University of California
Type of paper: Thesis/Dissertation Chapter
Apple’s Inc. Operations Management
Apple’s Inc. Operations Management
IntroductionDefinitively, the term operations management refers to the decisions, responsibilities and activities of managing the assets dedicated towards the manufacture and distribution of a service or a product. Successful companies are majorly dependent on use of operation management technology to facilitate the big changes and technological demands of the world markets. The use of technology to influence the working pace of employees and to speed up consumer transactions within a business environment is vital in uplifting a company. All of these aspects are pegged on the day to day business operations within the company. The focus of this particular report aims to highlight on the major and evident processes carried out in one of the most successful tech companies in the world, Apple Inc (Boyer & Verma, 2010).
This company both offers an innovative and competitive edge within the global market. It is one of the highly efficient companies in the global technological sector given its year after year maintenance of its consumer base and profit margins. The corporation endures to lead the tech industry by achieving the demands of its clients via its rapid innovation of new or improvised products. Some of its products entail the award winning computer operating system applications like the iLife application, the Professional applications and the OS X (Boyer & Verma, 2010).
The strategic operation management policies at Apple Inc. have proven to be impeccable since it’s’ establishment in the year 1977. The Apple Inc. Company has been committed to delivering the best quality services to the end users of its products through promoting a satisfactory user experience in their digital products. Throughout the course of this report, the paper content will highlight on the major management and operation strategies undertaken by the company to ensure the clients are always kept happy (Greasley, 2008).
The business operation strategy mainly involves expanding its distribution network within every country and its institutions. The institutions include government markets, small to medium businesses, enterprises and the education sector. In order to maintain a high-quality purchasing experience for the company’s products, the Company continues to make plans on the expansion schemes (O’Grady, J. D.2009). These proposed systems are aimed at improving the distribution abilities of the company. The significant plan of action highlighted in the paper involves the steps taken towards the expansion of the number of the Apple Inc. Company’s retail stores worldwide.
Current Operations StrategyThe consistent and constant introduction of hardware and software applications by the Apple Inc. Company has enabled it to maintain a large and increasing customer foundation. Not only does the Apple Inc. operate in the United States of America, but also in various international markets within the global market. The existing operational functions in the company mainly depend on the factors the operating environment of the organization, and they mainly include the political and economic elements within the environment of business operation (O’Grady, J. D.2009).
The main political factors affecting the operations of the Apple Company comprise issues regarding policy compliance in different countries like political instability. The economic factors affecting the business operations include the periodic changes in the value of the U.S dollar versus the local currency. Nevertheless, the company has been able to maintain a stable shareholder return on investment within all its years of business (Kamauff, 2010). The key issues involved within the management operation strategies are discussed below in detail:
Operations functionsThe operational functions within an organization define the unit roles or the organizational parts responsible for particular activities within the organization. The operational management functions identified at the Apple Company entail communication services and support distribution of products to warranted suppliers and retailers (Linzmayer, 2004). The Apple Company has major distribution channels and production subsidiaries, for example, in the Asian continent mainly in China and Korea. The basic roles of the operations managers in the Apple Company are listed below:
Roles of the Operations ManagerThe significant roles assigned to operations managers in the Apple Company aid in streamlining business operations while maintaining the value of the company. The managers are also expected to practice and abide by the principles of management by conducting all business activities ethically, honestly and with full compliance (Nersesian, 2000). The company regulations require and anticipate the operation managers to accomplish the following responsibilities in the Apple Inc. Company to ensure smooth running of operations:
Make PoliciesThe operations manager is obligated with the task of policy making and implementing them to conform to the Apple Company’s mission statements and vision. The operations manager ought to ensure that the set policies are effective in the business environment and that they are being put to proper use. Some of the policies employed by operations managers at the Apple Company include examining the expected performance level for workers, the employee retention, the employee safety regulations, etc. Furthermore, the operation managers are also tasked with making sure the business follows all national government legalities and other rules set by the company (Ireland, Hoskisson & Hitt, 2008).
