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Apple’s Supply Chain Strategy

Working Paper · January 2016


DOI: 10.13140/RG.2.2.32075.49448

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Apple’s Supply Chain Strategy
Hettiarachchi H.A.H.
harshaka@kln.ac.lk
Dept. of Commerce and Financial Management
Faculty of Commerce and Management Studies
University of Kelaniya
Sri Lanka

Apple Inc.

Apple Inc. is an American origin multinational company that designs, develops, and sells
consumer electronics, computer software, and online services, which was founded by Steve Jobs,
Steve Wozniak and Ronald Wayne in 1976. Apple brand was successfully established
under the leadership of Steve Jobs which ultimately became one of the top
tech innovative company in the world today with a large number of loyal
customer base. Apple produces state of the art devices including
smartphones (iPhone), tablet computers (iPad), personal computers (iMac),
laptops (MacBook), portable media players (iPod), smart watch (Apple Watch)
and recently introduced Apple Tv. Also, Apple’s software and applications segment mainly consist
operating systems (OS X and iOS), iTunes media player and web browser (Safari). Furthermore,
Apple’s online services include iTunes Store, iOS App Store, Mac App Store, and iCloud operating
systems (Apple, 2016).

Apple is a symbol of consistent technology innovation and famous for elegance in design. In fact,
it has been proven throughout of its sophisticated revolutionary product launches. These
characteristics were backed by Apple’s strategic vision and mission statements, which continue
to motivate the company’s employees to support and contribute to sustaining the competitive
advantage through groundbreaking innovations. Consequently, Apple was ranked among the
best supply chain management companies around the world for recent consecutive years.
Recently, in 2015, for an example, Gartner, a US-based research and advisory company, awarded
Apple its inaugural “Masters” award after previously ranking Apple No. 1 on its “Top 25 Supply
Chains” list for the past 5 years (Gartner, 2015).

Apple’s present CEO, Tim Cook, has won a strong reputation as his focus on improving Apple’s
supply chain to secure its competitive advantage. Tim has introduced Apple’s new vision and
mission statements including the changes to the Steve Jobs mission statement to reflect the
current positioning of the company. Apparently, the firm’s mission statement and vision
statement evolved over the time to address changing organizational and market conditions.

Apple’s Vision and Mission

Apple’s current vision statement was introduced by CEO Tim Cook during an interview, who
stated, “We believe that we are on the face of the earth to make great products and that’s not
changing. We are constantly focusing on innovating. We believe in the simple, not the complex.
We believe that we need to own and control the primary technologies behind the products that
we make, and participate only in markets where we can make a significant contribution. We
believe in saying no to thousands of projects so that we can really focus on the few that are truly
important and meaningful to us. We believe in deep collaboration and cross-pollination of our
groups, which allow us to innovate in a way that others cannot. And frankly, we don’t settle for
anything less than excellence in every group in the company, and we have the self- honesty to
admit when we’re wrong and the courage to change. And I think regardless of who is in what job
those values are so embedded in this company that Apple will do extremely well” (Lashinsky,
2009).
Apple’s current mission statement (although it was not officially labeled) considered as “Apple
designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and
professional software. Apple leads the digital music revolution with its iPods and iTunes online
store. Apple has reinvented the mobile phone with its revolutionary iPhone and App store and is
defining the future of mobile media and computing devices with iPad” (Blodget, 2013).

Apple’s Competitive Strategy

Apple’s strategic vision, as well as the mission, implies that Apple’s competitive strategy will strive
to offer a limited quantity of high-end state of the art products and services consistently
prioritizing the profits over market share. In fact, Apple attempts to capture its customer demand
by being different and innovative which entails making its products unique and attractive to its
consumers. Besides, by focusing on the customer’s’ willingness to pay more thus maintaining a
premium price, Apple also set up an artificial entry barrier to competitors. This theoretically
complies with the Differentiation Focus Strategy of the Porter’s Competitive/Generic Strategy
Framework (Porter, 1985).

Apple’s Supply Chain Strategy

It is important to have a consistency between customer priorities of competitive advantage


strategy and supply chain capabilities specified by the supply chain strategy, commonly known
as the strategic fit. A company may fail due to the lack of strategic fit to strive the balance
between two goals. According to the Fisher’s Framework (1997), Apple products fall into the
category of the innovative products. Therefore, predominantly, appropriate supply chain
strategy is being responsive opposed to being efficient. However, it seems Apple has been
practicing a more sophisticated “agile supply chain strategy” which aims at being responsive and
flexible to customer needs while the risk of supply shortage or disruption is hedged by pooling
inventory and other capacity resources. In fact, it is strengthened by the combination of the
hedged and responsive supply chains. Moreover, Apple’s agility allows them to be responsive to
the changing, diverse and unpredictable demands of the customer on the front end while
minimizing the back end risks of supply disruption.
Figure 01: Apple’s Supply Chain Strategy

References

Apple. (2016). Apple. Retrieved from Apple: http://www.apple.com/

Blodget, H. (2013, 08 03). Apple’s ‘Mission Statement’ Is Making People Worry That The
Company Has Gone To Hell. Retrieved from Business Insider:
http://www.businessinsider.com/apples-new-mission-statement-2013-8

Gartner. (2015, 06 14). Gartner Announces Rankings of Its 2015 Supply Chain Top 25. Retrieved
from Gartner: http://www.gartner.com/newsroom/id/3053118

Lashinsky, A. (2009, 01 22). The Cook Doctrine at Apple. Retrieved from Fortune:
http://fortune.com/2009/01/22/the-cook-doctrine-at-apple/

Porter, M. E. (1985). Competitive Advantage. In M. E. Porter, Competitive Advantage (pp. 11-


15). New York: The Free Press.

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