We decided to analyze the supply chain strategy of a company that has always been in the top ranks of the “Top 25 Chain Ranking Supply Chain" from Gartner - Apple Inc. Apple's complex supply chain is attributed to the fact that this Fortune 500 company has multiple suppliers located in different parts of the world, primarily in the United States, China, Japan and in Taiwan. Apple's manufacturing facilities are primarily located in China, where their products are assembled and shipped in bulk to various regions around the world for sale. Since Apple's manufacturing takes place overseas, in low-cost countries, it has a complex logistics network as its upstream suppliers are spread across the globe, assembly of its products takes place in the Asia-Pacific region and its largest downstream consumer base is in the United States. . This network, in the case of product distribution in the United States, involves both intermediate warehouses in partnership with UPS and FedEx, and warehouses in California that store finished products in bulk from manufacturing sites in China. This means that because most of Apple's final assembly takes place in the Asia-Pacific region, they spend large sums of money on logistics costs, import/export fees, and warehousing fees for bulk shipments of products. Apple's distribution to end consumers occurs through three primary avenues: online sales, in-person Apple retail stores, and through partnerships with retailers like Amazon, Best Buy, Target, wireless carriers like AT&T , etc. Staying in line with its mission of being a "high cost, low supply" company that delivers innovative products to consumers, Apple has grown significantly in size since its founding by Steve Jobs. Therefore, Apple's purchasing organization also enjoys a certain brand advantage that increases its bargaining power when negotiating with suppliers. For this reason, Apple enjoys cost advantages as well as the latest technology in purchasing the resources it needs for mass production of its multiple product lines. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get the Original Essay Since most of Apple's production takes place in China, the company has strategically located its supply base in the Asia-Pacific region. First, it creates a major problem for Apple because the company is unable to systematically control its work quality standards throughout its upstream value chain. One of Apple's iPhone molding suppliers, Catcher Technology Co., recently attracted media attention because workers at its Chinese manufacturing plant highlighted the problem of having to stand for 10 hours a day. day and handle hazardous chemicals without wearing appropriate protection. . Apple was therefore under scrutiny for not properly auditing its suppliers to ensure that their products were not manufactured under unfair working conditions. Several issues cited in Apple's annual Supplier Quality Report include, but are not limited to, bonded labor, debt labor, wages paid below agreed standards, and poor safety conditions at manufacturing facilities. work of foreign suppliers. We recommend that Apple raise its quality standards by refusing to partner with suppliersthat do not meet standard Good Manufacturing Practice (GMP) certification requirements, both for direct and contract suppliers. Apple could further impose higher standards for quality controls throughout the value chain - for quality related to product technology and to combat logistical complexities attributed to the complex design of their chain network global supply chain. They can ensure product quality standards by encouraging suppliers to employ more on-site quality engineers to perform constant checks on large batches of products rolling off production lines before being shipped for assembly. Such an investment would encourage lower PPMs at supplier manufacturing facilities, while also ensuring that Apple holds its supplier accountable for meeting its quality standards. Apple should also consider auditing its suppliers for fair labor practices using the Fair Labor Association (FLA) standards as a benchmark. Additionally, they could implement strict controls on wages and discourage underage and debt bondage among suppliers. Second, given its immense bargaining power with suppliers, Apple's relationship with its suppliers tends to become "one-sided", particularly with smaller suppliers whose revenue depends almost entirely on Apple's business. Due to its dominant position in the consumer electronics industry, Apple enjoys pricing advantages and can negotiate the most favorable price and quality of materials for the production of its multiple product lines . Because of this, suppliers make less profit and their businesses fall prey to Apple's control by being primarily, if not completely, dependent on Apple to maintain revenue. Apple has also entered into strict non-disclosure agreements (NDAs) for its products under development, creating a situation where suppliers may not be aware of production requirements well before launch. Once information is communicated from Cupertino, California to suppliers in China regarding product design, capacity and tooling requirements, it may already be close to product launch time on the market. This creates chaotic situations among Apple's overseas suppliers, who struggle to provide short delivery times in order to meet short product launch deadlines within their existing capacities. To keep up with Apple's schedule, suppliers may have no choice but to massively hire additional workers and extend working hours at their manufacturing facilities to meet demand, leading to unfavorable working conditions. In such high-pressure situations, suppliers must decide whether they would be willing to go out of business if they did not meet Apple's requirements, as many of these suppliers rely on Apple as a major source of their revenue or apply the force on their workforce to produce the products according to the imposed deadlines. Unfortunately, suppliers choose the latter option, overworking their employees to meet the need for additional capacity under short delivery times. For example, the issue of short delivery times to meet launch demands on time was a burden borne by Samsung, Apple's OLED display. supplier for the recent launch of the iPhone.