Solve ProblemsThe operations manager works towards achieving the company objectives and subsequently presents project plans to improvise the business operations. The managers demonstrate their skills through facilitating decision-making strategies that solve organizational problems related to business operations. The operations managers try to resolve different issues in the day to day operations of the Apple Company (Parker & Anderson, 2013).
Some of the areas that require problem in the Apple Company include issues regarding the client retention, the matters concerning the delays in shipment, the customer satisfaction index and the quality of services. The operation managers possess the problem solving skills necessitated for risk management within the Apple Company, which is why the managers are expected to be good at making fast decisions related to the Company’s operational processes (Cooke, 2012).
Manage FinanceThe management of the budget allocated for business operations is also vital for an operations manager. The finances for operational costs are well managed by the managers in order to ensure the business does not succumb to any losses. The Apple Corporation utilizes its financial resources to positively safeguard its day to day operations within all its major departments (Young, 2009). In order to track and optimize company spending, the managers are mandated to prepare periodical budget reports for the Apple Company’s senior management.
Operation managers are expected to maintain and successively collect information regarding sales, grow the profit margins and reduce overall operational costs. Coming up with business forecasts that aid in future decision-making processes is vital in realizing efficient ways for handling the corporations operational costs (Cao & Zhang, 2013). The consistency in revenue generation and profit making is pegged on the manager’s ability to regulate the expenditure.
Enable Communication (Company Representative)The smooth flow of communication within the organization is vital to accomplish all the business processes. The communication between all the entities involved in the operational processes enables the company operations manager to successfully ensure delivery of services to both the suppliers and direct clients within the global market. The operations manager ought to ensure there is a consistent understanding and no miscommunication amid the top-level management and the employees (Mahadevan, 2010).
Their responsibility is to ensure there is a good understand at all times so that the business operations are dealt with in the right manner. Therefore, resolve any misunderstandings and disputes at the earliest time are essential to run effective operations. Having exceptional interpersonal and communication skills is also appropriate for an operations manager. This enables them deal with people and treat them in a formal and ethical way.
Manage LogisticsManaging the logistics within the Apple organization is a vital job for the operations managers. For instance, ensuring that the machinery used in product manufacture are up to the industry standards and the subsequent goods and services offered are of high quality. The operations managers analyze the current state of logistics in the Company and conclude whether there is any need for changes to be implemented (Nicolás & Sanz, 2014).
Human Resource ManagementHuman resource management is vital in selecting an appropriate employee base that maintains successive business operations that are profit making. All the elements of the business operation process are highly dependent on the specific roles for each specialized employee all the way down to the lowest wage bill within the company. The managers have the obligations to assign tasks to various employees within the organization. Employing new workers is also a major responsibility for the managers at the Apple Company.
Process ManagementThe process management forms the vital section of the operational activities within the business. A smooth management process ensures that goods and services are delivered to the clients. The business processes in Company involve manufactures or the producers, the wholesalers they supply the products to, the retailers, the consumers and most importantly the customer inquiry and feedback service.
The manufacturers mainly deal with the design and development of the products or specified service. The products include the hardware devices accompanied with software material. The Sales teams are tasked with running activities that promote the amount of product supply within the client base. The Apple Company majorly relies on wholesalers and retailers to supply and distribute the Company’s products. The consumers additionally have access to an all-time available customer support in all time zones the Apple Company or its affiliates conduct business. The business operations processes are demonstrated on process chart below. It highlights the main elements that support the Apple Company (Lashinsky, 2012).
(Sales and Marketing Team)
(Sales and Marketing Team)
Customer service strategiesThe customer care center section of the company is vital to up keeping the image and social responsibility the company has towards its customers. The plans put in place within the business operations platform to support the customers comprise:
Staying Online– This service allows the customers who include the individual clients, retailers and wholesalers to contact the Apple Support team regarding any issues. The clients can submit online tickets or use self-service online chats that provide prompt feedback regarding various issues whether they are technical, logistics or even for educational purposes.
