Supply Chain of the Iphone 4 Series

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Discuss the Supply Chain Management of a Particular, Product/Company/Service of your Choice.

In this report we will analyseq the supply chain management of the iPhone 4 series. This will be done by researching the different parts of the supply chain, looking at how they are integrated and ‘referring to processes and exchanges across multiple organisations,’ (Verma and Boyer, 2010) and how the ‘operations management consists of the processes that effectively produces, transform, and deliver a product or service,’ (Verma and Boyer, 2010).

Apple products are known to be at the top end of technological advancement, as one might expect, they involve a lot of components. Apple in California designed the iPhone 4. Foxconn assembles it in China with many of the components coming from all around the world including Germany and Switzerland. One of the biggest costs for apple when making the phone is paying its chip suppliers like Samsung, who provide vital components including processors and flash memory. This is according to the latest teardown report conducted by iSuppli. They concluded that ‘Apple pays Samsung about $27 for flash memory and $10.75 to make its applications processor; and a German chip maker called Infineon gets $14.05 a phone for chips that send and receive phone calls and data,’ (The New York Times, 2010). A new feature of the iPhone 4 was the addition of a gyroscope; this feature is made by STMicroelectronics based in Geneva, costing Apple and additional $2.60. Distribution of value for iPhone, 2010 (Kraemer, Linden, and Dedrick, 2011) Distribution of value for iPhone, 2010 (Kraemer, Linden, and Dedrick, 2011) If you turn over an iPhone you will see “assembled in China,” however this doesn’t mean that most of the profit or revenue goes there. According to iSuppli (Andrew Rassweiler, 2010), ‘out of the $600 retail price, only $6.54 is given per phone to the assembly giants’, such as Foxconn. ‘Much of the value in high-end products is captured at the beginning and end of the process. China makes very little money on these things.’ (Jason Dedrick, Syracuse University). ‘Profits to first-tier suppliers is based on the location of their corporate headquarters. The iPhone is assembled in mainland China factories owned by Foxconn, a Taiwan-based firm,’ (Kraemer, Linden, and Dedrick, 2011).

Apple has become the worlds most valuable firm, overtaking Google, with its net worth approximated to be 70.6 billion pounds (www.apple.com). This is due to their globally expansive supply chain involving firms from Taiwan, China, America and Singapore. For the release of the first iPhone, ‘30 companies on 3 continents worked together’ (www.txyt.com) to produce the phone. The use of countries such as these in the manufacturing process creates a win-win situation for Apple and those contracted to help supply products. Apple are able to produce products cheaper due to the economies of scale and having long-term contracts with these firms, who gain in value and prosperity by simply having an affiliation with the technological giant.  An example of Apple being able to produce at a lower rate than their competitors is with the Taiwan firm Pegatron who produce and assemble a seventh of all iPhone 4S units, at a much cheaper labour cost rate that firms in the western world would charge. (www.shmula.com).

There are many other globally known firms based all over the world involved in the process of developing apple products, Samsung develop A4 and A5 processors for the iPhone and flash chips enabling Apple products to be able to show videos etc. Sony, LG and Sharp all allow for the high quality camera that comes with Apple merchandise. Various firms are required for overall product completion, e.g. Corning create the touch screen facilities and Nuance create the speech recognition software for the 4s iPhone model.  These firms amongst others are pivotal in ensuring an accomplished and efficient supply chain leading to Apples...
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