Discuss the operation management system of Apple Inc and link it to the theory of effective operation management.
The operation functions of an organization are concerned with getting the task done, i.e. producing goods and services for customers. It has the role of making the products and services in such a way that it meets the criteria of the market. As marketing function identifies the needs of the customer, the operation function operates to produce the required goods and services. Every organization is concerned of making grand plan and strategies to meet their goals and objectives. However, a grand plan cannot succeed if not followed with perfection in operations. The operations of the organization are strategically important as every organization comprises their day-to-day activities through the operation function. The key determinant of any organization to attain long term success is the relation between the operation functions and the organization strategy. An organization can meet its goal only if its short term activities in operations are consistent with its long term strategies (Ward and Peppard 2016).
In the paper, the organization discussed is Apple Inc which is an American multinational technology company whose headquarter is at California. The company develop and design consumer electronic, software of computers and provides online services. The most famous product of Apple is iPhone, iPad tablet computer, iPod portable media player, Mac personal computer and smart watch of Apple. The software produced by the company is ios operating. ITunes media player, macOS, iLife, Safari Web browser, iWork. The company was founded in 1976 and the founder people of Apple are Steve Jobs, Ronald Wayne and Steve Woznaik (apple.com 2016)
The paper discusses the operation management practices of Apple Inc. and examines the strategies of the company towards the operation department so that the required product that has sufficient demand in the market is produced optimally.
Strategy is one of the most widely used word in management and it can be defined as the scope and direction of an organization over a long term that brings advantage to the company through optimum resource mix with the aim to maximise its shareholder expectations. The major three elements of strategy are the firm’s objectives, external environment and the company’s resources. Operation management is concerned with the resources of the organization and the way the operation functions has an impact on achieving its objectives. Thus it is the integral part of any firm’s strategy (Seuring and Gold 2013).
Strategy can be at different level, corporate, business and function. At corporate level it deals with areas like selection of business, allocation of resources between different business and maintaining relationship between business and the centre. A t business level, the strategies shall be to create competitive position, to meet the mission and to make strategic objectives. At functional level, the strategy is to decide how to manage the resource, which technology to adopt and what skills are required (Slack 2015).
The operation strategies of any organization are formed to attain the objectives of low cost production, maintain quality of output, develop ability to meet the requirement of customers quickly and lessen the time between order received for product and delivery of the product. Further, objective is to deliver products in accordance to the requirement of the customers and to be flexible in operations when there is a need to change the volume of production, time taken to produce, change in product mix and innovation of new products. It is difficult for any organization to excel in all the strategic areas of operation and all firms strive to plan their operation strategy in such a manner that the cost is low, quality is high, speed of delivery is fast, and dependability is reliable and flexibility is high (Semini et al. 2014).
The two important terms in operation management are order winners and order qualifiers. The terms indicate the method of how the operational capabilities internal to the organization can be converted to criteria which brings market success and competitive advantage. It shows the link between marketing and operations. The people who are at operations are responsible for obtaining order qualifying and order winning criteria of marketing that makes the product win the orders in the market. The process of order qualifiers and order winners starts with the strategy of the corporate and ends with the criteria that make the company win over the orders of the customer from the market (Ross 2013).
Order qualifiers and order winners are the two criteria to be achieved in the market place by any organization. An order qualifier refers to the characteristics of the product that is required by the customers and order winner is that characteristic which will win the customer purchase. Hence any firm if want to stay in the market must meet the criteria. The firm need to be as good as the competitor to be a qualifier but they need to be better than the competitor for being the order winner. Both the concepts are equally important for operation management. The firms have to be cautious when dealing with the concepts. If the firm produce such high quality product that its cost of production rises and exceeds the market price then enhance in quality lead to loss of order. Hence making order qualifier against order winner in the market. The firm need to strategically plan to avoid such unfavourable results (Roh et al. 2014).
Both order winners and order qualifiers are time-specific and market-specific. They operate in different ways, in different combinations, in different markets and with different sets of customers. In some cases, there may be general situations but it is not stable always .In 1990s the order winners were customization of product and speed delivery and the price and quality of product were order winners which were previously order qualifiers. It implies that the market needs and customer preferences keep changing over time and firm need to develop various strategies to support the changing market needs. The matching between the customers and firms’ perception about order winners and order qualifiers lead to positive sales performance. In other word, favourable sales position is achieved by the firm when there is a match between the firm’s perception of the product strength and the customer’s perception of the product. However, increasing gap between the two, leads to negative sales performance (Reid et al. 2016).
