Supply Chain Practices of Apple Inc.

II MBA B,School of Management,SASTRA University.

Devapershiya. RJanani. SMugesh. PShrividhya. RShankar. S

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Supply chain Basics

Even though quality cannot be defined, you know what quality is – Robert M. Pirsig1/18/2016

Importance of Supply Chain

Quality is much better than quantity. One home run is much better than two doubles – Steve Jobs1/18/2016

Apple Inc

Design is not just what it looks like and feels like. Design is how it works – Steve Jobs

Type Public Limited Company

Industry Computer Hardware, Computer Sostware, Consumer Electronics,Digital Distribution

Founded April 1, 1975 in Cupertino, California, US

Founders Steve Jobs, Steve Wozniak, Ronald Wayne

No of locations 453 Apple retail stores in 16 countries

Key people Arthur D.Levinson (Chairman)Tim Cook (CEO)

Products Mac, iPod, iPhone, iPad, Apple Watch, Apple TV, iOS, OS X

Services Apple Store, Online Apple Store, iTunes Store , iOS Store, Mac Ap Store, iBooks Store, iCloud, Apple Music

Revenue US$ 233.715 billion

Net Income US$ 53.394 billion

No of employees 115,000

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Steve JobsName Steve Paul Jobs

Born February 24, 1955 in San Fransisco, California

Nationality American

Occupation Co-founder, Chairman, and CEO of Apple Inc.Primary investor and CEO of PixarFounder and CEO of NeXT

Education Homestead High School,Reed College

Board member of The Walt Disney Company, Apple Inc.

Spouse Laurene Powell

Died October 5, 2011 in Palo Alto, California

I want to put a ding in the universe– Steve Jobs1/18/2016

SCM of Apple Inc.

• Apple is famous for innovation and design. But few people know that the way Apple handles inventory is also a factor that led to success.

• A research firm Gartner ranks Apple’s Supply Chain as the best supply chain in the world every year from 2010 to 2013.

• A comparison of how tech companies managed their inventory in 2011 shows Apple was performing much better than Dell, HP, Blackberry (RIM) and Motorola.

Innovation distinguishes between a leader and a follower – Steve Jobs1/18/2016

Supply Chain Planning

Sometimes when you innovate, you make mistakes. It is best to admit them quickly, and get on with improving your other innovations – Steve Jobs

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Supply Chain Model

Be a yardstick of quality. Some people aren't used to an environment where excellence is expected – Steve Jobs1/18/2016

Supply chain or Value Chain?

We made the buttons on the screen look so good you'll want to lick them – Steve Jobs1/18/2016

Apple’s Supply Chain Score

Don’t let the noise of others’ opinions drown out your own inner voice– Steve Jobs1/18/2016

Apple iPhone vs iPad Value Chain

Distribution of value for iPhone

Distribution of value for iPad

It's really hard to design products by focus groups. A lot of times, people don't know what they want until you show it to them – Steve Jobs1/18/2016

Top 25 Companies based on Supply Chain

Have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.

– Steve Jobs1/18/2016

Top 10 OEM Manufacturers

Sometimes life's going to hit you in the head with a brick. Don't lose faith. I'm convinced that the only thing that kept me going was that I loved what I did– Steve Jobs1/18/2016

2011 2012 2013 2014 2015 Sales/Revenue 108.6B 155.97B 170.87B 183.24B 231.28B Cost of Goods Sold (COGS) incl. D&A 64.08B 87.92B 107.24B 112.55B 142.26BCOGS excluding D&A 62.26B 84.64B 100.48B 104.61B 131BDepreciation & Amortization Expense 1.81B 3.28B 6.76B 7.95B 11.26BDepreciation 1.62B 2.6B 5.8B 6.85B 9.96BAmortization of Intangibles 192M 677M 960M 1.1B 1.3B Gross Income 44.52B 68.06B 63.63B 70.69B 89.03B

