Supply Chain Management In 6 Minutes | What Is Supply Chain Management? | Simplilearn

SPEAKER: Alex is a
major tech enthusiast.

Recently, he attended a
virtual Apple launch event,

where he witnessed
the capabilities

of all new iPhone 13 series.

Instantly, he made the decision
to get an iPhone 13 Pro.

However, he missed the
pre-booking deadline,

and he's been waiting
for this phone

to hit the e-commerce
sites ever since.

After waiting for a long time,
he visited the offline Apple

Store, where the store
representative informed him

about an ongoing delay in the
production of iPhone 13 Pro due

to the supply
chain inefficiency.

Alex then went to
a couple of more

trusted Apple reseller outlets
and received the same response.

He then became intrigued
about this term supply chain

and how it affects the
production of a big corporation

like Apple Inc. Therefore, he
began exploring this topic.

He spoke with his friend
Rachel, who works at Apple Inc

to learn about supply
chain management

and how the chain is disrupted
due to international chip

shortage.

Rachel explained to him
about supply chain management

using Apple Inc's example.

She said if you order an
iPhone from the Apple Store,

you'll notice that Apple
is not precisely delivering

the product on its own.

All the iPhones
available on Apple Store

are majorly manufactured
at the Shenzhen assembly

plant in China.

But before that, raw
material suppliers

from all around
the world deliver

goods needed to manufacture an
iPhone to this assembly site.

And once the product
is assembled,

it gets shipped to
the storage warehouse

and then to your doorstep
by third party vendors

like FedEx or UPS.

This means entities such as raw
material supplier, manufacturer,

and third party
logistics vendor are

in consistent communication
with each other

until the iPhone reaches you.

These entities and
their communication

involved in product
manufacturing

to product delivery
is collectively

considered as a supply chain.

After listening to
this, Alex asked Rachel

how Apple Inc has
implemented this supply chain

and how can one design
a sleek strategy

to manage a supply chain
that is not overly influenced

by external factors.

In response, Rachel
explained, well, there

are five stages for building
supply chain management,

and Apple has adopted these
stages while building the supply

chain management strategy.

The first stage of
building a supply chain

is planning an
operational strategy.

Apple, since its inception,
has had a clear goal.

To provide the best personal
computing devices to consumers.

The initiative of Apple to
scrutinize each app or program

before launching it
on the Apple App Store

makes all Apple
devices more secure.

These pre-planned
actions or strategies

had been the most vital
USPs of this organization.

The next stage is sourcing.

In this stage, Apple acquires
equipment and materials

from suppliers and
then ships them

to the offshore assembly
factory in China.

The 120 hertz screens are
exported from Samsung's Asan

plant.

Foxconn ships batteries,
and the processing chips

are manufactured and
exported by TSMC.

Then comes the third
stage, known as Making.

This is the stage where Apple
manufactures its products.

The outsourced
Chinese assembly plant

majorly assembles all Apple
products and ships them

to the warehouses or
distribution centers

spread across
multiple continents.

After that, the next stage
of supply chain management,

delivery, comes into play.

Here, the products
ordered online

get shipped to the
doorstep of consumers

from storage warehouses,
whereas the distribution

centers, on the other
hand, send items

to retail stores
for offline sales.

This whole shipping
process is carried out

by third party logistics
vendors, such as FedEx.

Supply chain management's last
building stage is returns.

Here, the faulty or damaged
products during delivery

get shipped back to
the storage warehouses

and then the assembly
plant for refurbishment.

Statistically speaking,
97% of Apple's supply chain

is all about outsourcing
agreements and collaborations,

which has helped Apple become
the best computing device

producer.

However, due to the recent
worldwide chip shortage,

Apple's supply chain has
been affected adversely.

The world was shut down because
of the COVID-19 pandemic,

and many factories
also went down with it,

leaving chip
manufacturing materials

unavailable for months.

Increased consumer
electronic demand

in recent times and scarcity
of semiconductor supplies

has put pressure on
Apple supply chain,

prompting the company to halt
production of 10 million iPhone

13 devices.

After listening to
Rachel, Alex learned

why there is a constant delay
in the delivery of iPhones

and became more patient about
his desire to buy an iPhone.

On that note, here's
a question for you.

From the given
options, which option

does not fall under the stages
of supply chain management?

A, planning
operational strategy.

B, sourcing.

C, making.

D, disposal.

Do give it a thought
and leave your answers

in the comment section below.

Three lucky winners will
receive Amazon gift vouchers.

With the help of an
Apple Inc case study,

we explored how a
supply chain management

strategy can be established.

This domain of
business management

is crucial for any product
or service-based company

in the long run.

A well-managed supply chain
can lower operational expenses,

allowing a firm to
gain more profit.

It can also improve corporate
brand recognition and customer

service.

Hence, companies invest a great
deal in their supply chain.

They constantly hire
professional supply chain

management experts.

These professionals are tasked
with managing logistics,

updating the
company's inventory,

and conducting a thorough
evaluation of the manufacturing

cycle to discover
and correct flaws.

That is the reason why
these SCM professionals

are compensated really well.

According to Payscale, the
average salary for supply chain

managers is $84,000 per annum.

Whereas in India, the
average annual salary

is around 8.5 lakhs per annum.

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