FB 500 Company Analysis

Team 1Ankur Kale

Abhi RampalNitin Maurya

Rajagopal SrinivasanRekha Masilamani

Sumita Das

Agenda

• An Introduction• Financial Information and Supply Chain Laurels– Consolidated income statement/Spend– Organization Reporting

• Supply chain goals & objectives : iPhone– How Supply Chain works?– Supplier Selection– Worldwide Supplier Base

• SWOT Analysis• Challenges• References

An Introduction• 1971: Started by Steve Jobs, Steve Woznaik, Ronald Wayne as Apple

Computer Inc.• 1980 : Went Public, Worth $1.8bn in 1980• 1983: Entered into Fortune 500 companies• 2013: Valued at $171 bn, most valuable company in the world• Revolutionized the world 4 times:

– 1982: Lisa, World’s first PC– 2001: iPod, First Hard Disk Based Music Player.– 2007: iPhone, first capacitive touchscreen based Phone– 2010: iPad, Not the first, but revolution in tablets.

• Leading markets with largest shares are America, Europe and Greater China.

• USP: hardware and software products are tightly woven together for a seamless experience

• Earns $300,000 per minute

* Source: Apple Annual report 2014

Financial Info & Supply Chain Laurels

• Revenue: $183bn (7%)• Profit: $39.5bn ( 6%)• Gartner Best Supply chain for last 8 years (since 2007)• Inventory Turns: Every 5 Days, 73 Inventory turns per year.

• Dell: Every 10 days, 36 Inventory Turns per year.• McDonalds: Every 2.75 days, 142 Inventory turns per year.

• When Tim Cook joined, he said –“ Slash Inventory, Cut Down warehouses -> let suppliers compete” • CENTRALIZED SUPPLY CHAIN STRUCTURE (HQ: CUPERTINO)

• CEO – TIM COOK– SVP: OPERATIONS – JEFF WILLIAMS

» DIRECTOR, VENDOR STRATEGY – MICHELLE BROWN» DIRECTOR, OPERATIONS – TARA BUNCH» VP, Apple Care – Susan Gallagher

36%

22%

16%

8%

6%12%

2014Sales Mix by Operating Segment

AmericaEuropeGreater ChinaJapanAsia PacificRetail

56%

17%

13%

1% 10%

3%

2014Sales Mix by Product Segment

iPhone

iPad

Mac

iPod

iTunes, Software services

Accessories

* S

ourc

e: A

pple

Ann

ual r

epor

t 201

4

• ONLY 154 suppliers

Consolidated Income Statement

Design & Development Sourcing

USA , China, Europe , AsiaChina (50/50 split between Foxconn & Pegatron)

Manufacturing/ Assembling

Warehouse in, California

Intermediate warehouses via UPS/FEDEX for online stores.

Supply Chain - iPhone

iPhone 1 | iPhone3 | Iphone 3gs | iPhone 4 | iPhone 5 | iPhone 6

iPhone Models Iphone Iphone 3 Iphone 3gs Iphone 4 Iphone 5 Iphone 6Release Date Jan-07 Jul-08 Jun-09 Oct-11 Sep-13 Sep-14

Features

Full Touchscreen with icon based interface 3G Speed Data

High Speed Data LED Screen

Fingerprint Scanner NFC

New iOS GPS System Siri Nano Sim Nano SIM

Apple Store Updated Camera with HD Recording

Motion Data Processor Barometer

No Front Camera Micro- SIM CardLightening Connector

Multitouch Features Stainless Steel Aluminum

Front CameraSapphire Crystal Lens

Features- iPhone

Supplier Selection

• Location of Supplier• Reputation and Quality Standards• Alignment with Apple’s Goals and strategies• Deliveries as per Apple’s Crunch timelines• Agile and Flexible as per the changing market.• Trust and NDA, as most of the apple product are under-covers before

release.• Strategic selection of suppliers

– Risk Diversification– Capacity Management– Supplier Innovation

• Apple Maintains a SID(Supplier Information Database): includes potential and current suppliers, capabilities, Supplier diversity certification, Product and Service Descriptions, UNSPSC Code, contact info.

Supplier Base - Worldwide

China - 349 USA -60 Taiwan -42 South Korea -32 Malaysia -21Japan - 139

Strategic Suppliers ListComponent Supplier Location

Sapphire Crystal Components GT Advanced Technologies Mesa, ArizonaChips Samsung Austin, TXChips (New) Global Foundries Malta, New YorkChips Texas Instruments Richardson, TXChips Maxim Integrated San Jose, CACorning Glass Corning Harrodsburg, KYDisplay Japan Display Inc. JapanDisplay Innolux TaiwanDisplay LG South KoreaStorage Toshiba JapanStorage SK Hynix South KoreaTouch ID TSMC TaiwanNFC chip NXP NetherlandsGyroscope -Old STMicroelectronics FranceGyroscope -New Invensense CAAssembly Foxconn Taiwan (Assembly in China) Pegatron Taiwan (Assembly in China)New Assembly Foxconn Brazil

SWOT Analysis

Strengths• Customer loyalty• Innovative Products• Efficient Supply Chain• R & D investments• Marketing and

Advertisements• Product Focus

Weakness• Incompatible with other

OS• Market Share decreasing• Limited Products• Relatively high prices• Law Suits

Opportunity• Expanding Mobile Device

Market• Rising Demand in Cloud

Services.• Innovative Approach

towards problems- Macbook

• iOS for Car/TV

Threats• Rapid Changes in

Technology• Android OS Market• Limited Customization

Options• Prices dependent on

Global economy• Fluctuating Dollar Value

Challenges

• Rapidly changing Technology market.• Decreasing market share• Global Supply Management• Governance issues related to different suppliers and different countries.• Increasing demand/waiting times resulting in unsatisfied customers. • Fluctuating world economics• Too many eggs in one basket – Suppliers• Manufacturing Complexities causing disruptions in Supply Chain.• High logistics cost with only 1 warehouse – 1 Assembling country – higher

lead times.• Increasing labor issues in Chinese assembling plants.

References• Source: http://appleinsider.com/articles/15/01/28/apples-rd-spending-shoots-up-42-year-over-year-hit-new-19b-rec

ord-in-q1

• http://financesonline.com/how-iphone-is-made/

• http://www.supplychain247.com/article/apple_supply_chain_strong_as_iphone_6_closes_in/supply_chain_optimization

• http://www.opsrules.com/supply-chain-optimization-blog/bid/359149/iPhone-6-Apple-Supply-Chain-Revisited

• http://www.tradegecko.com/blog/apple-had-the-best-supply-chain-in-the-world-for-the-last-four-years-here-is-what-you-can-learn-from-it

• http://www.forbes.com/sites/timworstall/2014/05/07/explaining-the-economics-of-apples-sapphire-supply-chain/ • http://www.usanfranonline.com/resources/supply-chain-management/apples-process-improvements-make-it-a-glo

bal-supply-chain-leader/#.VR8Q3hPF_XI • http://bgr.com/2014/11/12/iphone-6-vs-android-sales/

• https://www.yahoo.com/tech/by-the-numbers-iphone-vs-android-97842025474.html

• Source: Apple Annual report 2014