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Apple Inc., founded by Steve Jobs, Steve Wozniak, and Ronald Wayne in 1976, is now a global sensation. On their website, https://www.apple.com/, you can learn about all of their different types of products like the iPhone, iPad, Apple Watch, and many other accessories. They are a leading member of the technology industry with sales including phones, tablets, music devices, and accessories.
Apple is a huge company and in the spotlight almost every day but that does not mean they are completely ethical in their business dealings. Their ethics have been in question from time to time in different areas like taxes and production. Wozniak has even commented on these suspicions and has stated that Apple may be not completely truthful in their dealings.
Demographic of customer
Apple’s target audience includes a wide variety of people. Different products target different ages, financial classes, and geographic data. There is a breakdown chart from Research Methodology that shows how each product targets a different demographic. We can see that most of these target audience is younger, of a higher financial class, and in the United States.
How are they doing?
So, does Apple’s target really work or are they only catering to a different type of demographic? Apple mainly sells to the younger audience but they also have a lot of sales toward the older generations as well. Almost everyone in America knows what Apple is and what their products are. They may not sell their products to all these people but they sell their name to everyone.
Design of the Supply Chain
The four desirabilities of the supply chain are designed for quality, delivery speed, delivery reliability, and low cost. Each company has a focus on one or two of these features of a product. By doing this, they can excel in a certain area to set them apart from their competition.
Precedence for Apple Inc.
Apple’s vision statement states, “We believe that we are on the face of the earth to make great products and that’s not changing. We are constantly focusing on innovating” (Rowland). According to this, we can see that Apple’s focus in these four areas is the design of quality. They want to make sure they have the best product on the market.
Material Resource Planning (MRP)
According to the textbooks by Jacobs and Chase, MRP is “the logic for determining the number of parts, components, and materials needed to produce a product” (Jacobs & Chase 330). By using items like a bill of materials and master schedules, a company can see how much of a raw material needs to be ordered, a component needs to be made, or when a product will be finished.
As stated earlier, Apple’s vision statement is about the quality of their products. They need to keep track of their supplies to make these quality products. It is important to take notice of these things so there are no bumps or hindrances in the supply chain. Apple needs to know how much and of what they have left to make their products.
Supplier Relationship Management Plan
What is a Supplier Relationship Management Plan?
According to Jonathan Webb from Forbes, a supplier relationship management plan is, “the process for organizations determining the supply categories that are important and creating the strategies that manage these items in an intelligent fashion.” (Webb).
Apple Gives Back
Apple has a lot of suppliers from all around the world. Apple helps its suppliers by providing things like educational resources and greener alternatives. By establishing this connection and relationship, they can build other relationships to connect the world together. Supplier relations will help not only with the connection between the supplier and the business but also the quality and value of the product being made.
What goes into an iPhone?
There are obviously many small, intricate, detailed pieces that make up an iPhone. Some of these include the battery, camera, audio chip, screen, and compass. Parts of the iPhone come from all over the world. From China, Japan, Germany, and the U.S.A., these parts travel across the globe just to go into a device that can fit in your pocket.
In the article, “Where is the iPhone Made?” by Sam Costello, it gives us a little more detail on the production process of Apple Inc. In this article, it talks about where each of the individual pieces come from in the world and the people take actually put together the phones. We can see that most of the items come from Asia. There are other pieces that come from other areas of the world like Australia, US, and France. We may think they come just from China but we would be wrong.
A Perfect Little Box
The packaging of an iPhone is an experience in itself. Each phone comes in a little white box that includes a charger, headphones, and the phone itself. Some people even say that opening these phones for the first time is satisfying and pleasing to them. In the article titled, “How packaging gives Apple’s buyers a sensory experience that reinforces brand” it states, “That’s because Apple makes its packaging as artistic and visually appealing as the device inside. Every corner of the box is clean. The color is an elegant, minimalist white. Every part of the packaging is designed to be clean, simple and direct.” (Personalics).
What Is It Made Of?
In the times of the iPhone 6s, the packaging was made using mainly plastic to encase the phones. As Apple Inc. has progressed, they have also changed its packaging to become greener and more eco-friendly. When the iPhone 7 came out, the packaging was mainly made of recycled fiber. Apple is taking their eco-friendly mentally and putting it into every part of their supply chain, including its packaging of products.
How much does it cost to get an iPhone from China to the US? In the article, “The Logistics Behind Transporting Millions of iPhones from China to Store Worldwide” it states, “the Boeing 777s FedEx uses cost ‘about US$242,000 to charter’ and can accommodate 450,000 iPhones” (Supply Chain 247). This means it costs roughly 54 cents to ship an iPhone from China to the US.
Although this cost is very low, is it efficient? Apple prides itself on being eco-friendly on the outside to the customer’s eyes but what about where the customer does not see? Surprisingly, the answer is yes. With the size of the boxes shrinking, it makes more room for more phones to be packed together which, in turn, means fewer trips back and forth.
Cost of Goods Sold
The definition of cost of goods sold from Investopedia says, “Cost of goods sold (COGS) refers to the direct costs attributable to the production of the goods sold in a company. This amount includes the cost of the materials used in creating the good along with the direct labor costs used to produce the good. It excludes indirect expenses, such as distribution costs and sales force costs.” (Investopedia). In other words, it is the beginning inventory plus the purchases during the period minus the ending inventory.
