1. What is Supply Chain Management about? What has to be managed? 2. Why is effective supply chain management (SCM) crucial for companies like Apple? Give examples for Apple’s successes related to effective SCM. 3. Analyze Apple’s supply chain management. How does the company use SCM to achieve operational excellence? Mention some interesting tricks used by Apple. 4. What other companies rely heavily on SCM? Give one concrete example. Made and presented for the course Management Information Systems at Viadrina University, winter term 2012/2013.

1. Apple’s SC Secret? Hoard Lasers
Management Information Systems
17.12.2012

2. Outline
1. What is SCM about? What has to be managed?
2. Why is effective SCM crucial for companies like Apple?
3. How does Apple use SCM to achieve operational excellence?
4. What other companies rely heavily on SCM?

3. Apple
o Founded April 1, 1976 by Steve Jobs, Steve Wozniak, Ronald
Wayne
o 394 retail stores
o Worldwide operations
o Electronic devices with own software and hardware
o Famous for: iMac, MacBook, iPhone and iPad
o Biggest company on the world based on market capitalization

4. Supply Chain Management
Managing flow of... ... in both directions.

5. SCM Goal Competitive advantage
o Increasing effectiveness and efficiency  operational
excellence
o Decrease operational costs
o Communication and relationships in a network of companies
Company
Company

6. Importance and value
Companies like Apple: Operational Excellence as
oHighly innovative competitive advantage
oShort product life cycle  oHigh control over costs and
continuous improvement information
oHigh number of competitors oSpeed product time to market
oLimited number of suppliers oDelivery based on demand
oInvestments needed oIncreased sales and margins
oTrade secrets oHigh quality
oWorldwide operations oReduce inventory levels
oDecreasing margins

7. Example of Apples success
related to SCM
o Design requirements: Light shining through aluminum, holes
invisible to human eye cut with hoard lasers
o Exclusive contract with laser manufacturer (impact on
competitors supply chains)
o Long-term commitment, dependability of supplier on Apple
o High volume, pressure on prices, negotiation  high margins

8. Apple´s SCM
“They have taken operational excellence to a level
never seen before.”
Driving factors of their
effective SCM
1. Closed ecosystem
2. Big discounts – due to Apple´s volume
3. Mentality to spend exorbitantly

9. Apple´s SCM
4. Apple engineers work close with suppliers – optimize
industrial process
5. Focus on a few product lines – do little in the way of
customization
6. Big weapon - $80 Billion in cash and investment
7. Tough bargaining with suppliers
o demands detailed price quote
o requires key suppliers to keep two weeks of inventory
o does not pay as long as 90 days after delivery

10. Apple´s SCM
8. Control reaches peak before announcement of new
product
o factories work overtime
o surveillance to track efficieny / ensure pre-launce
secrecy
o every handoff point is monitored
9. Retail stores give it a final operational advantage
o track demand by store / hour
o extra spending to get around bottlenecks
Enormous profits and margins due to their
Enormous profits and margins due to their
operational edge
operational edge

11. Tricks Apple uses
o innovative production techniques
o buy up all available air freight – handicapped rivals
o manufacturers are busy with Apple orders – rivals like HTC fall behind
o ship product in tomato boxes to avoid detection

12. Toyota –
SCM at its highest point
o „Toyota Production System“ - pioneer of „Just in time
delivery”
o world´s top carmaker
o hyper-efficient supply chain
 Well-intentioned BUT carries also unintended
consequences
 be exposed to supply chain surprises
 can compromise quality
 e.g. Toyota´s massive recall in 2009

13. Thank you!