Apple Inc.’s Trade Processes and Logistics

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18th Apr 2019 Business Strategy Reference this

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Introduction

Business processes administration refers to resolutions, accountabilities and events of supervising the capitals of a company that are devoted towards the production and circulation of either a service or manufactured goods. Flourishing corporations such as Apple Inc. are principally reliant on using operations management technologies or inventions to facilitate promising prospects and fulfilling technological desires of the global market. Using technology, for instance, to manipulate the operational speed of workers and speeding up customer dealings in a trade setting is important in elevating a enterprise’s status. All the above elements are attached on the daily business operations in a company. Therefore, the main aim of this essay is to clearly outline on the leading and evident procedures performed in Apple Inc., which according to intensive research is the most flourishing technology company globally, particularly in its business operations and logistics department.

Background

Apple Inc. provides both an inventive and aggressive edge in the international market. According to recent research, Apple Inc. is among the top extremely efficient companies globally, especially in the technological world. All this can be attributed to its yearly preservation of its customers’ base as well as turnover margins (Linzmayer, 2004). The company continues to be the leader in the technology industry by attaining the demands of its customers through speedy innovation of newer and enhanced products. Among its products are the award-winning computer operating systems including iLife software, its top notch iPhone products and various personal applications (O’Grady, 2009).

Strategic business operation management strategies at Apple Inc. have for an extended period of time confirmed to be flawless since 1977, when the company was founded. This company has for a long time committed towards delivering superior services and products to its end customers or users via advancing on attaining satisfactory user experiences, especially in their digital merchandises (Boyer & Verma, 2010). Hence, the essay will outline on the main administration and business functioning policies assumed by the company to guarantee the happiness and satisfaction of its customers.

Additionally, Apple Inc.’s business operation plan principally involves growing its distribution network in every nation and its corresponding organizations. These organizations include government marketplaces, small to medium sized ventures, various enterprises as well as the education department (Fleming, 2014). For the company to sustain a high-quality buying experience, Apple Inc. continues to strategize on its expansion programs. The suggested structures are intended to constant improvement of the company’s distribution capabilities (Linzmayer, 2004). An important strategy of action outlined in this essay involves the steps taken by Apple Inc. towards realizing successful increment of the company’s retail centers globally (Chongyan, 2010).

A review of Apple Inc’s existing process flows and logistics in relation to the supply chain management theories and the Internal and External Processing Map

Firms around the world pursue a variety of ways in which they can improve their business performance. One of sections of an organization that is critical in giving it a competitive edge is the logistics and supply chain management. The Council of Supply Chain Management Professionals (CSCMP) define logistics as the planning, implementation and control of the flow and storage of goods and services from their point of origin to point of consumption with the intention of meeting the customer requirements. On the other hand, Mentzer et al., (2001, pg. 3) define supply chain management as planned coordination of the conventional business functions within a certain firm with the intention of improving the long-term performance of the company and and the whole supply chain function.

There are several theories that underly the logistics and supply chain function. These theories borrow heavily from the various fields that have an impact on logistics and supply chain management such as economics, sociology, and strategic management. For instance, under economics, theories such as transaction cost analysis and the agency theory can be investigated. Nonetheless, under sociology, the theories of interest include the resource dependence and the social exchange theory. The resource based theory is often investigated under strategic management with regards to supply chain management and logistics. Besides the three fields mentioned before, there are other sectors such a customer relationships, buyer-supplier relationships, and even outsourcing.

Vergara (2012 p. 77) observes that transactional cost analysis theory involves a company minimizing the several risks that are often encountered during transactions with many parties. In this case, the company performs all the functions from production to distribution to the final buyer. In essence, the company may be termed as being vertically integrated. Apple Inc., is a vertically integrated company because it controls all the major aspects from making to the sale of its products (Bajarin, 2011). Apple may be seen as having four companies in one, that is, a hardware company that designs the firm’s hardware, a software company that develops its software, a retail company that gives its clients an unforgeable customer experience, and a services company that attends to the needs of the customers with regards to their devices. In this case, it can be seen that Apple Inc. does its best to eliminate the problems that it would have encountered were it to outsource some of the services in its supply chain.

Agency theory explains the relationship between the principal and the agent (Delves and Patrick, 2008 p.12). Apple Inc is the agent while the shareholders are the principals. A successful application of the theory may be stated simply as Apple aiming at satisfying the requirements of the shareholders through an efficient and effective supply chain and logistics system in place. A successful system ensures that the needs of the customers are met hence providing the company with increased sales which then translate into increased return on investment for the shareholders. In this case, Apple maintains a superior brand for its products by being vertically integrated hence ensuring that quality is maintained throughout its supply chain.

