It seems reasonable to state that production management plays a crucial role in the scope of operations management. To assess its importance to a significant extent, it might be rational to explore the experience of a notable international company. Such a firm, usually, pays a lot of attention to the issue of the manufacturing process as the latter defines its success and profit margins. Among these enterprises, Apple Inc. seems to be a perfect example to investigate in the framework of the above theme. Its practices, policies, and approaches regarding production management have been recognized and claimed to be noticeable and appropriate.
In this report, the operations system of Apple Inc. – its peculiarities, steps, and appropriacy – will be discussed. The paper will be organized as follows; the first section will describe inputs, outputs, and resources needed for the manufacturing process. The second part will investigate the primary process and activities of this operations system. Then, the third part will identify the layout of this system. Finally, the fourth and fifth sections will be dedicated to evaluating the approach to the regulation of the necessary materials.
Apple’s Operations System
Apple Inc. has several essential inputs – both fixed and variable ones. The latter implies employees, energy consumption, an inventory that is inside warehouses and stores, and raw materials. The firms’ fixed inputs include corporate buildings, production plants, Apple Stores locations, as well as warehouses and equipment. It might be assumed that since Apple Inc. is a full-scale international company, all of its inputs are to be managed coherently and consistently. In another case, due to the global business aspirations, demand for its products may substantially decrease after the release of competitors’ offers.
Plenty of the company’s fixed inputs are items that it intends to keep for a long period because the bulk of its production was removed from the US to other countries. These countries are mostly the Asian ones, with the concentration in China. This policy allows Apple Inc. to reduce the expenses on the fixed inputs. What is more, the variable inputs become less expensive due to lower salaries in foreign states.
The firm’s outputs might be considered as the ones among the most popular devices nowadays. They include smartphones (iPhone), tablets (iPad), laptops (MacBook), computers (iMac), and various smart accessories such as headphones (AirPods) and styluses (Apple Pencil). The company’s products might be characterized as high-quality, well-developed, and innovative ones. Apple Inc. put a lot of effort to provide its outputs with constant improvements, which is emphasized in its founding documents. Such an approach results in customers’ loyalty and suppliers’ willingness to cooperate with the brand.
Then, the firm utilizes several natural resources in its manufacture of electronic devices. The biggest part of these resources – for instance, copper or aluminum – Apple Inc. gets from various anonymous suppliers. As mentioned above, these suppliers are ready to compete with each other to collaborate with the company. Hence, their bargain power is considerably low, which allows Apple Inc. to choose only top-quality materials. However, it should be mentioned that many of the company’s products are made of limited raw materials. For Apple, it means that the manufacturing process will become more expensive with the flow of time. To summarise, the firm has developed a significant operations system that serves as a great foundation for its current leadership in the industry. At this point, it might be reasonable to discuss the main processes and activities of this system, as well as define its vital steps.
Operations System’s Steps, Activities, and Processes
The initial step of Apple’s production process is product design. Professionals that have the greatest extent of creativity work together to develop unique and remarkable projects. These projects should be different from previous ideas and be significantly distinguishable in the market. This launching step is a distinctive feature of Apple’s manufacturing activities as designers but not engineers work at the early stages of the process.
The following step is performed by both the company’s own and its suppliers’ capabilities. The company gets its materials by mining, smelting, and refining (Apple Inc., 2020). It is a laborious process that requires a lot of resources – starting from expensive facilities and machinery and ending with a qualified workforce. It should be emphasized that “Apple buys many of the components … from more than 200 suppliers around the world” (Barboza, 2016, para. 3). According to Barboza (2016, para. 4), “Apple orders many of the components from global suppliers, and then sells them, en masse, to one of its contract manufacturers based in China.” Recently, the firm has turned to a similar strategy in India – it has signed several agreements with local producers.
Then, Apple Inc. moves to the stage of the final assembly of a device. This step takes place in China due to the following reasons. First, it is a cheap labor force – there is no shortage of it as the population of the mentioned country is extremely high. Second, Apple’s products are in great demand, and to cover the latter, it is necessary to produce outputs in vast quantities; in China, it is possible. Third, if to assemble in another country, for example, the US, the cost of producing a unit will increase several times (due to insurance, wages, and logistics). Thus, the price of the final product will be greater accordingly. Fourth, in China, the extraction of rare earth metals (used in the manufacture of machinery) is about 90%; the state also restricts the export of these elements. Finally, the production tax in this country is one of the lowest.
Apple always makes an emphasis on the quality of the assembly. For instance, “there are 94 production lines at the Zhengzhou manufacturing site, and it takes about 400 steps to assemble the iPhone, including polishing, soldering, drilling, and fitting screws” (Barboza, 2016, para. 6). Then, it is essential to organize logistics appropriately and coherently. After a device comes off the assembly line, “it is placed in a sleek white fiberboard box, wrapped and put on a wooden pallet, and then wheeled out to waiting trucks” (Barboza, 2016, para. 7). Part of the products are shipped to other countries by plane, and the other part stays in China.
Then, when outputs come to a retail store, continuous support is provided. A consumer feels safe that his or her device will function well, and that the team of professionals is always ready to help. Finally, the company provides its clients with the opportunity to get a discount for a new product if they bring the old one to Apple. The firm pays a lot of attention to its recycling activities that are the last step of the production process. It seems that the latter demonstrates a great extent of coherency and appropriacy, which may be visible from the flowchart (Appendix 1). Such a manufacturing design contributes to the efficiency of operations management as a whole.
