supply chain of apple

 For its creativity and design, Apple is popular. But few people realize that a factor that contributed to success is also the way Apple treats inventory. In reality, since 2013, the Apple Supply Chain has led Gartner's Supply Chain Top 25 list. The Chief Operating Officer of the company was Tim Cook, the new CEO of Apple, a company that hit 260.17 billion in sales in 2019. He joined Apple in 1998, and Steve Jobs re-entered the business at the same time, turning the messy operations of Apple into a success, becoming COO in 2005 and CEO in 2011.Tim Cook claims that inventory deprecates very, very easily, losing 1-2 percent of its value each week when it comes to technology such as smartphones , tablets and laptops-" inventory is inherently bad, "he says. A comparison of how tech companies treated their inventory back in 2011 reveals that Apple performed much better than Dell , HP, Blackberry (RIM) and Motorola. In 2011, Apple performed 2 times better than Dell, 5 times better than HP, 4.5 times better than Blackberry, and 5.5 times better than Motorola, using the Inventory Turnover calculation that shows how many times a company's inventory can be sold and replaced within a given time span (so the higher the number the better). With a value of $4.8 billion, Apple 's annual stock peaked in 2017. In 2018 , the company saw a year-over-year fall of 18.52 percent, but they bounced back quickly and had $3.8 billion in inventory in 2019, a rise of 3.79 percent compared to 2018.

In a nutshell, Apple buys parts and materials from different manufacturers, then ships them to China's assembly plant. Items are delivered directly from there to customers (via UPS / Fedex) who are purchased from the Apple Online Store. Apple holds goods in Elk Grove, California (where the central warehouse and call centre are located) for other distribution outlets such as department stores and other distributors and ships products from there. Customers should return items to the nearest Apple stores or dedicated recycling facilities at the end of the product's life. 

The mantra of Tim Cook was to slash inventory from the very beginning, cut down on warehouses and make suppliers compete with each other. Looking back at the last five years, in September 2018, Apple's inventory turnover reached its lowest point: 37.2x. That means every 10 days, Apple hands its inventory over.

It is very important to have as little inventory on hand as possible. About why? Because of the warehouse costs and potential hits from rivals. Manufacturers of electronics can't afford to keep so many goods in stock because a sudden announcement from a competitor or a new innovation could change everything and suddenly bring down the value of products in inventory.

By 2013, Apple was working with 154 main suppliers (for example, far lower than Amazon), which encourages stronger supplier relationships) and holding only one central warehouse in complete synchronisation with approx. 250 stores owned by you. In the computer industry, accurately predicting sales levels and not getting excess inventory is absolutely crucial , especially as new products cannibalise the old quickly. Not having so many SKUs helps accurate forecasting (Apple had 26,000 SKUs in 2013, far fewer than other manufacturers of technology). Having a longer product life cycle is another facilitating aspect and Apple has more than 12 months for its main products. And demand forecasting doesn't only come in the form of what goods the consumers are going to purchase, but also what kind of innovations are going to be in demand for the next few years, helping the company to minimise supplier costs by placing longer-term orders. This also contributes to the development of ample supplier demand, so that the components can not be ordered by other rivals and thus restrict imitations. Although Apple has always been pushing for quick inventory turnover, not rushing to sell, it made a shift in 2011. With the launch of the iPad 2, the move was introduced and consisted of selling the much-awaited goods the second day after they were shipped to stores, amid the queues of customers in front. This measure was taken to ensure the smooth operation of inventory monitoring and there are no errors that contribute to inventory inaccuracies.