Further order winners and order qualifiers are also affected by the different stages of the product life cycle. At each stage of product life cycle, the sales of the product depend on several factors like change in technology, level of competition in the industry and preferences of the customers. The product characteristics vary at each stage of product life cycle and it requires different processes of production to meet the changing characteristics. This is only possible if there is proper communication between marketing and operations where marketing identifies the order qualifiers and order winners and operations builds the capabilities to develop the required features of the product. Moreover, product profiling is used to compare the requirement of the product characteristics and the development of the processes to meet the characteristics. It helps to fill the gap between the two and establish a certain level of fit between the order winning criteria and the choices of process for production (Purce 2014).
The paper discusses the operation strategy of Apple Inc., the American based technology multinational company. The corporate objective of Apple inc is to continuously bring innovation of new products and develop research and development in both software and hardware and finally to create unique differentiation of its product against the product of it’s competitors. The launching of an unique innovative product iPhone has redefined the mobile industry and through it Apple has climbed to the higher income segment of the population to increase its service revenues. Apple has manufactured and concentrated only on single device that is iPhone and has obtained perfect balance between the company charges the same price for the product across the globe. In comparison, the competitors like Nokia, believes in multi-product strategy and charging different prices to different sets of customers and market (Naeem 2014).
The target customer of Apple is high-end customers and has limited stores all over the world. It has opened separate retail channel for iPhone and has collaborated with several mobile operators so that there is an increase in the reach and coverage of the network for iPhone. The Apple has collaborated with several mobile operators to increase the network of distribution for the iPhone.The Apple product iPhone has become a potential threat for other competitors especially Nokia. The reason behind it is that Apple has a high scale advantage to meet the demand of the high end customers. Further Apple has not crowded the market with a number of products but has brought only two products in comparison to 20 products of competitors and consists of the better features than the features of the rival’s product (Kerzner 2013).
The order qualifiers of the market for mobile phone are divided into two segments, the low-end segment and high-end segment. In the low end segment, the order qualifiers are availability of phones and functionality. In the high-end segment, the order qualifiers are image, prestige, trendiness and availability of data content. On the other hand, the order winners are also divided into low-end and high-end customers. In the low-end customer, the order winners are low cost, durability of the product and brand reliability. In the high-end segment of the customers, the order winners are experience of the user, flexibility of the organization to accept the changing trend in the mobiles (Johnson 2014).
Apple has fully outsourced in Taiwan the manufacturing operation of the company to lower the cost of production by redesigning the value chain system of the firm. The strength of the company is the low investment cost as it has outsourced its production. The weakness of the company is that it has not reached the huge market of people and is not cost-efficient. The products are high priced and only has targeted high end segment of people. The iPhone is an innovative device and has virtual distribution of data that was present in the phone. The order winner strategy is alignment with high end customers (Hu et al.2013).
The operation strategy of Apple is to move from MP3 players to mobiles and to innovate new features. On framing the strategy, it focused on the experience of the users and tried to reduce the gap between what user expect from the product and what companies actually produces. The operation strategy of Apple is to produce high quality good in small volume and produce few goods. It outsourced ad re-outsourced its manufacturing of product to lower the cost of production and create less volume but of highest quality (Holmberg and Ida 2013).
The production strategy of Apple Inc is to produce telephonic appliances, low level drivers and develop a plan for following the position. In case of hardware, Apple has tried to develop few products of highest quality and less in volume. The hardware in production makes strategy to gain highest quality product with reasonable price and larger volume of scales. Large numbers of mobile apps has been outsourced to reduce the cost (Tano et al. 2013). The internal organization of Apple has centralised to obtain full control on the firm. It focuses on customer service and has a long vision to obtain success in the firm. The production strategy of Apple is to have central quality control system, to take first mover advantage and to collect feedback from direct customers. The internal organization is controlled and centralised and focuses on experiences from customers. The company believes i autocratic leadership with a long visionary and has attracting talent both internally and externally (Hill et al. 2014).