Make Service Delivery a priority – utilizing a well-trained workforce to manage the customers always comes first for any organization. The Apple Company ensures that all of their working staff from the sales team, the online or phone customer service maintains a high level of courteous conduct when dealing with customers.
Store collective Wisdom – This strategy sets up a system that offers ready information for the support team to respond to the client complaints and inquiries. Information collection, recording and storage ensure the Apple Company maintains a database of client information regarding customer care. This ensures there is a constant flow of accurate information for the staff to use while dealing with customer complaints.
Staff Empowerment – This policy has saved the company a lot of paper work and time for solving client problems. Streamlining the hierarchy or line authority within the operational sections of the Corporation has enabled the company frontline representatives to solve client problems. Empowering low level employees with ability to make certain decisions based on good judgment is good for the business (Nicolás & Sanz, 2014).
Client Understanding – The Apple Corporation has a simple Web-based customer relationship management software (CRM) application that helps the support team interact with the customer. Having a database of client info affiliated with their Apple IDs ensures the management team understands the consumer behavior.
Managing Client Relationships – Retaining special treatment of the customers is vital for keeping up the Apple Company’s image. This is achieved via reward programs that satisfy customer loyalty. Establishing a track record of quality provision through identifying and gratifying valuable clients that use the company’s products.
Managing capacity and demandManaging the capacity and demand of the Company has been facilitated by the globalization of the Apple Company’s operations. Globalization of sales enables the clients all around the world to access the services offered by the Apple Company. The constant demand held by the Apple product’s market gets its support from the multiple chain suppliers and the wholesale product sellers with the help with the production entities.
The demand for Apple products is increasing especially in two large emerging markets, China and India where the demand for the latest iPhone 6 product went above 10 million on the first weekend of release. The customer demand has to be predicted and the production demand satisfied on the manufacturing end. The Apple Company serves the worldwide market with approximately 437 Apple retail stores in 15 countries all over the world. Localization of production in places like china has enabled the company increase its productivity while maintaining a low cost labor force which saves on the any additional operational costs (Latif, Jaskani, Ilyas & Gulzar, 2014).
Inventory managementThe Apple Company has a disciplined Inventory management team. This can be seen from historic consistency on level of efficiency with the inventory. This is also indicated by how long the company takes to sell through its entire inventory. The number of days it takes for inventory movement was average of 5.3 for the latest product unraveled in the market. This is very low compared to other high performing tech companies like Dell or HP which had 10.2 and 26.5 approximated days respectively to move inventory. The inventory turnover facts also support the incredibly efficient inventory system given high inventory turnover the company has over a small periods of time (Abraham, 2014).
Scheduling operationsThe system put significantly helps the management keep track of the dales. The devices are designed and developed in a high quality industrial and manufacturing companies which are in turn delivered to distribution channels and systems around the world. Scheduling operations are accomplished through job tracking all the involved facilities responsible for the delivery of the product to the consumer.
The scheduling operations involve activities in the production centers, the distribution channel, and the purchasing point outlets. The time frame and location of operations are also entailed in the scheduling plans to showcase the scheduling activities planned for the company. Forecasting demand and foreseeing sales levels are also vital to scheduling operations.
Process analysis and improvementThe Apple Company is endlessly working to be on the forefront of cutting edge technology. That is why its process analysis and improvement environment continues to conduct research towards discovering new and innovative technology for the Apple Company’s prospective clients (Cornelissen, 2014). The operations manager is expected to look into the various operating departments within the company and identify the specific areas that need improvement.
The analysis conducted identified a few processes that limit company’s operations. Some of the flaws that needed to be improved on included the periodic system failures in certain locations that threaten to impede the engineering and shipping of products. System failures may also hinder successful delivery of online services, financial reporting and processing of transactions. Other areas that need improvisation is the relationship management between the company and the retailers, the macroeconomic factors within the business environment which may lead to unforeseen fluctuation in sales if they are not positively addressed (Abraham, 2014).
