Supply Chain Process for Apple & Zara

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Question 1
Apple iphone

Figure [ 1 ].1

The push and pull concept is more centralised to marketing aspects. Pull marketing for example is when customers are waiting for a product to launch and purchase it, little effort will be required from the company itself. This is exactly what is happening with Apple’s iphone sales. Customers of iphone will be lined up outside their local retail outlets waiting to purchase the latest iphone. Apple over here is making use of ‘Pull’ strategy (figure 1.1) whereby there is substantial demand out there, Apple will therefore supply their products through various distribution channels to meet the requirements.

Figure 1.1

The supply chain strategy of Apple iphone consists of a strong network of wholesale distributors as well as fast introduction and application of services. Through the vast distributers and dealers such as Singtel, Starhub, M1, epicentre and so on, Apple is able to reach out and shorten the distances between them and their customers. All these distributors will have to demand from customers, products will be pushed from the manufacturer Foxconn to supply the quantity of iphone’s required. Apple iphone cycle view (Figure 1.2):

1. Customers place orders and purchase iphones through authorised dealers/retailers. 2. Dealers/retailers such as Singtel, epicentre etc runs low in stock and require replenishment from distributors. 3. Various distribution centers runs low in inventories, this triggers manufacturer (Foxconn) for more iphones to be manufactured and shipped. 4. Manufacturer Foxconn starts production schedule planning, procurement of raw materials are done prior to manufacturing activities.

Figure 1.2

To competitive strategy consists of all functions that exist in Apple’s iphone value chain. Below shows an example of how an iphone’s value chain will look like. Components
Design
Build
OS / UI
Apps
Branding
Marketing
Sales
User
Billing
Network

Figure 1.3
Primarily Outsourced
Primarily Apple

Looking at the above figure 1.3, strategy of apple is to outsource functions such as network, billing, components and build. In this case, contracting manufacturer that handles the build function will be Foxconn in China. Apple by engaging contract manufacturers such as Foxconn, utilizes their economies of scale with high volume and low manufacturing cost as a result of low labour cost in China. The supply chain strategy here involves long-term partnership with contract manufacturer Foxconn, apple enjoys various advanges which includes cost savings, improving operations and gaining of outside technologies and expertise. All these advantages helps Apple to remain competitive in the mobile phone manufacturing market in providing consumers with a product of high level technology at an affordable price.

Figure 1.4
The above figure 1.4 illustrates the component level outsourcing of Apple iphone, the plan here is using the contract manufacturer to procure raw components that are Apple specific suppliers. These components from different countries, however the supply chain strategy from apple is to purchase most or all of the components from Taiwan. This approach can help to cut short the logistics required to deliver the components to Foxconn in China, Taiwan also enjoys and relatively short distance from China which in terms helps in saving logistics transportation costs. However it has one serious disadvantage, if Taiwan were to get into an economical decline or become politically unstable then it could actually destroy Apple iphone’s industry. The supply chain network design often puts one firm in control of it’s long term supply chain strategy. Apple utilizes technology, marketing and efficient distribution and distributes different weight age to each category to achieve strategic fit. The iphone’s vast distribution channels by various network providers as well as resellers such as Challenger and Cathay, also though official retail...
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