Resource dependence theory studies how the external resources of the organization affect its behaviour (Ma et al., 2012 p.33). The theory is based on the assumption that a firm’s vulnerability to external influence is largely dependent on the level of dependence on particular types of transaction for its operation within the external environment. Nevertheless, the theory assumes that scarcity and specialization are the factors that cause organizations to have exchange relations between each other. The most common external resource in the case of Apple Inc is raw materials. It is worth noting that the firm does not manufacture its products, it designs them (Vergara, 2012 p.78). For the raw materials, Apple Inc relies on a number of suppliers such as Samsung. Interestingly, it is Samsung who supply Apple Inc with flash memory for their devices. In essence, while Apple Inc vertically integrates its design and development process, it finds a way of outsourcing some of the production processes to other electronics firms. In this case, it can be seen that a scarcity of raw materials at Apple Inc influences it to have exchange relations with Samsung which specializes in the production of the required raw materials.

Resource based theory (RBT) explains that an organization that has strategic resources has a higher chance of developing competitive advantages over its rivals (Grant, 2011 p.56). It is important to understand that the resources being talked about in this case should not be those which can be easily acquired by a rival. Instead, these resources should be strategic to the extent that it is difficult to imitate, valuable, non-substitutable, and rare (Grant, 2011 p.58). Apple’s supply chain and logistics observe the resource based theory in the sense that it integrates four functions into one, that is, having hardware, software, retail, and service unlike other firms that outsource most of these functions. This integration is what gives Apple Inc a competitive edge above its rivals in terms of customer satisfaction and effective organizational approach.

Apple’s Internal and External Processing Map

Apple Inc’s Five performance objectives

Source: The Economist

Quality

According to Johnson and Clark (2005), quality constitutes the quality of a product design and service and also the quality of a process in delivery of product or service. The firm is known for its products that are of superior quality. Therefore, through the provision of genuine products, the firm’s holistic technique in assuring quality to its customers is assured..

Speed

Speed indicates how fast time is taken in order to provider products and services to the customers upon their request. Apple Inc signs up store operators who run its operations based on the guidelines that are released by the company. Through the operation of its guided stores, Apple delivers its products and services to the customers as and when they are needed to do so. Therefore, the firm is ranked among the top company’s around the world that delivers the speed objective.

Dependability

This implies consistency in the delivery of products or services to the customer on  time. Apple is consistent in designing products of superior quality. The firm is often two years ahead of its competitors. The reason why the world often awaits the release of the next iPhone is due to the firm’s ability to create and deliver the new product on time without disappointments.

Flexibility

According to Greasley (2013), flexibility is the ability of an organization in changing quickly what it does. Due to the firm’s cutting edge nature,  it allows innovation that is outside what the firm had initially projected. For instance, during the launch of the first iPhone, the company did not envision having its own app store and this provided them with a chance to listen and adapt to what the customer wanted (Gayle, 2012). In essence, the company created the app store, which has been instrumental in transforming the company’s fortunes.

Cost

It indicates the finance need to get inputs or in managing the change process which produces the finished goods and service. The cost of Apple’s products is often higher than that of competitors. However, it should be understood that quality comes at a price. Nevertheless, Apple is a device created for the high-end user. The high price that the customer has to part with to acquire its devices is justified by the quality and performance of the products.

Apple SWOT analysis

Source: Apple Inc Annual Report, 2016.

Pros and Cons of Using Tools such as SWOT and operation five performance objectives on the firm’s  Internal Operations

Regular and steady introduction of both hardware and software programs by Apple Inc. has allowed the company to sustain a huge and expanding client base. Apple Inc. does not only function in U.S. based markets, but also in different intercontinental markets existing in the global marketplaces (Greasily, 2008). Prevailing operational roles at Apple Inc. exclusively rely on the influences of the operating setting of the company, which primarily include both the political and financial components in the business operations and logistics department.

The leading political influences impacting the business operations and logistics in Apple Inc. encompass issues about policy observance in various nations such as political unsteadiness (Chongyan, 2010). On the other hand, financial influences affecting Apple Inc.’s business operations and logistics department include periodic variations in the value of the American dollar against the domestic currency (Ireland, et al., 2008). However, the company has managed to sustain a steady stakeholder return on investment in its annual business operations. Apple Inc.’s current business operations and logistics are discussed below in detail.

Improvements for Better Business Logistics and Operations Management

Adopting slant management strategies can help a company realize outstanding service and product superiority at reduced costs and at optimal customer receptiveness. Such efficiency in management is realized through various applications of aims (Linzmayer, 2004). These aims or objectives are all aimed at enhancing Apple Inc.’s business logistics and operations administration.