Purchasing and supplier managementThe Apple Company supply and purchasing model is majorly dependent on its dedicated client base which offers a steady market for the company’s products. The company’s main client foundation is vast which has made it possible to supply a wide range of products consistently for a long period of time. The main operations involved in the company majorly entail the design and development of hardware and software applications.
Lean Management within the OrganizationThis is a process within an organization that involves the efficient removal of waste from the entire aspects of the daily operations. Where, the consideration of wastes involves the loss or use of resources that doesn’t lead to product creation or service provision with regards to customers’ expectations (Cornelissen, 2014). Therefore, APPLE Corporation benefits much as there is increased efficiency in management. The purpose of adoption of lean management by Apple Inc. includes; the need to increase customer responsiveness, to minimize production resource needs and costs minimization, and to enhance quality of products hence increasing the firm’s competitiveness and profitability.
According to Apple’s highlights of audits conducted in 2011 in the company’s 2012 Supplier Responsibility Report, violations that occurred and corrective measures that occurred with their outsourcing supply chain and manufacturing representative is clearly illustrated. This shows the need for the firm and its subsidiaries to adopt lean management as part of their business. Lean management is implemented through application of numerous tools and methods that include;
Total Productive Maintenance
Just-in-time Production/KanbanCellular Manufacturing/ One-piece Flow Production Systems
Pre-Production Planning (3P)
Lean Enterprise Supplier Networks
Kaizen rapid improvement process
The firm’s adoption of lean management is to achieve immense service and product quality at the minimum cost possible and at maximum customer responsiveness. This efficiency in management is attained through applications of objectives including;
Increasing the flexibility and velocity of manufacturing
Minimizing service and product resource requirements in the form of materials and capital invested. This reduces the costs of production allowing for the ease of alterations and mixing of products developed.
Improving the initial quality of the product
Implementation of lean management minimizes costs of operation with regards to resource allocations, equipment downtime, and rework thereby optimizing the production process.
For instance, lean methods implementation at Warner Robins U.S. Air Force Base in Georgia has minimized the duration it takes for the overhaul of a C-5 transport plane from an approximate 360 days to 260 days. This has immense effect on the resource allocation for the Air Force since minimized maintenance time of 30% requires that a lower inventory of planes is kept. Therefore, this increases the aircraft’s flying status by 10% as a result the total cost of the in-service target is greatly minimized (Cornelissen, 2014).
Capacity Management within the organizationThe capacity requirements for the company APPLE Inc. is defined by the short term and long term planning conducted by the organization’s management. The planning process is important in determining how the needs are to be fulfilled. The company’s capacity planning decisions are dependent on the market demands and the management aligns its materials, human, and financial resources. The evaluation of the company’s capacity requirements is from two perspectives including; short-term capacity strategies and long-term capacity strategies.
Short-term capacity strategiesThe organization’s managers every so often use the product’s demands to approximate the work load that the company can handle in the short-term since managers anticipate output requirements for various products and services within a short period of 12 months. Requirements comparison with the available resources is done to ascertain the particular capacity alterations that are necessary. The short-term business periods are characterized by unchanged facilities hence making fundamental capacity to remain fixed within the period (Cousins, Lawson & Squire, 2006). The necessary alterations to the capacity is determined by whether the product can be stored as inventory, the conversion process is labor intensive or capital intensive.
The processes, that are capital intensive, rely heavily on plant, physical facilities, and equipment. Intense operation of the organization’s facilities can lead to the modification of the company’s short-term capacity. On the other hand, labor intensive processes alterations only involve the hiring or laying off of employees or by allowing certain workers more time. A product’s duration in storage as inventory would cause shifts in strategies for capacity alterations. The short-term capacity strategies that might be applied by the company include;
Backlog; this is a strategy applied during periods when the business is at its peak. Customers, who are willing, are requested by the company to wait for the fulfillment of their orders at a much later date after the peak period.