2017 to 2018
The cost of goods sold in 2018 from Apple Inc. was $163.756 billion. This increases by 16.1% from 2017. This is a great statistic for Apple to see. They want the cost of the good to increase because that means the value of the product is increasing to the customer. An increase of 16.1% in one year is a fantastic sight for Apple Inc.
CRM stands for Customer Relationship Management. In the article from SalesForce, it defines CRM as, “a strategy for managing an organisation’s relationships and interactions with customers and potential customers” (SalesForce). CRM helps connect the customer and the business together.
Customer is Always Right
Building a relationship with your customer is extremely important. The customer needs to trust you as a company so they know that their money is going to a place that is good. If you are too greedy and do not give back to the community, the customer will be less willing to give you their sale. Apple makes sure to give back to the community in ways of being eco-friendly but some people argue that Apple is too greedy. Some say their prices are too high and need to be lowered so their product is available to a wider variety of people. This is one thing that Apple can take into consideration when it comes to CRM.
Sustainability and CSR Plan
CSR and Sustainability
CSR stands for Corporate Social Responsibility. CSR and sustainability are a growing aspect of the business world. It is very important to be knowledgeable about the ways your company is socially responsible as well as aware of new ways to implement better CSR and sustainability initiatives.
A Green Apple
Apple uses greener and recycled materials when making their product. One of their programs for recycling is laid out in their environmental responsibility report. In this report it says, “We’ve also set up recycling programs in cities and college campuses in 95 percent of the countries where we sell our products, diverting more than 421 million pounds of equipment from landfills since 1994” (Apple Inc.) Apple does its best to give back to the earth by using recycled materials in their products.
Apple does a great job and exceeds expectations in some areas of their supply chain. Some of these areas include their sustainability and their supply chain layout.
Their sustainability record is extraordinary. Apple reuses their materials in their packaging and they have a strong willingness to recycle old technology. Because of these reasons, Apple Inc. has been deemed a sustainable company.
Second is their supply chain layout. Below is an outline of their supply chain. They are very focused and straightforward in their chain. This is a good thing because it helps in understanding the process and what steps need to be taken.
Needing to Raise the Bar
Although Apple has a lot of great qualities, they could use some improvement on others. One of these areas is CRM. As stated earlier, CRM is important because it connects the customer and the business. Apple is on the verge of being loved by all but they are not quite there. Some believe they significantly overcharge their customers for their products. This leads to some people not trusting them or feeling like they are thieves. If Apple were to relate with the middle-class Americans more so, they would have better CRM.
Another area where Apple can improve would be their transportation. It has been stated earlier that Apple has been doing its best to reduce costs and emission on transportation but is it enough? They still use too much fuel by transporting the products from overseas. They need to find a way to drastically reduce emission instead of slightly reducing them.
In conclusion, Apple Inc. has a very well laid out supply chain and they have some people in their business that make it run as smoothly and seamlessly as possible. With things like their production process, sustainability, and MRP, Apple has been able to put out products of value to their customers. Apple Inc. has become a household name because of their great business techniques. Although there is always room for improvement, Apple is really pulling their weight in the world of technology and business.
- Apple. (2014). Environmental Responsibility Report (Rep. No. FY2013). Retrieved from https://www.apple.com/environment/reports/docs/apple_environmental_responsibility_report_0714.pdf
- Apple. (n.d.). Retrieved from https://www.apple.com/
- Costello, S. (2019, April 08). Where Is the iPhone Made? (Hint: Not Just China). Retrieved from https://www.lifewire.com/where-is-the-iphone-made-1999503
- Dudovskiy, J. (2019, April 25). Apple Segmentation, Targeting and Positioning – Research-Methodology. Retrieved from https://research-methodology.net/apple-segmentation-targeting-and-positioning/
- Hayes, A. (2019, June 16). Understanding Cost of Goods Sold – COGS. Retrieved from https://www.investopedia.com/terms/c/cogs.asp
- Heisler, Y., & Ferrari, B. (2013, September 14). The Logistics Behind Transporting Millions of iPhones from China to Stores Worldwide – Supply Chain 24/7. Retrieved from https://www.supplychain247.com/article/the_logistics_behind_transporting_millions_of_iphones_from_china_to_stores/georgia_tech_supply_chain_and_logistics_institute
- Jacobs, F. R., & Chase, R. B. (2018). Operations and supply chain management (15th ed.). New York, NY: McGraw-Hill Education.
- Retention, C. (2016, March 15). How packaging gives Apple’s buyers a sensory experience that reinforces brand. Retrieved from https://www.personalics.com/2016/02/03/sensory-design-packaging/
- Rowland, C. (2019, February 13). Apple Inc.’s Mission Statement and Vision Statement (An Analysis). Retrieved from http://panmore.com/apple-mission-statement-vision-statement
- Supplier Responsibility. (n.d.). Retrieved June 25, 2019, from https://www.apple.com/supplier-responsibility/
- Webb, J. (2017, February 21). What Is Supplier Relationship Management? Retrieved from https://www.forbes.com/sites/jwebb/2017/02/21/what-is-supplier-relationship-management/#12d193d6ec5a
- What is CRM? (n.d.). Retrieved from https://www.salesforce.com/eu/learning-centre/crm/what-is-crm/
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