Quantitative Models For Supply Management: Principles And Operations

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Discuss About The Quantitative Models For Supply Management?

The productivity of an organization not only lies in the successful management of the organization but the key to success lies in the effective management of the different divisions in the organization. The most important way of controlling the productivity of an organization depends on the effective management of the logistic division of the organization. Logistics is the detailed divisional explanation of an organization and the application of the complicated operations that are executed and incorporated from within (Christopher, 2016).

This report covers the details about the principles of Logistic Management with reference to an organization has been considered. The organization considered is Apple.Inc . Apple is the world largest IT Company in terms of revenue and asset and the world’s second largest mobile phone producer. Founded by Steve Jobs and Steve Wozniak, Apple has around 115,000 employees from all over the world. Apple earns about $ 300,000 every minute and has more operating cash that the U.S treasury itself. Apple iphone has higher average sales than everything that even Microsoft has to offer. The entire brand is worth US$ 118.9 billion and is the world’s most valued brand, after Microsoft and Google (Chan, Pun & Selden, 2013).

Apple has around 475 Apple store in 22 countries. In the first quarter of the year 2014, Apple generated revenue more than Google, Face book and Amazon united and was worth more than the whole Russian Stock market. The distinctiveness of Apple lies in the genuine innovations that are taken into consideration while making its products, making it unique and prized. The company’s productive manufacturing and the logistics help it launch newer products without having it to maintain large profit utilizing inventories.

The purpose of this report is to closely identify and analyze the logistics management of Apple.Inc and to identify the operation management that makes it one of the most successful brands worldwide.

This section mainly emphasizes on the interpersonal and interfunctional coordination between the logistics and the three core areas namely the production, marketing and the finance. The finished product requires achievement of raw materials ,parts and components, that triggers the purchasing behavior and the activities (Slack, 2015.

The quantity of the incoming materials and parts obtained by purchasing is often instrumental in determining the quality if the finished product regarding sales and distribution. In this case, with reference to the logistics, the production and the supply chain of Apple is strong. The reason for this is, Apple focus in developing the hardware, software and the associated digital services than just focusing in one aspect. This helps in providing an unmatched user experience, allowing Apple to capture higher margins in terms of its products and services. Often the machinery that are used in type production are exclusive in nature due to the special contracts or due to the fact that Apple is large enough for a backlog for the machines and equipments becomes extremely long.

Order Cycle

Apple makes itself unique in terms of production since it asks its supplier for a price quote and a detailed accounting for how the manufacturer would meet the quote, which includes the labor, material charge and the projected profit. The suppliers can be possibly hit with a penalty regarding the quality related issues and the warranty claims. On the brighter side, due to this strategy Apple does not gets demand forecast for new products and they have a set of loyal patrons who are willing to wait for the new products This is extremely crucial in creating huge marketing buzz (Chandler & Werther, 2013). In terms of logistics the production, Apple works in secrecy in terms of the supply of the key component and in particular the custom components that are used so as to protect the uniqueness of the products in order to avoid leakage.

The main goal of this method is to protect the design and ensure a huge marketing sensation when the product actually hits the market. In this manner, Logistic management is inter-related with the marketing strategy of Apple (Eden & Ackermann, 2013).

Theoretically, Logistics and finance of any organization are completely different sides, where logistics is a completely customer eccentric management whereas the finance is the management that do not believe in blocking the flow of cash through creditability and inventory.

Apple has made a reputation through its management and logistics so probably the finance management would not be much affected by the Logistics management due to the brand reputation it has earned through marketing and production quality (Hill, Jones & Schilling, 2014). Apple has always maintained its reputation by the worthy pricing of its products and the customers are also willing to purchase its products at any cost and manage the favorable cash flow by its well maintained management and pricing strategies (Chen, Li, & Zhou, 2012).

From the perspective of cost effectiveness, with an attempt to lower logistics expenses by consolidating smaller shipment and using a slower mode of hauling would increase the lead-time and would accordingly increase the inventory incurring costs. This would in turn hurt the customer services through the delayed deliveries. Thus, it can be justified that the change in logistics behavior directly influences the efficiency and competence of production and marketing. In particular, logistics are closely related to marketing through their contribution in client services.