To begin with, Apple must increase their flexibility and speeds of manufacturing. The company can achieve this by reducing both service and product resource needs in form of material and capital resources devoted (O’Grady, 2009). This strategy can help minimize overall costs of production, hence permitting for ease of changes and incorporation of produced products.

Apple should also improve the first quality of their products. Adopting lean management strategies reduces the overall costs of operations with respect to capital allocations, equipment downtown as well as re-works hence maximizing the entire production procedure. Additionally, Apple should adopt various capacity management strategies in the company (Boyer & Verma, 2010). The aptitude requirements in Apple Inc. is outlined by both short term and long term scheduling carried out by the company’s executive management. The entire scheduling process is vital in establishing the manner in which the company’s needs are to be achieved. Apple’s capacity scheduling judgments are reliant on the marketplace demands and the how the management brings into line its materials, human capital, as well as economic resources (Greasily, 2008).

Also, Apple Inc. requires to immensely think about adopting capacity scheduling and judgment. This strategy can offer the company increased operation efficacy in many ways including the following. Premeditated capacity scheduling and decisions can, for example, impact the company’s capabilities to realize its prospective demands for both its services and products (Gaubinger, et al. 2015). This is because; capacity essentially reduces the rate probable output. Many prospects would be taken advantage of only if Apple possesses adequate capacity to manage their customer demands. Additionally, operation costs are often influenced by capacity decisions because it is obvious that the demand necessities and capacity are unswervingly associated (Nersesian, 2000). In other words, when a positive association exists between demand and capacity, a company can reduce the total costs of operation hugely. Nevertheless, the real demand and predicted demand often varies or regularly changes therefore informed capacity decisions can aid a company like Apple to create equilibrium of the operations costs of both over and under capability.

Apple Inc. also needs to mix universal policies in the near future which will push the company to improve on its customer wants. For instance, leadership, outsourcing, differentiation, and the customer-centered strategies are leading divisions that are recognized sin operations management and logistics department. Completely addressing specific problems and sustaining increased quality service centers simultaneously is important towards the company’s enhancement aims for product understandability, particularly for the software as well as hardware components (Ireland, et al, 2008).

The company also needs to regulate its overall operational costs sustained in software advancement and research of emergent application. For instance, there exists some situations when a company can invest substantial amounts of resources to some research projects which might fail terribly. Hence, the enhancement costs of personal computer (PC) Software which will be leased, retailed or marketed are increasingly subjected to capitalization by many companies (Gaubinger, et al, 2015). Consequently, this will only be instigated the moment a product’s technological feasibility is identified and established then concludes with the product accessibility to general customers. Therefore, operating costs incurred subsequent to the achievement of a technological feasibility are in overall not that crucial (O’Grady, 2009). Apple, hence, needs to investigate into using their resources on most software as well as application progression expenditures and what impact they have on the company’s incomes expected from the final product or even service.

Finally, Apple should minimize on its shipping expenditures for all its shipping trips. The collective payable to customers associated to the shipping and scheduling costs of products and services are often classified as income. Hence, the company’s scheduling and transportation expenses should be minimized with an aim of reducing the company’s operational expenditures whereas capitalizing on profit incomes (Boyer & Verma, 2010). The guarantee expense also creates an important component in Apple’s overall projected cost for either a hardware or even software element sold to consumers. The guarantees for a greater percentage for most hardware as well as software applications should be evaluated for sufficiency with respect to pre-existing guarantee accountabilities (Ireland, et al, 2008). This extends a long way in guaranteeing that the real alterations in future approximations and user experience are effortlessly trailed.

Conclusion

To sum up, Apple Inc. as a leading company in the technology world has excelled in the quality of its products, services, and even resolutions. All of the company’s products as well as services abide by the merit of the company. It is evident that from the above discussion, innovation is a main factor that pushes Apple Inc. to reach and realize extended undertakings and achievements, something that has placed the company among the leading company in the tech world. Therefore, better business operations and logistics is crucial for Apple Inc. Better and enhanced business operations and logistics will aid the company to attain even elevated status in the technology world because it will streamline and improve various processes, hence increased efficiency. Additionally, improved operations management will help the company in solving various issues including client retention, issues about holdups in shipments, attaining better customer gratification indexes, and even in assessing the superiority of its services as compared to those offered by their competitors. Hence, operation managers at Apple Inc. should have extraordinary problem solving capabilities demanded for risk administration in the company. This is the main reason why most operation managers are often expected to be competent in making informed and fast decisions associated to their company’s operational procedures.

References

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