPhone 4 | iPhone 5 | iPhone 6 iPhone Models Iphone Iphone 3 Iphone 3gs Iphone 4 Iphone 5 Iphone 6 Release Date Jan-07 Jul-08 Jun-09 Oct-11 Sep-13 Sep-14 Features Full Touchscreen with icon based interface 3G Speed Data High Speed Data LED Screen Fingerprint Scanner NFC New iOS GPS System Siri Nano Sim Nano SIM Apple Store Updated Camera with HD Recording Motion Data Processor Barometer No Front Camera Micro- SIM Card Lightening Connector Multitouch Features Stainless Steel Aluminum Front Camera Sapphire Crystal Lens Features- iPhone
- 8. Supplier Selection • Location of Supplier • Reputation and Quality Standards • Alignment with Apple’s Goals and strategies • Deliveries as per Apple’s Crunch timelines • Agile and Flexible as per the changing market. • Trust and NDA, as most of the apple product are under-covers before release. • Strategic selection of suppliers – Risk Diversification – Capacity Management – Supplier Innovation • Apple Maintains a SID(Supplier Information Database): includes potential and current suppliers, capabilities, Supplier diversity certification, Product and Service Descriptions, UNSPSC Code, contact info.
- 9. Supplier Base - Worldwide China - 349 USA -60 Taiwan -42 South Korea -32 Malaysia -21Japan - 139
- 10. Strategic Suppliers List Component Supplier Location Sapphire Crystal Components GT Advanced Technologies Mesa, Arizona Chips Samsung Austin, TX Chips (New) Global Foundries Malta, New York Chips Texas Instruments Richardson, TX Chips Maxim Integrated San Jose, CA Corning Glass Corning Harrodsburg, KY Display Japan Display Inc. Japan Display Innolux Taiwan Display LG South Korea Storage Toshiba Japan Storage SK Hynix South Korea Touch ID TSMC Taiwan NFC chip NXP Netherlands Gyroscope -Old STMicroelectronics France Gyroscope -New Invensense CA Assembly Foxconn Taiwan (Assembly in China) Pegatron Taiwan (Assembly in China) New Assembly Foxconn Brazil
- 11. SWOT Analysis Strengths • Customer loyalty • Innovative Products • Efficient Supply Chain • R & D investments • Marketing and Advertisements • Product Focus Weakness • Incompatible with other OS • Market Share decreasing • Limited Products • Relatively high prices • Law Suits Opportunity • Expanding Mobile Device Market • Rising Demand in Cloud Services. • Innovative Approach towards problems- Macbook • iOS for Car/TV Threats • Rapid Changes in Technology • Android OS Market • Limited Customization Options • Prices dependent on Global economy • Fluctuating Dollar Value
- 12. Challenges • Rapidly changing Technology market. • Decreasing market share • Global Supply Management • Governance issues related to different suppliers and different countries. • Increasing demand/waiting times resulting in unsatisfied customers. • Fluctuating world economics • Too many eggs in one basket – Suppliers • Manufacturing Complexities causing disruptions in Supply Chain. • High logistics cost with only 1 warehouse – 1 Assembling country – higher lead times. • Increasing labor issues in Chinese assembling plants.
- 13. References • Source: http://appleinsider.com/articles/15/01/28/apples-rd-spending-shoots-up-42-year-over-year-hit-new-19b- record-in-q1 • http://financesonline.com/how-iphone-is-made/ • http://www.supplychain247.com/article/apple_supply_chain_strong_as_iphone_6_closes_in/supply_chain_optim ization • http://www.opsrules.com/supply-chain-optimization-blog/bid/359149/iPhone-6-Apple-Supply-Chain-Revisited • http://www.tradegecko.com/blog/apple-had-the-best-supply-chain-in-the-world-for-the-last-four-years-here-is- what-you-can-learn-from-it • http://www.forbes.com/sites/timworstall/2014/05/07/explaining-the-economics-of-apples-sapphire-supply- chain/ • http://www.usanfranonline.com/resources/supply-chain-management/apples-process-improvements-make-it-a- global-supply-chain-leader/#.VR8Q3hPF_XI • http://bgr.com/2014/11/12/iphone-6-vs-android-sales/ • https://www.yahoo.com/tech/by-the-numbers-iphone-vs-android-97842025474.html • Source: Apple Annual report 2014