Supply Chain Practices of

Apple Inc.

Devapershiya. R II MBA B,
Janani. S School of
Mugesh. P Management,
Shrividhya. R SASTRA
Shankar. S University.
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 Supply chain Basics

1/18/2016Even though quality cannot be defined, you know what quality is – Robert M. Pirsig
 Importance of Supply Chain

Quality is much better than quantity. One home run is much better than two doubles –
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Steve Jobs
 Apple Inc
Type Public Limited Company
Industry Computer Hardware, Computer Sostware,
Consumer Electronics,
Digital Distribution
Founded April 1, 1975 in Cupertino, California, US
Founders Steve Jobs, Steve Wozniak, Ronald Wayne
No of locations 453 Apple retail stores in 16 countries
Key people Arthur D.Levinson (Chairman)
Tim Cook (CEO)
Products Mac, iPod, iPhone, iPad, Apple Watch, Apple TV, iOS, OS X
Services Apple Store, Online Apple Store, iTunes Store , iOS Store, Mac
Ap Store, iBooks Store, iCloud, Apple Music
Revenue US$ 233.715 billion
Net Income US$ 53.394 billion
No of employees 115,000

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Design is not just what it looks like and feels like. Design is how it works – Steve Jobs
 Steve Jobs
Name Steve Paul Jobs
Born February 24, 1955 in San Fransisco, California
Nationality American
Occupation Co-founder, Chairman, and CEO of Apple Inc.
Primary investor and CEO of Pixar
Founder and CEO of NeXT

Education Homestead High School,

Reed College

Board member of The Walt Disney Company, Apple Inc.

Spouse Laurene Powell
Died October 5, 2011 in Palo Alto, California

1/18/2016 I want to put a ding in the universe– Steve Jobs

 SCM of Apple Inc.
• Apple is famous for innovation and design. But
few people know that the way Apple handles
inventory is also a factor that led to success.
• A research firm Gartner ranks Apple’s Supply
Chain as the best supply chain in the world every
year from 2010 to 2013.
• A comparison of how tech companies managed
their inventory in 2011 shows Apple was
performing much better than Dell, HP, Blackberry
(RIM) and Motorola.
1/18/2016 Innovation distinguishes between a leader and a follower – Steve Jobs
 Supply Chain Planning

Sometimes when you innovate, you make mistakes. It is best to admit them quickly,
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and get on with improving your other innovations – Steve Jobs
 Supply Chain Model

Be a yardstick of quality. Some people aren't used to an environment where excellence is

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expected – Steve Jobs
 Supply chain or Value Chain?

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We made the buttons on the screen look so good you'll want to lick them – Steve Jobs
 Apple’s Supply Chain Score

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Don’t let the noise of others’ opinions drown out your own inner voice– Steve Jobs
 Apple iPhone vs iPad Value Chain

It's really hard to design products by focus groups. A lot of times, people don't know
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what they want until you show it to them – Steve Jobs
 Top 25 Companies based on Supply
Chain

Have the courage to follow your heart and intuition. They somehow already know
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what you truly want to become. Everything else is secondary.
– Steve Jobs
 Top 10 OEM Manufacturers

