Production and Inventory Management,
Production and Inventory Management,
Production and Inventory Management,
Demand for Apple iPhones in the Global Mobile Market”.
The focus of the essay needs to strongly focus around:
• Production planning from forecasting,
• Logistics
• Holding Inventory storage
• Supply & distribution chains
• Business models
• Hierarchical Planning (Business planning -> Aggregate planning -> Master Planning material and resources coordination -> Work order release -> Operations Scheduling & Control)
• Capacity utilisation and yield
• Strategic launch planning
• Launch Management
The above topic areas need to state the ones Apple use and some comparisons to other market leaders. Also case studies need to be included to highlight the major challenges and how they have been addressed. All topics building towards relating to the new or latest iPhone release. This business essay should NOT focus too much on the monetary side of Apple, more on the physical logistics, inventory storage, distribution and business models used, with all specific and accurate terminology used. Please do not scope the assignment too widely keep it on the cores of Holding inventory, and business models
The marks weighting is as below:
1. Scope, focus, description of domain, key issues 20%
2. Planning and control – processes, activities, approaches, models/methods 50%
3. Examples/Case study/research/citation/presentation 20%
4. Citation, referencing, presentation 10%
Beneath are 6 emboldened points which have to be discussed, and some primary attempts at answering them:
1. Business, market and supply chain characteristics; product characteristics; the nature and characteristics of demand, types of customers, level of variety and customisation; supply networks; production – workflow, technology issues, set ups etc; distribution. Try to identify the dominant business and market characteristics and the dominant operational factors and constraints. Link to relevant business plan, production and distribution models and which hierarchy system it uses for planning.
The mobile phone market is very large consisting of a few large players which include Apple, Samsung, Huawei, Xiaomi and Lenovo. In this report we are looking at how Apple met its consumer demand for the IPhone 6. At the end of the fourth quarter of 2014, Apple had a market share of 19.7% of the world smartphone market (IDC, 2014). The major challenge which Apple faces is meeting the large demand for their IPhones. Apple’s supply chain model is not very complex and uses a producer driven approach to meet demand. It consists of 5 stages namely sourcing, manufacturing, warehousing, distribution and return. Apple sources raw material from a variety of countries that is United States, China, other Asian countries and Europe. They then ship these raw materials to China where the IPhone is then assembled. From there, the IPhones are shipped to consumers who buy IPhones from Apple’s online store, and for other distribution the IPhones are shipped to Apple’s only warehouse in California from where the IPhones are distributed to retail stores, their direct sales force and wholesalers. The supply chain network also handles returns by consumers which handles returns on warranty, Apple’s trade in program and recycle/reuse program (SupplyChainOpz, 2013). Apple’s IPhone targets a variety of customers, from adults to every member of the family, business people who use various applications available on the IPhone and it serves as an entertainment device for younger kids (Prezi, 2013). The IPhone has little variety on the different types; they include the IPhone 6 which comes with different memory size of 16 GB, 64 GB and 128 GB. The IPhone 6 plus has a slightly larger screen size and comes with the same variety of memory as the IPhone 6. Apple’s top three business characteristics which helped the company become successful are; innovation, style and customer service (Examiner.com, 2013). Just after the launch of the IPhone 6 and IPhone 6 plus, Apple sold an incredible 10 million units just 3 days after the launch (Apple, 2014), in order to meet these sales volume apple were running 100 production lines 24/7, 200,000 workers dedicated to the production of the IPhone 6 and 6 plus producing a total of 540,000 units daily of which 140,000 were IPhone 6 plus and 400,000 were IPhone 6 (Lovejoy, 2014). One of their main issues was to meet the demand apple had and this caused long lead times from when a phone was ordered and when it was delivered. Figure 1 below shows that right after launch, in the UK customers had to wait between 3-4 weeks for both IPhone 6 and 6 plus to be delivered once they ordered a phone (Hughes, 2014).
References
Apple (2014), First Weekend iphone Sales Top 10 Million, Set New Record. Downloaded from: https://www.apple.com/uk/pr/library/2014/09/22First-Weekend-iPhone-Sales-Top-10-Million-Set-New-Record.html. Last accessed 23rd March 2015.
