The technology industry is intensely competitive. To survive in this industry, firms are forced to innovate. The entry of manufacturers who place their focus on affordability has intensified the competition in the industry. Despite the competition, there are firms that continue to thrive. Apple is among these. Today, it has risen to become the world’s most valuable company (Mark, 2014). A number of factors are responsible for Apple’s emergence as a key player in the technology industry. Among these factors are the robust logistics processes and structures that Apple has established. Through logistics, Apple is able to make products at different locations in the world and ensured that they are delivered to customers in time (Mark, 2014). There are numerous strengths and opportunities that enhance Apple’s logistical operations. The firm also faces threats and internal weaknesses which hamper growth. If Apple is to retain its position as a market leader, it needs to address the weaknesses and threats while investing in its strengths and opportunities.
Strengths
One of the key aspects of logistics is supply. This element is concerned with how a firm obtains the raw materials that it needs for its production operations (Christopher, 2016). A vast network of suppliers is one of the strengths of Apple’s logistical operations. The company’s research and development operations are based in the United States. It relies on Chinese firms for the assembly of its products (Mark, 2014). As it has set up different functions in different markets, the firm is able to leverage the conditions in these markets. For example, the cost of labor in China and other Asian markets tend to be low (Crinis & Vickers, 2016). By locating its assembly operations in China, Apple is able to make significant cost savings. While an elaborate and vast supply network enhances the operations of a firm, it is not enough to sustain growth. A firm also needs to establish mechanisms for delivering its products to customers. Apple understands the need for a solid retail and distribution network. The company has set up its own stores where customers can purchase its wide range of devices. Apple has also established warehouses and works with such providers of warehousing services as UPS and FedEx (Mark, 2014). It has also partnered with third parties for the purpose of selling its products. Moreover, Apple has joined forces with hundreds of mobile carriers in dozens of different countries. Through its distribution network, Apple has managed to deliver its devices to its customers in a convenient fashion. The distribution network has also allowed the firm to adopt a just-in-time supply model (Mark, 2014). One of the drawbacks of this model is that it is difficult to ensure that the supply matches demand. Apple’s distribution network allows it to meet demand satisfactorily.
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The third strength that Apple’s logistical processes possess concerns collaboration. Teamwork is needed for logistical processes to run smoothly. At Apple, different divisions work together to ensure that all deliverables are met (Mark, 2014). For instance, the team responsible for industrial design works closely with the production team. As a result of this collaboration, Apple’s product development typically requires just one year. This is as opposed to the situation in other firms where the product development timeline spans several years. Maintaining a tight grip on outsourced operations is another strength that can be seen in Apple’s logistical processes (Mark, 2014). Instead of allowing third party firms to whom Apple outsourced manufacturing to exercise total control, Apple worked closely with them. The relationship that Apple established with its partners offered its steep discounts. Moreover, this close supervision and collaboration enables Apple to ensure that the products are developed as conceptualized. Providing suppliers with the support and resources needed to provide components is another strength (Mark, 2014). Through this strategy, Apple insulated its production processes against component shortages.
One of the most important strengths of Apple’s logistics is the adoption of revere logistics. Basically, reverse logistics involves getting products out of the hands of consumers (Dyckhoff, Lackes & Reese, 2013). Through such initiatives as trade-ins and warranty programs, Apple’s reverse logistics system enhances the customer experience. The various reverse logistic initiatives also enabled Apple to lower the pressure that the technical support team faces (Mark, 2014). The initiatives also helped to minimize errors while offering Apple the opportunity to promptly repair defective products. The reverse logistics program also enhanced accountability since every product was tracked closely. Thanks to the program, Apple kept its customers informed regarding the warranty status of their products and the steps they needed to take as they sought to exercise the warranty (Mark, 2014). Overall, the reverse logistics program allowed Apple to offer its customers an unrivalled experience.
Weaknesses
For the most part, Apple’s logistical processes are solid and facilitate its operations. However, there are some weaknesses that hold the company back from achieving even greater success. Working with companies whose practices are questionable is one of these weaknesses. Apple relies on Foxconn for the assembly of its products. Overworking workers is among the numerous unethical practices that Foxconn engaged in (Mark, 2014). In the case study, it is noted that Foxconn would wake its employees at night and require them to work to meet targets that Apple had set. Allegations that Foxconn uses child labor have also emerged. As it continues to work with such firms as Foxconn, Apple risks damaging its reputation.
