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Principles of Logistics Management

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Course: Principles of Logistics Management

Module Synopsis

This module introduces students to Logistics and Supply Chain with difference
strategies which a company can achieve its competitive advantage.

On successful completion of this module, students should have the

knowledge and understanding of the following:
• Supply Chain and Logistics Model
• Logistics value proposition
• “Work of Logistics” which provide the five areas of logistics work
including order processing, inventory, transportation,
warehousing, and facility network
• Logistics integration process
• Logistics operational arrangements
• Traditional Organization Of Logistics Related Functions versus
Logistics functional Aggregation
• Apple Computer Case Study

Grade: There are total of10 assignments and one exam as follows:
Assignments (10 assignments) 40%
Exam: 60%
Total: 100%

DEADLINE for Handing Assignment:

All assignments must be submitted in hard copy on exam date.

Any late assignments will be graded zero marks.

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1. Assignment 1: Discuss the Supply Chain Model and its effectiveness to
create the competitive advantage for companies. Provide relevant examples.
Ref textbook (Logistics and Financial Mgt), pg. 7, Fig. 1.1

2. Assignment 2: What are the logistics value proposition and its benefits.
Provide relevant examples.
Ref textbook (Logistics and Financial Mgt), pg. 30 – 33

3. Assignment 3: Discuss the “Work of Logistics” which provide the five areas
of logistics work including order processing, inventory, transportation,
warehousing, and facility network. Provide relevant examples.
Ref textbook (Logistics and Financial Mgt) pg 33-37, Fig. 2.1

4. Assignment 4: Discuss the logistics integration process whereby

information flows through the enterprise resulting in effectiveness in the
supply chain. Provide relevant examples.
Ref textbook (Logistics and Financial Mgt) pg 38-40, Fig. 2.2

5. Assignment 5: Discuss the specific logistics operating concerns of

customer relationship management, Manufacturing and Procurement. Provide
relevant examples.
Ref textbook (Logistics and Financial Mgt) pg 40, Table 2.2

6. Assignment 6: Discuss the logistics integration objectives within the supply

chain which impact upon the six objectives. Provide relevant examples.
Ref textbook (Logistics and Financial Mgt) pg 40-42

7. Assignment 7: Discuss the logistics operational arrangements for the

echelon-structured logistics system. Provide relevant examples.
Ref textbook (Logistics and Financial Mgt) pg 42-44, Fig 2.3 + Fig 2.4

8. Assignment 8: Discuss the logistics organization in terms of: Traditional

Organization Of Logistics Related Functions versus Logistics functional
Aggregation. Provide relevant examples.
Ref textbook (Logistics and Financial Mgt) pg 129-134, Fig. 14.1 + Fig 14.2

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9. Assignment 9: Reference the course notes given:
Course Notes ref: A: Apple Case Study

Discuss the success of the Apple case study model in agile logistics
management.

No of words: 500 words.

10. Assignment 10: Ref video link on Apple:

https://vimeo.com/248951284
password: roger99

1.. Discuss what is a key supplier? How would Apple key supplier strategy
base of Foxconn play a key supplier for Apple [1:15]

2.. Discuss the key success of Apple’s Supply Chain [3:30]

3.. How would Apple scale up the millions of “finish goods” inventory for its
products with implications to its costs + labour + logistics [4:57]

4.. Discuss how Apple would find the balance between its workers and its
products [9:40]

5.. USA President Trump would want Apple to bring back its manufacturing to
USA, is Apple able to do so? [10:05]

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 COURSE NOTES REF: A: APPLE CASE STUDY
Course: Advanced Diploma in Business & Logistics Management
Subject: Principles of Logistics & Supply Chain Management

Course: Graduate Diploma in Logistics & SC Mgt

Subject: Int’l Logistics and SC Mgt

This case study will show you the analysis of Apple Supply Chain core processes,
challenging issues and complexities of its operations.

1) Apple's Supply Chain Model

Information about Apple Supply Chain is a bit here, there and everywhere, it's kinda
tough to find the actual case study. To the best of my knowledge, many business
schools still use the case study "Apple Computer's Supplier Hubs: A Tale of Three
Cities" from Stanford University (1996). To get a closer look at the modern day
supply chain at Apple Inc, this case study utilizes content analysis technique. Annual
Report (SEC Filing) is analyzed and simplified supply chain processes are constructed
as below,

Supply Chain Planning at Apple Inc

Supply Chain Planning at Apple Inc is the classic example of New Product Development

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Process (NPD). It's the integration of R&D, Marketing and various function
under supply chain management. From the above graphic, Apple Inc
accelerates the new product introduction by acquiring the licensing and 3rd
party businesses. The whole process looks very similar to that of other
industries. Interesting point is that Apple Inc has to make the pre-payments to
some suppliers to secure the strategic raw materials.

Supply Chain Model of Apple Inc

Supply Chain Map is the way to express a large system from the points of
origin to points of consumption in simple to understand manner. Information
from the annual report is also used to produce the Apple Supply Chain Map.