Examiner.com (2013), Apple’s top 3 characteristics for success. Downloaded from: http://www.examiner.com/article/apple-s-top-3-characteristics-for-success. Last accessed 23rd March 2015.
Hughes, N. (2014), Strong demand for iPhone 6 & 6 Plus persists, prompts Piper Jaffray to raise Apple price target to $135. Downloaded from: http://appleinsider.com/articles/14/11/20/strong-demand-for-iphone-6-6-plus-persists-prompts-piper-jaffray-to-raise-apple-price-target-to-135. Last accessed 23rd March 2015.
IDC (2014), Smartphone Vender Market Share, Q4 2014. Downloaded from: http://www.idc.com/prodserv/smartphone-market-share.jsp. Last accessed 23rd March 2015.
Lovejoy, B. (2014), IPhone 6 production by the numbers: 100 production lines, 200k workers, 540k phones a day. Downloaded from: http://9to5mac.com/2014/09/17/iphone-6-production-by-the-numbers-100-production-lines-200k-workers-540k-phones-a-day/. Last accessed 23rd March 2015.
Prezi (2013), Apple: Target Market. Downloaded from: https://prezi.com/u_aj_jqmjfvq/apple-target-market/. Last accessed 23rd March 2015.
SupplyChainOpz (2013), Is Apple Supply Chain Really the No. 1? A Case Study. Downloaded from: http://www.supplychainopz.com/2013/01/is-apple-supply-chain-really-no-1-case.html. Last accessed 23rd March 2015.
2. Consider the key/distinctive issues from a management perspective e.g. the need for responsiveness, cost control, stability in operations etc.
3. The major planning, scheduling and control activities: the planning horizon; forecasting; capacity management; inventory management; planning and control approaches; planning and control levels and structure; information requirements and material flows; IS/IT; performance measurement.
4. Models, methods and techniques used.
processes, activities, approaches, Business models
5. The major challenges and how they can be addressed.
“Bendgate”
so many % electronics produced do not function, standard practice to accept and anticipate this.
Our customers are in Taiwan, Korea, Japan and China,” said James B. Flaws, Corning’s vice chairman and chief financial officer. “We could make the glass here, and then ship it by boat, but that takes 35 days. Or, we could ship it by air, but that’s 10 times as expensive. So we build our glass factories next door to assembly factories, and those are overseas.” http://www.economist.com/blogs/freeexchange/2012/01/supply-chains
6. Illustrative case studies.
Successful organisations and poorly performing organisations
“The concept of country of origin for manufactured goods has gradually become obsolete.” – Pascal Lamy, the director-general of the World Trade Organization, said in a speech in October.
http://www.wsj.com/articles/SB10001424052748704828104576021142902413796
Apple, it’s worth pointing out, continues to capture most of the value added in its products. The most valuable aspects of an iPhone, for instance, are its initial design and engineering, which are done in America. Now, one problem with this dynamic is that as one scales up production of Apple products, there are vastly different employment needs across the supply chain. So, it doesn’t take lots more designers and programmers to sell 50m iPhones than it does to sell 10m. You have roughly the same number of brains involved, and much more profit per brain. On the manufacturing side, by contrast, employment soars as scale grows. So as the iPhone becomes more popular, you get huge returns to the ideas produced in Cupertino, and small returns but hundreds of thousands of jobs in China.
comparing countries instead would find that Japan is the champion of the true value added to the entire iPhone supply-chain, occupying 34 per cent, while the US gets only 6 per cent. The study is introduced on Wall Street Journal:
http://www.wsj.com/articles/SB10001424052748704828104576021142902413796
Apple’s products are assembed in massive factory complexes in China, run by Foxxconn, which also handles the production of consumer electronics for many other large players in the industry. http://www.economist.com/blogs/freeexchange/2012/01/supply-chains
After the iPhone became a success, Corning Kentucky received a flood of orders from other companies hoping to imitate Apple’s designs. Its strengthened glass sales have grown to more than $700 million a year, and it has hired or continued employing about 1,000 Americans to support the emerging market. http://www.economist.com/blogs/freeexchange/2012/01/supply-chains