Strengths and Weaknesses of SCM of Apple

Explore Apple’s management of its supply chain and human resource management and evaluate the strengths and weaknesses in the company’s approach.
 

This report aims at analysing the internal factors that affect the various operations at Apple Inc., an international American organisation that produces cell phones, consumer electronic products, computer software and personal computers. The factors that have been analysed include Supply Chain Management (SCM), Human Resource Management (HRM) and the overall business approach adopted at Apple Inc.

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Supply chain is a set of businesses or organisations taking part in the manufacturing of a particular product, from the first stage of production until the last stage (Croom et al 2010). Supply chain management can be defined as managing, supervising and controlling this chain of events to make sure that despite the employment of many manufacturers and suppliers, the end product is still making a net profit. An effective supply chain drives the productivity and profitability of a business (Hugos & H, 2011). It is one of the vital aspects of any organisation or business and can prove to be the biggest weakness for any organisation when not taken care of appropriately (Prater et al, 2011). Today, Apple Inc. creates a large number of electronic products that gain immense popularity in a short span of time. As per AMR Research, Apple Inc.’s supply chain management has been named the best around the world. The entire supply chain is appropriately optimised and augmented in terms of operations, cost and logistics (Mollenkopf et al, 2010). There are a large number of supply managers at the organisation who report to the CEO, Tim Cook, rather than to the production or manufacturing department. However, it still has some weaknesses.

The strengths and weaknesses of supply chain management at Apple are as follows:

Strengths: The supply chain management of Apple is believed to be omnipotent by many researchers. The company purchases materials and components from various suppliers. The company has built a closed and secure ecosystem where it regulates approximately each piece of supply chain, from designing to retail store. This is how Apple has taken supply chain management and operational excellence to an all new level.

Weaknesses: All of the company’s production takes place overseas and so it is overly dependent upon foreign contractors to manufacture its products in time, and often face economic challenges at home. Majority of Apple Inc.’s production is carried out in Asia. The main intent is to save costs so that the company could sell its products at lower prices in order to compete with its rivals like Microsoft, Samsung, etc. However, rigorous competition is forcing Apple to lower its price to an extent where they will not be able to gain profit.

Strengths and Weaknesses of HRM of Apple

The supply chain of Apple is simple but it is not agile to overcome various challenges and obstructions in the supply chain.

The company needs to come up with some process improvement strategies and hire experienced people for key positions to make its supply chain management effective. 

Human resources management or HRM includes recruitment, employee remuneration and benefits, and defining job roles (Dass et al, 2009). Human Resource Management entails a set of formal systems and processes carried out for the management of employees in an organisation. Factors relating to management of people vary within a company and across situations (Mathis et al, 2011). A large number of organisations in this competitive business world are being held back because of rising issues of human resources management or HRM (Lado et al, 2014).

Many reports indicate that Apple has implemented best approaches for managing its employees. However, there still lie some weaknesses in the overall HRM system. The strengths and weaknesses of HRM of Apple are as follows:

Strengths: The HRM at the company aims maximising the return on investment from Apple’s human capital and minimising financial risk.

Strength is that the human resource managers at Apple conduct all their responsibilities in an effective, consistent, legal and fair manner. Factors related to HRM in Apple have been described below:

• Recruitment: Apple hires people by assessing computer based knowledge. The management hires the ones who fit well to the culture of the company irrespective of their experiences.
• Equal opportunity: The Company is an equal opportunity employer and promotes organisational diversity.
• Employee compensation: The Company offers a large number of benefits to all its employees and the compensation on offer is highly competitive.
• Recognition: The company created Apple fellows program in 1995 so as to recognise the most hardworking and successful employees.

Weaknesses: Some of the poor HRM practices at Apple Inc. have raise many issues among the employees in the recent times. Many reports have suggested that the human capital at Apple often faces difficulties because of strict policies of human resource management that lack transparency. There is lack of clarity among the staff members about the business and personal objective. There is also lack of clarity about the strategies of the company.

