fb500- apple_supply chain analysis
TRANSCRIPT
FB 500 Company Analysis
Team 1Ankur Kale
Abhi RampalNitin Maurya
Rajagopal SrinivasanRekha Masilamani
Sumita Das
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
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
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%
2014Sales Mix by Operating Segment
AmericaEuropeGreater ChinaJapanAsia PacificRetail
56%
17%
13%
1% 10%
3%
2014Sales Mix by Product Segment
iPhone
iPad
Mac
iPod
iTunes, Software services
Accessories
* S
ourc
e: A
pple
Ann
ual r
epor
t 201
4
• ONLY 154 suppliers
Consolidated Income Statement
Design & Development Sourcing
USA , China, Europe , AsiaChina (50/50 split between Foxconn & Pegatron)
Manufacturing/ Assembling
Warehouse in, California
Intermediate warehouses via UPS/FEDEX for online stores.
Supply Chain - iPhone
iPhone 1 | iPhone3 | Iphone 3gs | iPhone 4 | iPhone 5 | iPhone 6
iPhone Models Iphone Iphone 3 Iphone 3gs Iphone 4 Iphone 5 Iphone 6Release 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 CardLightening Connector
Multitouch Features Stainless Steel Aluminum
Front CameraSapphire Crystal Lens
Features- iPhone
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.
Supplier Base - Worldwide
China - 349 USA -60 Taiwan -42 South Korea -32 Malaysia -21Japan - 139
Strategic Suppliers ListComponent Supplier Location
Sapphire Crystal Components GT Advanced Technologies Mesa, ArizonaChips Samsung Austin, TXChips (New) Global Foundries Malta, New YorkChips Texas Instruments Richardson, TXChips Maxim Integrated San Jose, CACorning Glass Corning Harrodsburg, KYDisplay Japan Display Inc. JapanDisplay Innolux TaiwanDisplay LG South KoreaStorage Toshiba JapanStorage SK Hynix South KoreaTouch ID TSMC TaiwanNFC chip NXP NetherlandsGyroscope -Old STMicroelectronics FranceGyroscope -New Invensense CAAssembly Foxconn Taiwan (Assembly in China) Pegatron Taiwan (Assembly in China)New Assembly Foxconn Brazil
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
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.
References• Source: http://appleinsider.com/articles/15/01/28/apples-rd-spending-shoots-up-42-year-over-year-hit-new-19b-rec
ord-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_optimization
• 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-glo
bal-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