Inventories; During the periods of slow business or slack periods, the company opts to stock up finished goods so as to meet the customers’ demands during peak periods of business.
Level of Employment; the company would re-structure the employment level through hiring and firing of employees depending on the fluctuation of demands during peak periods.
Training of Employees; the company’s employees are required to be taken through multi-skilled training so as to allow job rotation for the employees. These multi-skills earned from the training assists the management in selecting alternatives for the hiring opportunities.
Process design; Contents of the job are altered through redesigning the job
Subcontracting; the company opts for subcontracting specific firms for temporary production of particular parts. This is a common process during peak hours.
Long term capacity strategiesThe market dynamics and the rate of technology uptake in recent time have made it difficult for APPLE Inc. and other companies in the industry alike to determine the long-term capacity. This is because of the uncertainties in technology and consumer demand trends. This long-term strategy application in capacity management faces immense risk and increased challenges. APPLE’s recent unveiling of the new IPhone Series provides extensive leverage on the market to produce more products for the future and at a rate equal to consumer expectations (Heap, 2008).
The long-term capacity necessities are determined by the company’s product development, marketing plans, and the products life cycle. The entire output level of the firm involving numerous alterations to the organization’s operation is accommodated by the long-term capacity planning process. Therefore, the firm’s management is responsible for the implementation and marketing the environmental assessment of the long-term capacity plans. However, the long-term capacity decisions may be affected by the following;
Phasing in capacity; a technology company such as APPLE Inc. faces the risk of increased rate obsolescence. Therefore, the industry requirement is that swift roll-out of products is essential to the firm’s success. The duration of facilities construction is lengthy compared to the rate of product development and commercialization thereby rendering the facilities incapable. However, the firm may apply functions such as phase in capacity on segmental basis. In addition, the company would employ an effective method of technological breakthrough capitalizing via committing men and funds towards facilities for a duration of 3-5 years.
Variety of products; for the company to increase its profitability it requires to produce a variety of products using the same facilities since this increases efficiency. Also, the manufacture of multiple products minimizes the risk of failure in the market and numerous products development increases the performance of capacity planners. Maximization of the firm’s capacity is achieved through proper scheduling as the different products have different life cycles.
Phasing out capacity; the production facilities that are out of date result is extreme plant and machinery downtime and closures. The phasing out of capacity is done in a manner that is environmentally friendly minimizing the negative impacts to the consumer population since the impacts of closure extend beyond the fixed costs of plants and machinery. This phasing out process also creates the opportunity for the firm to sift employees to other job applications for an ongoing product development.
APPLE Inc. needs to consider greatly the immense advantages that capacity planning and decisions offer the company thereby increasing operation efficiency. The benefits range from;
There is real impact felt by capacity decisions affect the ability of the firm to achieve its future demands for the services and products since capacity basically minimizes the rate of possible output. Numerous opportunities would be capitalized on if the company has sufficient capacity to handle consumer demand.
Operating costs are affected by capacity decisions since practically it is evident that the demand requirements and capacity are directly related. This means that a positive correlation existing between demand and capacity minimizes the costs of operation immensely. However, the actual demand and expected demand usually differs or cyclically varies thereby needing capacity decisions to assist in creation of balance of the costs of over and under capacity.
Initial costs are majorly determined by the firm’s capacity. Normally, the costs are greater when the capacity of a productive unit is great.
It is generally less expensive to modify or alter capacity decisions since they characteristically involve long-term resource allocation. This therefore limits the extent of major costs incurred.
A firm’s competitiveness may be affected by the capacity decisions of the managers. The availability of excess capacity in a firm or increasing capacity may act as barrier to entry or push other firms out of business in the industry by other firms. This increases its competitive advantage.
Management greatly benefits from efficiency in capacity decisions as it increases ease of operation and fluidity between departments involved in the production process.