Apple Inc purchases raw materials from various sources then get them
shipped to an assembling plant in China. From there, assembler will ship
products directly to consumers (via UPS/Fedex) for those who buy from the
Apple's Online Store. For other distribution channels such as retail stores,
direct sales and other distributors, Apple Inc will keep products at Elk Grove,
California (where central warehouse and call center are located) and
supply products from there. At the end of product's life, customer can send
products back to the nearest Apple Stores or dedicated recycling facilities.

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2) Apple's Supply Chain Challenges
What does it feel like to be "Apple Inc"? One journalist indicated that the life of
Apple Inc is fairly easy by utilizing its negotiation power. Believe me, Apple Supply
Chain has very the high risks. There are many challenges to overcome, for example,

- Global economy could affect the Company.

- Some re-sellers may also distribute products from the competing manufacturers.
- Inventories can become obsolete or exceed the anticipated demand.
- Some components are currently obtained from the single or limited sources.
- Some custom components are not common to the rest of the industries.
- Ability to obtain components in sufficient quantities is important.
- Supply chain disruption such as the natural and man-made disasters can be serious.
- Company depends on logistical services provided by outsourcing partners.
- Company also relies on its partners to adhere to supplier code of conduct.

The above information is also from annual report. As you can see, most of the risks
are on the supply side.

3) How Complex is Apple's Supply Chain?

Some people in blogosphere said that Apple Supply Chain is not that complicated. So
this section will explain some characteristics of Apple Supply Chain through various
metrics and compare them with Amazon Supply Chain.

Inventory Turnover
Inventory Turnover is a traditional financial measure to determine how efficient
company uses its financial resources to create sales, the higher number is the better.
Supply chain professionals also use this metric in inventory management function.
Generally accepted calculation is [Cost of Goods Sold / Average Inventory]

Inventory Turnover of Amazon vs Apple Inc

The above picture shows that the inventory turnover of Amazon and Apple is 10 and 59

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respectively (cost of goods sold of digital content/downloadable products are excluded).
From the face value, Apple seems to be more efficient. Anyway, there is a reason for
this. Apple Inc is now a marketing company with no manufacturing facility but Amazon is
a distributor of general merchandise. It's pretty natural that Amazon has to keep more
stocks then the inventory turnover is much lower.

Number of Key Suppliers

Supply chain management is about relationship between trading partners.
Working closely with strategic suppliers will bring competitive advantage to
the firm.

Number of Key Vendors Amazon vs Apple

Apple recently said that they have about 156 key vendors across the globe. This
amount of suppliers is quite manageable. According to this information, Amazon has
about 3 million suppliers in total. Top 5% of this is 300,000 suppliers, way more than
that of Apple Inc.

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Number of Warehouse Facilities
In the United States, transportation cost is the big portion of total logistics cost. Then,
good management of related function is essential.

Number of Warehouse Facilities Amazon vs Apple

Apple inc has the central warehouse in California but Amazon has
approximately 28 warehouses from coast to coast. What Apple has to do is to
synchronize data between the central warehouse and its own 246 stores +
customers. With appropriate level of the automation, this kind of operations
can be done efficiently.

For Amazon, thing is more complicated than that. Amazon is known to employ
many PhD graduates in operations research/industrial engineering. The
reason is that Amazon's distribution environment must
be mathematically solved through the optimization method. Typically, they
have to determine how many facilities they should have, where serves which
market, items/quantity stored in each location, how to
manage transportation between warehouse-to-warehouse and warehouse to
customers in order to minimize cost and increase service level.

Number of Items (Stock Keeping Unit)

Stock Keeping Unit aka SKU is another indication of supply chain complexity.
One model of phone but different software inside is considered a different
item/SKU.

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 Number of SKUs Amazon vs Apple

According to this, Amazon has about 170 million items on its catalog. About 135
million items are physical products. For Apple, they have about 26,000 items (rough
estimate, subject to change). The point is that, if you have to make a demand forecast,
which one will more difficult for you, 135 million items or 26k items.

Product Life Cycle

Put it simple way, the product life cycle is how long you can sell products (the longer
is the better).

Product Life Cycle Amazon vs Apple

From the rough estimate, Amazon has some seasonal products such
as summer ware. They can only sell it for 3 months max. The life of Apple's
key products are way more than 12 months. It goes without saying that the
demand forecast of seasonal, short life cycle products is very very difficult to
estimate.

As you may notice, based on the example characteristics, Amazon's Supply

Chain is far more complicated than that of Apple Inc.

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4) Conclusion
The results from the analysis of Apple's processes, challenging issues
and complexities indicates that the success of its supply chain operations
depends on how well they manage the supplier relationship. This includes
early supplier involvement in new product development, close communication
and supplier performance improvement/evaluation. Then, Apple Inc is dubbed
as "King of Outsourcing".

- See more at: http://www.supplychainopz.com/2013/01/is-apple-supply-chain-

really-no-1-case.html#sthash.g6n5MBJN.dpuf

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