The key manufacturing task of any company is the basis for making strategic policies and is decided by the marketing strategy of the company. The Apple’s key manufacturing task is flexibility which is obtained in three different ways, new product flexibility, volume flexibility and product-mix flexibility. The order qualifiers of Apple are cost and quality. The company maintains high premium price and high gross margin, so they may not have low cost. Further, the company does not need to maintain highest quality of the product in the market and only sufficient quality is maintained to assure that they have potential customers (Heizer et al.2013).
Apple has different strategy towards the labour force in different manufacturing unit. The factory of Apple in United States does not have huge labour force at cheaper rates. The labour force of Apple has several differences in terms of stability, skills, experience and motivation. The workers in the Foxconn unit of Apple do not have stable labour force and the company has kept them on one year contract basis. However, in the US unit, the workers are more stable and mature in their job. The workers in the China unit at Foxconn are literate but do not have much of experience in technical skills and industrial operations as their life is based on traditional agricultural system (Tsai et al.2013). On the other hand, American workers are comfortable with the advanced technological system as they have been growing with it since early ages. For Chinese labour force in Foxconn unit there is lack of safety on social grounds, less opportunities for employment and poverty in the region demands more labour force per unit of production compare to US unit. For every 700 workers of United States unit, the China Unit requires 700 work forces. The less use of labour in US unit is due to larger automation of work in the US factory as compared to China’s unit. Further in cellular production system, the US unit will require further lower amount of labour force, say 500 workers. This is because of micro line imbalances eliminations and improved motivation of the workers (Heizer et al.2016)
The company labour costs are different between different units and comparing them is difficult due to complexities in taxes and exchange rates. The wage structure is different in different countries as well as the benefits availed by the labour force. In Foxconn, the wage given for per hour is $2.50 to the workers whereas in U.S. manufacturing unit, the wage given per hour is $15. So comparing the labour cost, it has been noticed that Apple is able to produce at a cheaper labour cost outside United States than within the country. It implies that the company seeks to establish manufacturing unit in areas of cheaper labour cost in order to reduce its overall cost (Göleç 2015).
The difference in motivation and background of the workforce calls for different approaches towards the factory operation management system. The U.S factory should consider hiring stable, socialized, matured and teachable labour force. They should invest in training and education for workers and should form work groups and work in team. Further, technical support and quality check supervisors should be included in the team. Moreover, the living standards and cultural background of American labour is different from that of Chinese Labour, so the company should have different compensation structures and training programs (Eden and Ackermann 2013).
The allotment of supervisors differs according to the product line and their requirement. It also depends on the quality and standards of the employed labour force. In Foxconn the production line requires lots of supervision and every four workers should have one supervisor above them to ring effective and efficient results and to increase productivity. However, in United States, as the working staff is more matured and experienced, the supervising of the task is comparatively less and the similar assembling line requires fewer supervisors to bring efficiency in the production. For example, in United States per supervisor will have around 10 workers under them than the manufacturing unit in China (David and David 2016).
The allotment of technician in industrial engineering will also vary according to the requirement of the unit and perfection of the labour force. A unit in U.S. will require less number of technicians for every lot of workers compared to the unit in China. Regarding automation and equipment the company has to consider several key issues like the workflow and layout of the plan, changes in the volume of production and the support requirement for the installation of automated equipments. The requirement varies according to the products and the place the plant is established (Chase 2012).
The manufacturing strategy towards maintaining qualifiers should include strong component of quality and the product need to satisfy the six sigma of total quality management. Further other areas of operation management like, supply chain system scheduling of task and allocation of work need proper planning and strategic movements to obtain efficiency in management of operations (Brown et al.2013).
Conclusion and recommendation
In conclusion, the brief of the paper is given, The paper basically discusses the operation management system of Apple Inc and link it to the theory of effective operation management. The operation functions of an organization are concerned with getting the task done, i.e. producing goods and services for customers. It has the role of making the products and services in such a way that it meets the criteria of the market. The order winners and order qualifiers are the important area of discussion in the paper.
Apple Inc. has a widespread and efficient operation management system. However, seeing the increasing production cost of the product, it is recommended that the manufacturing unit are to be established in countries that have cheaper resources both in term of labour and capital. The training programs for the labour force should be more rigorous for the workers in developing countries than in developed countries. The company should make survey study to analysis the required order qualifiers and order winners of different market in different countries and according should try to minimize the gap between the expected requirement of the customers and the actual requirement met in the product.
References
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