Success in operations is related to the efficiency in managing the supply chains. The idea and theory behind this statement is presented in many textbooks, and an article about Apple’s operations and supply chain management in Bloomberg Businessweek provides a detailed example of how this works to improve on timeliness and competitive advantage while reducing the same in competitors.
The article in Bloomberg Businessweek describes how Apple has achieved operational competitiveness through supply chain advantages which have translated into high margins which are double those of other hardware manufacturers (Satariano & Burrows, 2011). This is described as being the result of control, investment and planning which ensure efficiency in procurement, manufacturing, and logistics. With regard to procurement, Apple is able to get volume discounts as well as to ensure that others do not, by taking actions such as purchasing all available air freight space in the period before Christmas (Satariano & Burrows, 2011). In the manufacturing process the control and investment includes surveillance and secrecy. Manufacturing is a critical aspect of production and supply chain management, and Apple puts considerable effort into ensuring that it can be done well through planning and investment which also involves careful monitoring and keeping suppliers and executives close to this action. The logistics are kept efficient not only by ensuring the procurement and manufacturing are done in a timely and efficient manner, but also by having a lot of control over the sales of the product. This is achieved by not increasing complexity with customization as well as using their own retail stores, with even more tracking capacity, for the final destination and sales.
Key points are therefore the importance of procurement, manufacturing and logistics. The principles in the textbook describe how excellence in supply chain management requires attention to supplier relationships, the production process and getting the product to market as quickly as possible (Ferrell et al. 2011). Apple has clearly excelled in all three areas. These are similar in nature to the control, investment and planning with regard to procurement, manufacturing, and logistics which are described in the Bloomberg Businessweek article about Apple.
The Bloomberg Businessweek article can make it seem as though it would be impossible to compete with Apple, however their strengths in supply chain management which has led to their success in operations also have the potential to be their downfall.
The article describes how Apple’s procurement strategies have resulted in many of the raw material manufacturers being overly dependent on Apple because of the high volume of orders, as well as time lags and delays in being paid for supplies (Satariano & Burrows, 2011). Ferrell and others (2011) describe the importance of supplier relationships in the text, and Apple does not appear to be paying attention to that component. Manufacturing is another area where there is potential for competitors to find advantages, particularly if they focus on their relationship with suppliers and ensuring their suppliers have higher profit margins that they would in partnering with Apple. In terms of planning, the incredible expense of the investment which Apple makes in terms of its supply chain may also lead to its downfall in comparison to competitors who may opt for a more lean strategy. By reducing the costs of a solid supply chain management strategy the overall price of the product can be reduced, and this would provide a competitive advantage which Apple may not have in the future given its plans to double supply chain expenditures which are already high in comparison to other electronic manufacturers (Satariano & Burrows, 2011).
Clearly there is potential for those companies who wish to compete with Apple. Despite the attention to procurement, manufacturing and logistics there is still room for improvement, particularly with regard to supplier relationships.
- Ferrell, O.C., Hirt, G & Ferrell, L. (2011). Business, A Changing World, Fourth Edition. McGraw-Hill Ryerson.
- Satariano, A. & Burrows, P. (2011). Apple’s Supply-Chain Secret? Hoard Lasers. Bloomberg Businessweek. Retrieved from: http://www.bloomberg.com/news/articles/2011-11-03/apples-supply-chain-secret-hoard-lasers