Sometimes life's going to hit you in the head with a brick. Don't lose faith. I'm convinced
1/18/2016 that the only thing that kept me going was that I loved what I did– Steve Jobs
 Fiscal year is October-September. All values USD millions.
2011 2012 2013 2014 2015
Sales/Revenue 108.6B 155.97B 170.87B 183.24B 231.28B
Cost of Goods Sold (COGS) incl. D&A 64.08B 87.92B 107.24B 112.55B 142.26B
COGS excluding D&A 62.26B 84.64B 100.48B 104.61B 131B
Depreciation & Amortization Expense 1.81B 3.28B 6.76B 7.95B 11.26B
Depreciation 1.62B 2.6B 5.8B 6.85B 9.96B
Amortization of Intangibles 192M 677M 960M 1.1B 1.3B
Gross Income 44.52B 68.06B 63.63B 70.69B 89.03B
2011 2012 2013 2014 2015
SG&A Expense 10.03B 13.42B 15.31B 18.03B 22.4B
Research & Development 2.43B 3.38B 4.48B 6.04B 8.07B
Other SG&A 7.6B 10.04B 10.83B 11.99B 14.33B
Unusual Expense 158M 0 - 205M 0
EBIT after Unusual Expense (158M) 0 - (205M) 0
Non Operating Income/Expense (650M) 41M 352M (380M) 3.7B
Non-Operating Interest Income 519M 1.09B 1.62B 1.8B 2.92B
Interest Expense 0 - 136M 384M 733M
Gross Interest Expense 0 - 136M 384M 733M
Pretax Income 34.21B 55.76B 50.16B 53.48B 72.52B
Income Tax 8.28B 14.03B 13.12B 13.97B 19.12B
Income Tax - Current Domestic 4.65B 8.42B 10.42B 9.48B 13B
Income Tax - Current Foreign 769M 1.2B 1.56B 2.15B 4.74B
Income Tax - Deferred Domestic 3.04B 4.9B 1.57B 3.01B 3.19B
Income Tax - Deferred Foreign (167M) (490M) (426M) (658M) (1.81B)
Consolidated Net Income 25.92B 41.73B 37.04B 39.51B 53.39B
Net Income 25.92B 41.73B 37.04B 39.51B 53.39B
EPS (Basic) 4.01 6.38 5.72 6.49 9.28
Basic Shares Outstanding 6.47B 6.54B 6.48B 6.09B 5.75B
EPS (Diluted) 3.95 6.31 5.68 6.45 9.22
Diluted Shares Outstanding 6.56B 6.62B 6.52B 6.12B 5.79B
EBITDA 36.31B 57.91B 55.08B 60.6B 77.89B
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 The only way to do great work is to love what you do. If you haven't found it yet, keep
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looking. Don't settle. – Steve Jobs
The people who are crazy enough to think they can change the world are the ones who
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 Financials in Numbers

That’s been one of my mantras – focus and simplicity. Simple can be harder than
complex;
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you have to work hard to get your thinking clean to make it simple – Steve Jobs
 Milestones

I’m the only person I know who’s lost a quarter of a billion dollars in one year…it’s very
1/18/2016 character building – Steve Jobs
 Apple Global Suppliers

The heaviness of being successful was replaced by the lightness of being a beginner
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again – Steve Jobs
 Cost and Time Comparison

If today was the last day of my life would I want to do what I’m about to do today? –
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Steve Jobs
 Challenges - Apple Supply Chain
• Like other supply chains, Apple’s Supply chain has very high risk associated
with it.
– Global economy could affect the Company.
– Some resellers may also distribute products from the competing
manufacturers.
– Inventories can become obsolete or exceed the anticipated demand.
– Some components are currently obtained from the single or limited
sources.
– Some custom components are not common to the rest of the
industries.
– Ability to obtain components in sufficient quantities is important.
– Supply chain disruption such as the natural and manmade disasters
can be serious.
– It depends on logistical services provided by outsourcing partners..

I’m proud of many of the things we haven’t done. Innovation is saying no to a

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thousand things – Steve Jobs
Porter’s Five Force Model of Apple Inc.

Being the richest man in the cemetery doesn’t matter to me. Going to bed at night
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saying we’ve done something wonderful, that’s what matters to me – Steve Jobs
Porter’s Five Force Model of Apple Inc.
Contd.

Do you want to spend the rest of your life selling sugared water, or do you want a
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chance to change the world – Steve Jobs
 Apple’s Supply Chain Strategies

I’m convinced that about half of what separates successful entrepreneurs from the
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non-successful ones is pure perseverance – Steve Jobs
 Digital Content Delivery - Issues
The Change in Philosophy
– Many components were often sourced from single
supplier – Lack of parts to fulfill the order
– Faulty structure which leads to poor, low forecasts
– Self-competing products which ate away its own
profits
– Holding Inventory worth $437 million, which was
a month’s total worth

Remembering you are going to die is the best way I know to avoid the trap of thinking
you have something to lose. You are already naked. There’s no reason not to follow
1/18/2016 your heart – Steve Jobs
 Digital Content Delivery – Issues
(Contd.)
Locking in the Supply Chain : The iPod Nano
– Faced software and security bugs, like Microsoft
– Predatory supply chain
– Joint investment with Samsung Electronics for the
production of flash chips
– Locked in supplies of flash chips from Samsung

I think if you do something and it turns out pretty good, then you should go do
something else wonderful, not dwell on it for too long. Just figure out what’s next–
1/18/2016 Steve Jobs
 Amazon vs Apple – Some metrics

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 Conclusion
• The result 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.
• Then, Apple Inc is dubbed as "King of
Outsourcing" .
Stay hungry, stay foolish – Steve Jobs
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 Video – Story of iPhone
• Story of an iPhone- Analytics in Supply Chain
Decisions - YouTube[via
torchbrowser.com].mp4

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• Credits – Shankar. S
Contact details:
• Email id – shankarnaren91@gmail.com
• Mobile - 9600246242

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