The designing step is conducted at Apple’s headquarters in Silicon Valley, California. Here, the company’s employees develop and improve a device, applying a sophisticated system of assessing the latter. Then, as mentioned above, most of Apple products’ components come from various manufacturers around the world. These manufacturers produce a particular item – generally, Apple’s device is a compilation of parts made by autonomous suppliers. For instance, the battery of the iPhone is manufactured by Samsung, while its camera is provided by Qualcomm.
The assembly stage is undertaken by two Taiwanese companies – Foxconn and Pegatron, mainly, by the former. They are responsible for the accurate and high-quality assembling of Apple’s products. However, it should be mentioned that recently, a number of the firm’s outputs started to be assembled in the US to maintain its economic growth. Finally, a complete device goes to retail stores worldwide at which a consumer can purchase it. These stores also take old Apple products and offer a discount for the new ones as an exchange.
The process flow may be described by identifying the location of the crucial departments of the company. Foxconn runs the Zhengzhou facility and even manufactures several small components, such as metal casings (Barboza, 2016). Apple orders a lot of elements from international partners, and then sells them to Foxconn. Barboza (2016, para. 5) states, “Foxconn’s facilities in Zhengzhou cover 2.2 square miles and can employ up to 350,000 workers, many of whom earn about $1.90 an hour.”
Here, an essential process that determines the quality of the products takes place. “The operation does what is called F.A.T.P., or final assembly, testing and packaging” (Barboza, 2016, para. 5). Then, the devices pass a government custom that is just outside the Foxconn facility and goes to the US and the rest of the world by plane. “Apple keeps products at Elk Grove, California (where central warehouse and call center are located) and ships products from there” (Lu, 2020, para. 7). The final step is recycling, which is also conducted at Foxconn, where Apple sends old devices provided by customers.
System for Regulating Materials
It seems important to emphasize that Apple Inc. has a unique and distinguished supply chain. It orders the components for the devices from suppliers around the globe. Hence, the system that regulates the materials needed should be genuinely sophisticated, and it might be assumed that the company has developed one. Apple Inc. achieves success by holding itself and its suppliers accountable for every stage of operations management – starting from product design and ending with recycling. The company maintains high standards in this regard to protect people and the planet by applying rigorous assessments (Apple Inc., 2020). Then, if any issues are identified, the firm starts working with suppliers to better their operations and ensure long-standing changes that will positively affect all the processes.
Apple’s requirements apply to suppliers across the chain – even to those that provide the company with services. “In addition to assessments, we [Apple] also seek input from experts across the industry and civil society, asking for feedback on what we are doing well and where we could be doing more” (Apple Inc., 2020, p. 77). Such an approach allows the firm to achieve the highest rate of objectiveness and accuracy.
For the company, responsible procurement practices are an integral part of the operations system. From 2016, Apple “began to engage even earlier in the product development process to assess new materials, technologies, and suppliers” (Apple Inc., 2020, p. 78). According to Apple Inc. (2020, p. 78), the firm’s “work begins far in advance of any production activity and includes a series of Facility Readiness Assessments and Process Safety Risk Assessments.” These examinations are developed to ensure that risks to humanity are mitigated before the launching stages of production. With such early evaluations, the company can prevent suppliers that cannot meet the standards from being a part of the supply chain. In 2019, 9% of prospective suppliers faced this prevention because of several identified critical violations of Apple’s policy (Apple Inc., 2020). Nevertheless, such a system also allows efficient and significant onboarding of new partners.
The mentioned assessments are a sophisticated process that needs a lot of time, estimates about 500 criteria, checks compliance, and determines aspects for improvements. All the assessed facilities get ranked on a 100-point scale. Moreover, the firm undertakes unannounced evaluations and unexpected visits “in response to supplier employee allegations” (Apple Inc., 2020, p. 80). After the results are investigated, the company provides supplier teams with experts who support them and help improve management policies. The latter activity is undertaken within the scope of Apple’s capacity-building.
Measures for Enhancing the Productivity of System for Regulating Materials
There might be some actions that could improve Apple’s system for regulating materials. Given the fact that the firm gets components from various suppliers, it seems rational to send to them the company’s employee who will constantly monitor, assess and report production issues during a year. Such an approach will contribute to the increased extent of transparency, as well as the quality of materials. Apple’s representative will be interested in the top-quality inputs and will do his or her best not to let the firm down.
Furthermore, Apple could cooperate with universities and scientific centers that may research how to better the materials and which ones to choose. Independent and reliable establishments can provide reports and investigations that assess several aspects that are out of Apple’s evaluations scope. With this approach, the company would get a more comprehensive picture of its actual and potential strategy for regulating the materials.
In conclusion, it might be appropriate to state that Apple’s operations system and supply chain are among the best ones for today. Its production management may be considered unique and exponential as it contains several significant aspects. The above research investigated Apple’s inputs, outputs, activities, layout, and system for regulating materials in the framework of the manufacturing approach. The firm’s departments and warehouses have notable locations that contribute to its profitability and success. Apple Inc. tends to demonstrate consistent and expedient control over its suppliers. Finally, it was suggested to send Apple’s employees to these suppliers to monitor the production process and to cooperate with universities and scientific centers to enhance the productivity of the materials-regulating system.
Apple Inc. (2020) Supplier responsibility. Web.
Barboza, D. (2016) ‘An iPhone’s journey, from the factory floor to the retail store’. The New York Times. Web.
Lu, C. (2020) Apple supply chain – The best supply chain in the world. Web.