FB 500 Company Analysis

Team 1
Ankur Kale
Abhi Rampal
Nitin Maurya
Rajagopal Srinivasan
Rekha 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
2014 2014
Sales Mix by Operating Segment Sales Mix by Product Segment
3% iPhone
America
6% 12% 1% iPad
Europe 10%
36% Mac
8% Greater China 13%
Japan 56%
iPod
16% 17%
Asia Pacific iTunes, Software
22% Retail services
Accessories

• Revenue: $183bn (7%)

• Profit: $39.5bn ( 6%)

* Source: Apple Annual report 2014

• Gartner Best Supply chain for last 8 years (since 2007)
• Inventory Turns: Every 5 Days, 73 Inventory turns per year. • ONLY 154 suppliers
• 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
Consolidated Income Statement
 Supply Chain - iPhone
Manufacturing/ Assembling
Design & Development Sourcing

China (50/50 split between Foxconn &

USA , China, Europe , Asia Pegatron)

Intermediate warehouses via UPS/FEDEX for online

stores.

Warehouse in, California

 Features- iPhone
iPhone
Models Iphone Iphone 3 Iphone 3gs Iphone 4 Iphone 5 Iphone 6
Release
Date Jan-07 Jul-08 Jun-09 Oct-11 Sep-13 Sep-14
Full Touchscreen
with icon based High Speed Fingerprint
interface 3G Speed Data Data LED Screen Scanner NFC
New iOS GPS System Siri Nano Sim Nano SIM
Updated Camera Motion Data
Apple Store with HD Recording Processor Barometer
Features
Lightening
No Front Camera Micro- SIM Card Connector
Multitouch
Features Stainless Steel Aluminum
Sapphire Crystal
Front Camera Lens

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

 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 Japan - 139 USA -60 Taiwan -42 South Korea -32 Malaysia -21
 Strategic Suppliers List
Component Supplier Location
Sapphire Crystal Components GT Advanced Technologies Mesa, Arizona
Chips Samsung Austin, TX
Chips (New) Global Foundries Malta, New York
Chips Texas Instruments Richardson, TX
Chips Maxim Integrated San Jose, CA
Corning Glass Corning Harrodsburg, KY
Display Japan Display Inc. Japan
Display Innolux Taiwan
Display LG South Korea
Storage Toshiba Japan
Storage SK Hynix South Korea
Touch ID TSMC Taiwan
NFC chip NXP Netherlands
Gyroscope -Old STMicroelectronics France
Gyroscope -New Invensense CA
Assembly Foxconn Taiwan (Assembly in China)
Pegatron Taiwan (Assembly in China)
New Assembly Foxconn Brazil
 SWOT Analysis

Strengths Weakness
• Customer loyalty • Incompatible with other
• Innovative Products OS
• Efficient Supply Chain • Market Share decreasing
• R & D investments • Limited Products
• Marketing and • Relatively high prices
Advertisements
• Product Focus
• Law Suits

Opportunity Threats
• Expanding Mobile Device • Rapid Changes in
Market Technology
• Rising Demand in Cloud • Android OS Market
Services.
• Limited Customization
• Innovative Approach
towards problems- Macbook Options
• iOS for Car/TV • 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-
record-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_optim
ization

• 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-
global-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