Research Apple

Research Apple. What other SCM issues have they had? Why are they now considering bringing back some manufacturing back to US?

Apple is a classic case for supply chain. When Tim Cook joined apple in 1998, Apple was losing money and their supply chain process was in complete shambles. The company held $500 million of inventory, which was about 2 months coverage, much more than those of the other technology companies. Cook realized that Apple's supply chain was too complex to handle. So he reduced number of key suppliers, from 100 down to 24. Cook also asked vendors to consider the price discount, and relocate closer to Apple's factory. He then he reduced number of warehouses from 19 to 9 and slashed inventory level from 2 months to 1 month. By September of 1998, inventory level was down to 6 days. Cook reduced the manufacturing cycle time, from 4 months down to 2 months. Within the first 2 years, Tim Cook simplified Apple' supply chain a significantly. This generated the huge cost savings and improved service drastically.

One of the ways in which Cook revolutionized Apple’s supply chain was by virtually eliminating stockpiled inventory. This is important because every product that is stuck in a warehouse costs Apple money instead of making them money. Cook has called inventory “fundamentally evil,” and likened the way a computer maker should handle inventory as being similar to the way a milkman should deliver milk, “as straight from the cow as possible.” By closing down warehouses, slashing inventory and getting products into consumer’s hands as directly from the manufacturing factories as possible, Cook has been integral in making Apple the most profitable tech company in the world.

Tim Cook also convinced Apple to steer away from manufacturing its own components, and instead partner with external manufacturers like Foxconn.

Unsurprisingly, IT research firm Gartner ranks Apple Supply Chain as the best supply chain in the world for 3 years in a...