Using tactics that resemble bullying is another weakness in Apple’s logistical operations. As noted earlier, Apple tightly controls the operations of the firms with which it has partnered. The tight control limits the operations of these firms. For example, Apple usually demanded exclusive arrangements (Mark, 2014). These arrangements meant that the firms could not work with other companies. The unfair tactics that Apple uses have caused some firms to refuse to work with Apple. Partnering with firms which cannot be relied on to execute their mandate is yet another flaw in Apple’s logistical operations (Mark, 2014). For a firm’s operations to occur without hitches, all stakeholders need to do their part. Apple looks to such firms as Sharp to supply it with components. When these suppliers fail to deliver the components in time, Apple’s production process is compromised.
Opportunities
There is no doubt that Apple’s logistics processes are largely responsible for the firm’s success. To derive even more benefit from these processes, Apple should exploit the numerous opportunities available in the industry. One of these opportunities concerns collaboration with suppliers and other partners. It has been pointed out above that such partners as Foxconn have engaged in unethical practices. As a result of its partnership with this company, Apple’s image has been tainted. Moving forward, the company needs to screen its partners stringently. It should ensure that the partners share its commitment to employee welfare and quality in production. Another opportunity that Apple should exploit involves fast-tracking its response to customer concerns. In the case, it is noted that Apple sends its customers packaging for products that they wish to return within 48 hours (Mark, 2014). While this is impressive, it can be improved. Apple should work on enabling customers to return products faster. Expanding its stores to new markets is another opportunity that holds the key to driving Apple’s growth. Currently, the firm sets up stores in up-market areas where high traffic is witnessed. To broaden the reach of its products, Apple needs to establish a presence in more markets.
One of the insights that one gains from the case is that Apple relies heavily on third parties for supplies and assembly of its products. Thanks to the efforts of its partners, Apple has been able to keep costs down (Mark, 2014). However, the over-reliance on third parties exposes the firm to various risks. For example, in the event that a supplier is unable to deliver, Apple may be forced to halt production. This risk presents an opportunity for growth. Apple should consider developing its own capacities and facilities. For instance, it could set up a plant for manufacturing such phone components as screens. This will shield the firm’s operations against shocks like shortages.
Threats
The market in which Apple operates presents challenges which pose serious threats to Apple’s logistical operations. Intense competition for suppliers and logistics resources is one of the threats. Apple is forced to use innovative and desperate measures to tackle the competition. For example, Apple has had to use up nearly all air transportation services so as to lock out rivals (Mark, 2014). While this measure has worked before, it cannot be guaranteed that it will be effective again. Therefore, Apple should brace for competition with its rivals who also wish to use the limited logistics resources. The availability of adequate and competent labor is another threat that Apple needs to confront. Apple’s partners such as Foxconn go great lengths to ensure that temporary workers are available to meet the strict deadlines that Apple imposes. For example, the workers are brought in from such Asian markets as Myanmar, Cambodia and Vietnam (Mark, 2014). The workers are then made to work for long hours and are paid meager amounts. The tight timelines within which Apple aims to develop its products introduces immense pressure. Unless the firm allows its partners adequate time to develop products, it may be unable to meet its targets. Even if the partners are able to find workers, they may be forced to treat these workers unfairly. It appears that Apple’s own ambition is its biggest threat.
In conclusion, Apple’s success is indeed phenomenal. For years, the company has blazed the trail for other technology companies. Its logistics system has been at the heart of its operations. Apple has established a vast network of suppliers, assembly plants and retailers. Through this network, it has consistently managed to bring its ideas to life. The reverse logistics programs have also enhanced the logistic function. There are various threats and weaknesses which Apple must address if it is to maintain its position. The firm should particularly pressure its partners to adopt fair employee management practices and policies.
References
Christopher, M. (2016). Logistics & Supply Chain Management. London: Pearson UK.
Crinis, V., & Vickers, A. (2016). Labor in the Clothing Industry in the Asia Pacific.
Milton Park: Taylor & Francis.
Dyckhoff, H., Lackes, R., & Reese, J. (2013). Supply Chain Management and Reverse
Logistics. New York: Springer.
Mark, K. (2014). Apple Inc.: Managing a Global Supply Chain. London, Ontario:
Ivey Publishing.
