Supply chain management & case study
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case study on apple supply chain
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Supply chain management & case study
- 1. DHRUV PATEL (11BIE024) HARDIK MEHTA (11BIE037) MALAV BHATT (11BIE056)
- 2. Supply Chain is also referred to as the logistics network Supply chain comprises of : ◦ Suppliers, manufacturers, warehouses, distribution centers and retail outlets – “facilities” ◦ Raw materials ◦ Work-in-process (WIP) inventory ◦ Finished products that flow between the facilities
- 3. Suppliers Manufacturers Warehouses & Distribution Centers Customers Material Costs Transportation Costs Transportation Costs Transportation CostsInventory CostsManufacturing Costs
- 4. Suppliers Manufacturers Warehouses & Distribution Centers Customers Material Costs Transportation Costs Transportation Costs Transportation CostsInventory CostsManufacturing Costs Plan Source Make Deliver Buy
- 5. A set of approaches used to efficiently integrate ◦ Suppliers ◦ Manufacturers ◦ Warehouses ◦ Distribution centers So that the product is produced and distributed ◦ In the right quantities ◦ To the right locations ◦ And at the right time System-wide costs are minimized and Service level requirements are satisfied
- 6. 1960’s - Inventory Management Focus, Cost Control 1970’s - MRP & BOM - Operations Planning 1980’s - MRPII, JIT - Materials Management, Logistics 1990’s - SCM - ERP - “Integrated” Purchasing, Financials, Manufacturing, Order Entry 2000’s - Optimized “Value Network” with Real-Time Decision Support; Synchronized & Collaborative Extended Network
- 7. Uncertainty is inherent to every supply chain ◦ Travel times ◦ Breakdowns of machines and vehicles ◦ Weather ◦ Local politics, labor conditions, border issues The complexity of the problem to globally optimize a supply chain is significant ◦ Minimize internal costs ◦ Minimize uncertainty ◦ Deal with remaining uncertainty
- 8. Forecasts are never right ◦ Very unlikely that actual demand will exactly equal forecast demand The longer the forecast , the worse the forecast ◦ A forecast for a year from now will never be as accurate as a forecast for 3 months from now Aggregate forecasts are more accurate
- 9. Purchasing Manufacturing Distribution Customer Service/ Sales Few change- overs Stable schedules Long run lengths High inventories High service levels Regional stocks SOURCE MAKE DELIVER SELL Low pur- chase price Multiple vendors Low invent- ories Low trans- portation
- 10. STRATEGY- Make to Stock ◦ WHEN TO CHOOSE- standardized products, relatively predictable demand ◦ BENEFITS - Low manufacturing costs; meet customer demands quickly STRATEGY- Make to Order ◦ WHEN TO CHOOSE- customized products, many variations ◦ BENEFITS - Customization; reduced inventory; improved service levels
- 11. STRATEGY- Configure to Order ◦ WHEN TO CHOOSE- many variations on finished product; infrequent demand ◦ BENEFITS - Low inventory levels; wide range of product offerings; simplified planning STRATEGY- Engineer to Order ◦ WHEN TO CHOOSE- complex products, unique customer specifications ◦ BENEFITS - Enables response to specific customer requirements
- 12. Delivery Performance ◦ 16%-28% Improvement Inventory Reduction ◦ 25%-60% Improvement Fulfillment Cycle Time ◦ 30%-50% Improvement Forecast Accuracy ◦ 25%-80% Improvement
- 13. Overall Productivity ◦ 10%-16% Improvement Lower Supply-Chain Costs ◦ 25%-50% Improvement Fill Rates ◦ 20%-30% Improvement Improved Capacity Realization ◦ 10%-20% Improvement
- 14. Analysis of Apple Supply Chain core processes, challenging issues and complexities of its operations.
- 17. 1. Number of Items (Stock Keeping Unit)
- 22. The results 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. The reason is that Amazon's distribution environment is mathematically solved through the optimization method. Typically, they have determined how many facilities they should have, where serves which market, items/quantity stored in each location, how to manage transportation between warehouse-to-warehouse and warehouse to customers in order to minimize cost and increase service level.
- 23. • Global economy could affect the Company. • Inventories can become obsolete or exceed the anticipated demand. • Some components are currently obtained from the single or limited sources. • Company depends on logistical services provided by outsourcing partners.
- 24. Thank-U
Notes de l'éditeur
- This figure shows the working of Supply Chain The whole system is divided into 4 parts------ In supplre first the raw mat comes nd the raw mat is moved to man. As per the req. Of product. And assemble Now from assemble products are goes to ware houses and dis. Cntrs ….and from that chentr the product goes to cust. & online sevieces s
- Supply chain management plays significant role globally its minimize the costs, minimize uncertainity and solve the remaining uncertainity
- Purchasing – low purchase price Manufacturing – stable shedules, long run lengths Distribution – low inventory so low transportation Sales – high inventorie so transportation cost is high
- Standardized products – so we have to apply the make to stock strategy the benefit is low manufacturing cost When customized product is produce then we have to apply make to order so the inventory is low
- When final product have many variation then we have to apply the configure to order so the wide range of product available When the complex producs are required then we have to apply engineer to order so the we fulfiles the customer requirement
- To analyze apples supply chain process we look at its case study.
- Threre are 5 parts of sup chain plannin R&D: R&D department is responsible for doing inovations and it also takes care of all the Patent Licensing related issues. CT: They draw out their Pros and Cons of product through Market reasearch , assembling Cost Data to find the potential scope of product in the market Pre Lnch : Design software for new product, determine launch quantity according to public demand and based on that they carry out the whole prodctn planning Launch: --- Quaterly Review – after every quarter they review inventory level and based on that they devise new strategies for upcoming quarter.
- As shown in fig Apple Inc purchases raw materials from various sources like then gets them shipped to an assembling plant in China. for those who buy from the Apple's Online Store after assembly the products will be shipped directly to consumers (via UPS/Fedex) For other distribution channels such as retail stores, direct sales and other distributors, Apple Inc will keep products at, California (where central warehouse and call center are located) and supply products from there. At the end of product's life or any warranty claim , customer can send products back to the nearest Apple Stores or any recycling facilities.
- Demand forecasting in case of amazon is difficult.
- Apple has about 156 key vendors across the globe, this amount of suppliers is quite manageable. while amazon has around 3 Lakh vendors.
- From the rough estimate, Amazon has seasonal products such as summer ware. They can only sell it for 3 months max. The life of Apple's key products are way more than 12 months So the demand forecast of seasonal, short life cycle products is very difficult to estimate.
- Apple inc has the central warehouse in California but Amazon has approximately 28 warehouses acr. What Apple has to do is to synchronize data between the central warehouse and its own 246 stores + customers. With appropriate level of the automation, this kind of operations can be done efficiently.
- The above picture shows that the inventory turnover of Amazon and Apple is 10 and 59 respectively From the face value, Apple seems to be more efficient. Anyway, there is a reason for this. Apple Inc is now a marketing company with no manufacturing facility but Amazon is a distributor of general merchandise. It's pretty natural that Amazon has to keep more stocks then the inventory turnover is much lower.
- Global economy– -- instance If International Relations btween US n China gets bad then it will highly affect Apple. --- could happnen Because of Flaw in Forecasting or due to new technology ---Due to this compared to amazon apple becomes highly depandant on its suppliers.