The arrangement of the distribution network has been formulated in such a manner that the warehouses and the retail store of Apple gets enough supp[y to meet high levels of demand at times. The filling up of the inventory in the retails stores in a 24 hours window fosters an efficient method of eliminating the out of stock crisis in the retail outlets. Apple obtains the key materials from its suppliers and transports the components to the production plant in China that carries out assembling procedures (Mangan & Lalwani, 2016).

Getting customer orders, Apple ships and delivers the product directly to the clients. The idea or concept of supplying through online is faster delivery of the products to the customers who are unable to reach out to the retails stores. To perform better in supplying its products, Apple has invested heavily in websites.

Apple is arguably one of the best companies in terms supply chain management (Stadtler, 2015). Apple makes every possible effort to deliver its products to the customers who order online. This process is facilitated by 1 click feature that has been incorporated by Apple. Every customer who are ordering their products online can avail the facility by signing into the Apple account that need to be created. The feature needs to be activated and the make the selection of the desired product to purchase and then click the “Buy with 1 click” option.  Without making a valid Apple account customers cannot avail this facility.           

Apple tries to make its order processing in time and prompt and despite that, it faces backlash due to heavy ordering and peak times surrounded by holidays that results in the delays. Apple makes every possible effort to deliver its products to the customers in time to maintain a good relation with the customers. Even though the lead-time is provided, the shipping time may vary depending upon the stocks and availability of the products. To make the process effective, the customers are properly informed about each step of processing in the order (Tayur, Ganeshan & Magazine, 2012).

One of the major backfires that Apple faces is crashing of the online order supplying system. This incidents usually takes place due to the collapsing of the AT&T’s online system due to overloading, account security breaches and due to the fluctuations in the server. This usually results in a total chaos where the orders cannot be taken online disrupting the entire order processing system.

The order processing systems can be effectively improved by dividing the servers through which the order process can be channeled instead of one central server, which can be venerable to unethical hacking and viral attacks. System crashes can be rectified with periodic debugging procedures and creating a more secured platform. Prompt system of order processing and delivery can be facilitate by maintaining a good and healthy relationship with the suppliers. Proper action and effective measures should be taken after the products have been supplied to the customers to maintain a good after sales report and a healthy relationship with the patrons (Goddard et al., 2012). Improvising older processing systems are necessary to effective increase the productivity of the company.

The primary key to success of Apple is its inventory management. Apple has created a huge range of products and devices that were meant for different purposes. Some of the inventories included the ipad, Mac book, Mac book pro, I phone, smart covers and much more. Even though some of the products did not stand a chance to flourish itself in the global market, yet it left its mark in the process.

The prime motto of Apple is to believe that humans and technological innovations are inseparable. In order to achieve such a goal Apple emphasizes and takes a different approach. The adoption of new innovative marketing techniques to set its mark in the global market. Apple applies the design concepts in an innovative way that is instrumental in shaping the appearance of all the devices under the same brand. This concept focuses on the brand value that is attained through the user orientation as Apple believes and follows the same value up to date.

Apple’s secret to success lies with the intricacy of its inventories. Apart from meeting the customer demands, the performance of the company depends on the ability to create user-friendly interfaces that are demanded by the patrons (Osterwalder et al., 2014).

Apple in the recent times cut down its inventories the reason being, inventories are depreciates quickly and tends to lose around 1% to 2% every week. Tim Cook, the current CEO of Apple adopted the same strategy to cut down the inventories in order to help perform better in the market competition and cut down the warehouse cost (Myerson, 2012).

The theory behind this is to keep the stocks at a lower rate. This is beneficial since the technology manufacturers cannot afford to keep many products in stock due to the highly competitive nature of the technology industry (Hitt, Ireland & Hoskisson, 2012). An innovation from a competitor can change the dynamics of the whole industry and depreciate the value of products in inventory.