2011 2012 2013 2014 2015 SG&A Expense 10.03B 13.42B 15.31B 18.03B 22.4BResearch & Development 2.43B 3.38B 4.48B 6.04B 8.07BOther SG&A 7.6B 10.04B 10.83B 11.99B 14.33BUnusual Expense 158M 0 - 205M 0EBIT after Unusual Expense (158M) 0 - (205M) 0Non Operating Income/Expense (650M) 41M 352M (380M) 3.7BNon-Operating Interest Income 519M 1.09B 1.62B 1.8B 2.92B Interest Expense 0 - 136M 384M 733MGross Interest Expense 0 - 136M 384M 733M Pretax Income 34.21B 55.76B 50.16B 53.48B 72.52BIncome Tax 8.28B 14.03B 13.12B 13.97B 19.12BIncome Tax - Current Domestic 4.65B 8.42B 10.42B 9.48B 13BIncome Tax - Current Foreign 769M 1.2B 1.56B 2.15B 4.74BIncome Tax - Deferred Domestic 3.04B 4.9B 1.57B 3.01B 3.19BIncome Tax - Deferred Foreign (167M) (490M) (426M) (658M) (1.81B)Consolidated Net Income 25.92B 41.73B 37.04B 39.51B 53.39B Net Income 25.92B 41.73B 37.04B 39.51B 53.39B EPS (Basic) 4.01 6.38 5.72 6.49 9.28Basic Shares Outstanding 6.47B 6.54B 6.48B 6.09B 5.75B EPS (Diluted) 3.95 6.31 5.68 6.45 9.22Diluted Shares Outstanding 6.56B 6.62B 6.52B 6.12B 5.79B EBITDA 36.31B 57.91B 55.08B 60.6B 77.89B

Fiscal year is October-September. All values USD millions.

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1/18/2016The only way to do great work is to love what you do. If you haven't found it yet, keep

looking. Don't settle. – Steve Jobs

1/18/2016The people who are crazy enough to think they can change the world are the ones who

do – Steve Jobs

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That’s been one of my mantras – focus and simplicity. Simple can be harder than complex; you have to work hard to get your thinking clean to make it simple – Steve Jobs

Financials in Numbers

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I’m the only person I know who’s lost a quarter of a billion dollars in one year…it’s very character building – Steve Jobs

Milestones

Apple Global Suppliers

The heaviness of being successful was replaced by the lightness of being a beginner again – Steve Jobs1/18/2016

Cost and Time Comparison

If today was the last day of my life would I want to do what I’m about to do today? – Steve Jobs

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Challenges - Apple Supply Chain• Like other supply chains, Apple’s Supply chain has very high risk associated

with it.– Global economy could affect the Company.– Some resellers may also distribute products from the competing

manufacturers.– Inventories can become obsolete or exceed the anticipated demand.– Some components are currently obtained from the single or limited

sources.– Some custom components are not common to the rest of the

industries.– Ability to obtain components in sufficient quantities is important.– Supply chain disruption such as the natural and man made disasters

can be serious.– It depends on logistical services provided by outsourcing partners..

I’m proud of many of the things we haven’t done. Innovation is saying no to a thousand things – Steve Jobs1/18/2016

Porter’s Five Force Model of Apple Inc.

Being the richest man in the cemetery doesn’t matter to me. Going to bed at night saying we’ve done something wonderful, that’s what matters to me – Steve Jobs1/18/2016

Porter’s Five Force Model of Apple Inc. Contd.

Do you want to spend the rest of your life selling sugared water, or do you want a chance to change the world – Steve Jobs1/18/2016

Apple’s Supply Chain Strategies

I’m convinced that about half of what separates successful entrepreneurs from the non-successful ones is pure perseverance – Steve Jobs1/18/2016

Digital Content Delivery - Issues

The Change in Philosophy– Many components were often sourced from single

supplier – Lack of parts to fulfill the order– Faulty structure which leads to poor, low forecasts– Self-competing products which ate away its own

profits– Holding Inventory worth $437 million, which was a

month’s total worth

Remembering you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There’s no reason not to follow

your heart – Steve Jobs1/18/2016

Digital Content Delivery – Issues (Contd.)

Locking in the Supply Chain : The iPod Nano– Faced software and security bugs, like Microsoft– Predatory supply chain– Joint investment with Samsung Electronics for the

production of flash chips– Locked in supplies of flash chips from Samsung

I think if you do something and it turns out pretty good, then you should go do something else wonderful, not dwell on it for too long. Just figure out what’s next–

Steve Jobs1/18/2016

Amazon vs Apple – Some metrics

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Conclusion

• The result from the analysis of Apple’s processes, challenging issues and complexities indicates that the success of its supply chain operations depends on how well they manage the supplier relationship.

• This includes early supplier involvement in new product development, close communication and supplier performance improvement/evaluation.

• Then, Apple Inc is dubbed as "King of Outsourcing" .

Stay hungry, stay foolish – Steve Jobs1/18/2016

Video – Story of iPhone

• Story of an iPhone- Analytics in Supply Chain Decisions - YouTube[via torchbrowser.com].mp4

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• Credits – Shankar. SContact details:• Email id – shankarnaren91@gmail.com• Mobile - 9600246242

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