Also, good ideas sometimes get stolen and accredited to others in Apple Inc. The HRM policies at the organisation do not have sufficient provisions to recognise and give rewards to the one who actually presents the idea. This often weakens the morale and motivation levels of the personnel and prohibits the progress of proficient and deserving employees. This has often caused attrition at Apple. 

A business strategy can be defined as the art and science of formulating and implementing important business decisions that enable a company to attain its long-term goals (Beer et al, 2010). It is very important for any company as it incorporates organisational and personal objectives into a competitive edge that ultimately increases the profitability and efficiency of the company. The strengths and inadequacies of the business strategy of Apple Inc. are as follows:

Strengths and Weaknesses of business approach adopted by Apple

Strengths:The biggest strengths of the business strategy of Apple Inc. which enable it to withstand all the threats and overcome weaknesses in its business environment include strong brand image, effective innovation process and high profit margins (Amit et al, 2012).

Apple Inc. is among the strongest and most valuable brands around the world. It is capable of coming up with profitable innovative products and services by virtue of its powerful brand image. The company has maintained an exceptional pricing strategy that comes with high profit margins. This helps the company by creating flexibility to regulate and modify selling prices while ensuing substantial profits. In addition, Apple Inc. is renowned for rapid innovation that enables it to keep abreast with the technological changes for ensuring competitive edge and significant profits.

Weaknesses: The business strategy of Apple Inc. involves high selling prices, limited distribution network, and sales limited primarily limited to the elite class or high-end market (Beer et al, 2010).

The company has a limited network of distribution due to its exclusivity policy. For instance, Apple carefully picks up authorised sellers and suppliers of its products and services. This limits the market reach of the organisation. Another weakness is its premium pricing strategy. This further adds to another weakness for the company, the weakness of earning a major part of its sales revenue from the high end market. Therefore, the distribution, as well as pricing strategies impose weakness in Apple’s business.

Conclusion

This report has attempted to identify and assess the strengths and weaknesses of Supply Chain Management, Human Resource Management, and business strategy of Apple Inc. It can be concluded that Apple Inc. is an early adaptor and is usually the foremost company to engineer and design unique, innovative products.  No doubt, the company enjoys a strong market position, as well as consumer loyalty, but it needs to be careful as far as various internal and external environment factors are concerned. The company must address the weaknesses of its SCM strategy, HRM policies, and business strategy in order to increase its productivity and profitability. In addition to this, Apple should also consider its strengths and use them appropriately to overcome all the weaknesses thereby advancing the company’s mission.  

References

Amit, R., & Zott, C. (2012). Creating value through business model innovation. MIT Sloan Management Review, 53(3), 41.

Beer, M., & Eisenstat, R. A. (2010). The silent killers of strategy implementation and learning. MIT Sloan Management Review, 41(4), 29.

Croom, S., Romano, P., & Giannakis, M. (2010). Supply chain management: an analytical framework for critical literature review. European journal of purchasing & supply management, 6(1), 67-83.

Dass, P., & Parker, B. (2009). Strategies for managing human resource diversity: From resistance to learning. The Academy of Management Executive, 13(2), 68-80.

Hugos, M. H. (2011). Essentials of supply chain management (Vol. 62). John Wiley & Sons.

Lado, A. A., & Wilson, M. C. (2014). Human resource systems and sustained competitive advantage: A competency-based perspective.Academy of management review, 19(4), 699-727.

Mathis, R. L., & Jackson, J. (2011). Human resource management: Essential perspectives. Cengage Learning.

Mollenkopf, D., Stolze, H., Tate, W. L., & Ueltschy, M. (2010). Green, lean, and global supply chains. International Journal of Physical Distribution & Logistics Management, 40(1/2), 14-41.

Prater, E., Biehl, M., & Smith, M. A. (2011). International supply chain agility-Tradeoffs between flexibility and uncertainty. International journal of operations & production management, 21(5/6), 823-839.