Apple has one of the most successful inventory in the electronics industry. In order to achieve such most of the warehouses have been shut down. Almost ten warehouses have been shut down with only nine remaining. With the lesser number of warehouses and higher number of key suppliers,

Apple was able to maintain a good strategic relationship with its vendors (Lambert & Schwieterman, 2012). This tactic has been used to make the company leaner by cutting the extra incurring costs and reducing the inventory overstocks, by keeping in mind the expiry date of the products. Keeping the inventories lesser ensures the complete selling of the products without any wastage (Coelho & Laporte 2014).

The effective ways to increase productivity is to reduce the inventory days and lesser number of days to sell out its products. This can be achieved by having only one central warehouse with most of the inventory confined in the retail outlets. By taking the advantages of drop shipping or directly shipping the products from the manufacturer to the consumer, online purchases can effectively reduce the shipping cost along with the wastage and the storage cost.

Conclusion

With the help of this report, the principle and theories of Logistic management are used to justify the methodology that is adopted by Apple.Inc in terms of Logistics, its production marketing, finance, the order cycle and the inventory management thus enhancing its productivity in the global electronics market. Apple successfully administers the principles to manipulate the production, marketing and financial divisions. Apple maintains its production quality by regulating the supplies and the quality of the parts used in the gadgets making it so unique. Apple’s concept of maintaining ambiguity in terms of its products is one of the strong marketing strategy, helping it maintain a loyal set of patrons. The strong logistics management is influential in the uninterrupted flow of cash even though Logistics and finance management are two different ends. The logistics and the brands does the work. The supply management of Apple is one of the best and despite that, the order processing system of Apple faces major backlashes due to certain factors like crashing of online ordering systems, hacking and faulty network servers, improper order placed, delayed delivery due to unavailability of products and clash of lead-time with holidays. Apple has one of the strongest inventory management that is channeled through strategic planning of constant innovation and effective reduction of the shipping cost, warehouse cost, product wastage and over stocking, resulting in smooth revenue generation.

References

Chan, J., Pun, N., & Selden, M. (2013). The politics of global production: Apple, Foxconn and China’s new working class. New Technology, Work and Employment, 28(2), 100-115.

Chandler, D., & Werther Jr, accounting. (2013). Strategic corporate social responsibility: Stakeholders, globalization, and sustainable value creation. Sage Publications.

Chen, X., Li, L., & Zhou, M. (2012). Manufacturer’s pricing strategy for supply chain with warranty period-dependent demand. Omega, 40(6), 807-816.

Christopher, M. (2016). Logistics & supply chain management. Pearson UK.

Coelho, L. C., & Laporte, G. (2014). Optimal joint replenishment, delivery and inventory management policies for perishable products. Computers & Operations Research, 47, 42-52.

Eden, C., & Ackermann, F. (2013). Making strategy: The journey of strategic management. Sage.

Goddard, M. G. J., Raab, G., Ajami, R. A., & Gargeya, V. B. (2012). Customer relationship management: A global perspective. Gower Publishing, Ltd..

Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an integrated approach. Cengage Learning.

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2012). Strategic management cases: competitiveness and globalization. Cengage Learning.

Lambert, D. M., & Schwieterman, M. A. (2012). Supplier relationship management as a macro business process. Supply Chain Management: An International Journal, 17(3), 337-352.

Mangan, J., & Lalwani, C. (2016). Global logistics and supply chain management. John Wiley & Sons.

Myerson, P. (2012). Lean supply chain and logistics management. New York: McGraw-Hill.

Osterwalder, A., Pigneur, Y., Bernarda, G., & Smith, A. (2014). Value proposition design: How to create products and services customers want. John Wiley & Sons.

Slack, N. (2015). Operations strategy. John Wiley & Sons, Ltd.

Stadtler, H. (2015). Supply chain management: An overview. In Supply chain management and advanced planning (pp. 3-28). Springer Berlin Heidelberg.

Tayur, S., Ganeshan, R., & Magazine, M. (Eds.). (2012). Quantitative models for supply chain management (Vol. 17). Springer Science & Business Media.