ConclusionsThe outcomes from the above analysis of Apple’s Inc. operations processes, interesting subjects and complications show that the accomplishment of its supply chain processes is contingent on how well the managers control the supplier and customer relationship. This comprises of early supplier participation in innovative product development, proximal communication and supplier performance upgrading or enhancement via evaluation of the current system.
In the close future, the mix of universal strategies to propel the company operations will certainly give Apple Inc. the improvement it needs to supports its consumer’s demands. The leadership strategy, the outsourcing strategy, the differentiation strategy and the customer-centered services are major areas identified within the operations management docket. Positively addressing these particular issues while maintaining a high quality service center at the same time is essential to the company’s improvement objectives for products understandability especially for the software and hardware. Apple’s new products and services can be expected soon that would introduce a new model of technology on leading front.
Honesty in operations management is vital to enabling the smooth processes involved the Company’s internal controls. Decisively, the manager has the role to help prevent or minimize any errors or fraud by detecting them at early stages before they turn into something that would alarm the senior management. It is worth noting that a control system, no matter how well designed and developed, can deliver only sensible, not absolute, reassurance that the purposes or goals of the business operations are duly met.
One other vital factor highlighted in the report content is the importance of maintaining fair activity costs for the operational system. The system depicts resource constraints as a main feature in particular locations which hinders and limits sale of products to customers due to ignorance or lack of ready acceptance. The evaluation of internal controls within the operational platform of the Apple Company helps the managers predict and illustrate the future expectations of the business. The change in business conditions also poses a vital topic of how to evaluate the effectiveness of business controls in the future periods in the case there might be any risk involved.
The Apple Company assesses the enactment of its functioning parts or subdivisions in relation to the operating income and the net sales. The Retail section overall sales are established on the sales made and retrieved from the Apple Company’s retail stores. On the other hand, the overall net transactions for the geographic divisions are commonly based on the setting of clienteles. The business operating income for every section comprises of the operating expenditure openly attributable to the each department related to business operations. Additionally, the overall net sales to third parties and the related cost of sales and other expenses; for example, advertising expenditures are normally incorporated in the geographical area in which the expenses or operational costs are incurred.
The recommended approaches for the firm to take to improvise its operations would involve multiple departments or segments in the organization. The operating income for each section ignores other expenses and income which are managed outside the functioning segments. This ought to be looked at and be addressed. The first and foremost section is the communication sector, which has to be kept running at all times to ensure the passage and exchange of information within the organization during operations.
Since the Company deliberates the weakening in market share value of its in demand securities investment portfolio to be provisional in nature, the Company characteristically capitalizes in highly-rated securities. This policy usually restricts the amount of regular investors who can acquire stocks. The Company’s investment plans require the shareholders to practice the highest form of activity performance with the chief objective of reducing the possible risk of principal loss. Other areas recommended for change include:
The shipping costs should be kept low for all the periods presented. The aggregates payable to clienteles linked to the shipping and handling cost of goods or services are usually categorized as revenue. Therefore, the Company’s handling and shipping costs should be kept low to minimize operational expenses while maximizing profit returns. The warranty expense also forms an essential part of the Company’s overall estimated cost for either a hardware or software component sold to clients. The warranties for most hardware and software applications ought to be assessed for adequacy with regards to the pre-existing warranty liabilities. This goes a long way in ensuring that the actual changes in future estimates and client experience are easily tracked.
The operational costs incurred in software development and research of new application by the company also need be regulated. There are occasions where heavily funded research results into dead ends. Therefore, the development costs of PC software, to be leased, sold or else marketed, are highly exposed to capitalization by the company. This instigates when a product’s technological viability is recognized and proven then ends with the product availability to general clienteles. Consequently, expenses incurred following the accomplishment of a technological practicability are generally not important. The firm ought to look into the spending on most software and application development prices and what effect they have on the returns anticipated from the finalized product or service.
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