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Worth 50% of module mark

2500-3000 words

Choose an organisation and investigate and report on how it has applied the 5
configuration components of Strategic Supply Chain Management. Your research
should include a wide range of references from academic, trade and mainstream
literature.

Apple Inc.

IPAD

Demand Forecasting

Apple issued a press release on Monday announcing that 300,000 iPads were sold
on launch day.  Many analysts were forecasting much higher first-day sales in the
range of 400,000 to 500,000 units.  Some were more bullish, such as Piper Jaffray
analyst Gene Munster who issued a pre-launch forecast of 600,000-700,000 units. 
After reviewing the results from the opening weekend, Munster revised his first year
sales estimates downward on Monday from 5.6M to 4.3M units.  The research firm
iSuppli has a more aggressive forecast of 7.1M units in year 1, doubling to over 14M
in year 2. 

I have not seen an updated report of sales results, but the ad network Chitika Labs
(not to be confused with Chiquita bananas), has a real-time web site upon which it is
projecting iPad sales.  The Chitika site also displays sales estimates by state.  Not
surprisingly, California, Texas and New York are in the leadership position for device
sales.

Apple did not comment on whether the 300,000 units were higher or lower than
expectations.  However, I suspect Apple had very good insights into true customer
demand as it was able to monitor pre-orders through its online store.  Apple began
accepting pre-orders on March 12th for launch day home delivery or in store-pickup.
Pre-Order functionality in web sites enables manufacturers and retailers to gain
unparalleled insights into demand for future product launches, which allows for better
alignment of supply chain resources to reduce out-of-stocks or excess inventory.

Manufacturing

Back in March there was much speculation about whether the iPad launch would be
delayed due to manufacturing bottlenecks.   Cannacord Adams analyst Peter Misek
stated that “An unspecified production problem at the iPad’s manufacturer, Hon Hai
Precision, will likely limit the launch region to the US and the number of units
available to roughly 300K in the month of March, far lower than the company’s initial
estimate of 1,000K units.”  The manufacturing challenges seemed to be confirmed
by Apple’s original decision to limit pre-orders of the devices to two per customer.

Apple has been praised and scolded for its supply chain prowess over the past 12
months.  The company earned the distinction of being #1 in AMR’s Top 25 Supply
Chains for 2009.  However, Apple disclosed in its Supplier Responsibility Progress
Report in early February that it had uncovered several infractions by contract
manufacturers including the hiring of underage employees; working excessive hours
and exposing factory workers to poisonous chemicals.  However, the social
responsibility issues did not pose a challenge to the success of iPad’s launch,
perhaps because many people praised Apple for proactively identifying the human
rights violations and quickly disclosing them to the public.
Sourcing

Much like the iPhone, iTouch and iPod, Apple’s new iPad contains a significant
amount of content from third parties.  Both ChipWorks and iFixIt conducted virtual
teardowns of the device based upon photos provided by the US Federal
Communications Commission (FCC). 

 Power Supply by Foxlink Technology


 WiFi and Bluetooth antenna by Broadcom
 Flash Memory from Samsung and Toshiba
 A4 Processor designed by Apple and manufactured by Samsung Electronics
 Audio processor by Cirrus Logic
 Touch Screen controller by Broadcom
 Display by LG Display, Samsung and Seiko Epson

Although many of the components contained in the iPad are sourced from foundries
in Asia, the device is not available for sale in countries.  That has not stopped
enthusiasts in China from obtaining the device through China’s robust grey market.

Analysis released today by iSuppli suggests that although the iPad is priced at $499,
the actual hardware component costs only total $259.60.  Of course, this analysis
does not include the R&D investment for the design nor any of the software and
applications pre-loaded onto the device.

Aftermarket

In addition to the 300,000 iPads sold on the first day there were 1 million applications
downloaded from the AppStore and 250,000 titles purchased at the new iBook
store.  Apple expects to enjoy significant uplift from the sale of music, movies, books
and applications by its iPad user community, which is the genius the behind the
business model.  Not everyone buys into Apple’s business model for the iPad.  I did
find a number of dissenters amongst the blogs I reviewed.  For example, Cory
Doctorow of Boing Boing posted an article entitled “Why I won’t buy an iPad (and
you shouldn’t either),” in which he chastises Apple for its Wal-Martization of the
software supply chain.  “I don't want my universe of apps constrained to the stuff that
the Cupertino Politburo decides to allow for its platform.”

In addition to software applications, Apple will also enjoy noteworthy upsell revenue
from aftermarket components such as the keyboard dock, camera connection kit and
VGA adapter.
Reverse Logistics

In today’s socially responsible, “Design for Environment,” supply chain, opinion


leaders are just as concerned with how technology devices are manufactured and
distributed as they are with how the devices can be recycled and properly disposed
of.  Blendtec experimented with one disposal technique by inserting the iPad device
into its blender and shattering it into a million pieces. 

Another less creative, but popular decomposition of the iPad was from a group of
teenagers who took a baseball bat to the device.  Fortunately, it was captured on
video for the world to witness.

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