Supply chain management on mobile phone companies

Supply chain management is the practice of controlling the flow of information and materials in a supply chain to provide the highest degree of customer satisfaction at the lowest cost (Hugos 2011, 15; Skulley 2003, 99). It entails the integration of the main business processes from the extraction of raw materials to the moment the finished product reaches the customer, including the provision of transportation and storage services, intermediate processing, and the last ultimate sale to the customer. In order for an organization to achieve its specific goals, it needs robust supply chains, committed CEOs, and employees who collaborate. Founded in the, Apple Inc. international enterprise based in the USA with its headquarters at Cupertino, California (Kaur and Arora 2015, 940). The corporation is renowned for developing designs and selling electric devices such as personal computers, phones, tablets, and computer software. There have been debates as to whether Apple’s supply chain is the best supply chain in the world. There are various credits given to the company for its creativeness in design and innovation. Few people know that the success at Apple is attributed to how the corporation handles inventory. The company buys raw materials from various suppliers where they are shipped and taken to the assembling plants where they are then shipped directly to the buyer. When the product life ends, the customers take the products back to the nearest apple store or a dedicated recycling facility. Samsung, on the other hand, is an international South Korean company with its headquarters at Samsung Town, Seoul, South Korea. It contains numerous and varied affiliated businesses and subsidiaries. The major product and the key competitor of iPhone is Samsung Galaxy. In the supply chain management context of Galaxy, Samsung has revealed an operational excellence which makes their supply chain become famous across the globe. It is not well known whether the supply chain at Samsung is better than that of the Apple since both of them are technological giants that are competing for customer satisfaction at the least price every day. This paper is an analysis and comparison of Samsung’s and Apple’s supply chain status.

The overall design of the supply chains

Polat and Gungor (2016, p.150) assert that Samsung likely to enhance it is the success when the iPhone sales increase. Polat and Gungor (2016, p.151) further reiterate that for every $1,000 Apple makes form the $1,000, Samsung galaxy generates $110. The idea is a reflection of the rivalry between the two mobile manufacturers since one has more of unusual supply chain design in the business. The two technology giants are striving to lure customers to purchase their products, But Samsung galaxy is likely to make more sales from the sale of the memory chips and screens since Apple relies on these products to produce the iPhone (Kaur and Arora 2015, 940). iPhone and Samsung are the two main Smartphone being sold in this contemporary world. Moreover, Samsung and Apple expect to be the most profitable organization s in 2018.

The companies need each other to realize this fortune. For example, for iPhone to be manufactured, Apple must purchase the Samsung parts whereas, for Samsung galaxy to be sold, the company needs require orders for the Apple Inc. Particularly, in 2016, Samsung Company made $195 billion from the sale of the mobile phones parts to the Apple Inc. (Corominas 2013 p.6828). This mutual relationship was established d after Apple had started selling the Smartphone because of the cooperation between organizations, Apple sales more than 200 million iPhone annually hence limiting the Supply field. Samsung Company is the main maker of the semiconductor in the world, it is the only organization with the potential of making small chips featured with the extra memory volume. Additionally, the corporation is the sole maker of organic lights which emits the displays of diodes. Apple uses these parts in the manufacture of the iPhone screens. However, in 2011, the two organizations fought the legal battle for the patent infringement. Apple accused Samsung of copycatting their designs.

The Supply Chain Model at Apple

Regarding the supply chain management practices in the production of iPhone, the sophisticated software system of iPhone as well as the supply chain model is the secret behind the company’s leadership in the smartphone market. For many years, innovations at Apple have made it produce the phones that no other company has been able to offer to their customers. The following is the supply chain process for the manufacture of iPhone.





Figure 1: The Supply Chain Model at Apple (Kaur and Arora 2015, 940)

Supply chain planning for the iPhone is a good example of new product process which involves the incorporation of research and development (R & D), and many other functions under the company’s supply chain management such as marketing. From the above picture, Apple increases the introduction of a new commodity by obtaining the licensing and third party businesses. One thing that astonishes people is that Apple has to complete payments to its various vendors for the security of some strategic raw materials. The diagram below is the supply chain map for the production of iPhone, which shows the expression of a large system from the point of source to the consumer end. The company will buy materials from various suppliers which are then assembled in China from where they are distributed to the buyers via the company’s online stores. They can again be kept at Elk Grove, California from where they are distributed in alternative distribution channels.



Figure 2: Supply chain planning for the iPhone (Kaur and Arora 2015, 940)

Supply Chain Model at Samsung

As a result of the competition that the company is given by Apple Incl., it has responded by producing the high tech Galaxy series which is the closest competitor of iPhone in the smartphone market. There are 7 transformations that the executives at Samsung pay much attention to so that the company can maintain a high profile in the market and ensure total loyalty of its buyers. One of them is that the customer interests come before anything. A client-based company is always successful. Secondly, the company improves its operations in the supply chain by adopting the Six Sigma Methodologies. Thirdly, they are able to gain remarkable success by utilizing the APS system. Fourthly, they utilize the "Voice of Business" system where action plans are developed on a collective decision which makes it easy to sort the needs of the customer on time. Fifth, the company employs people with a good track record by gradually integrating merit-based system. The sixth one is standardizing parts and processes so that they can manage the efficiency and quality of the product more easily. Lastly is the establishment of a powerful risk management system.

Distribution and Logistics

The smartphone inventory usually depreciates quickly hence losing value and as result, he affirms they should be handled in same way highly perishable products are managed. Apple purchases material and components from several suppliers and ships them to their main plant located in China for manufacturing. Then they are distributed directly to various consumers across the world through Fedex who accesses them at Apple online store (Kaur and Arora 2015, 946). For the distribution of other distributors and retail stores, the company keeps the products at the California, Grove, and ships the goods from directly from there. Therefore, in the product life, the clients send the goods back to the closest Apple store (Kaur and Arora 2015, 946). The way Apple Company sells its goods it cannot be compared with other organizations in the electronics industry. The corporation has the best channel and direct pricing plan for both online and retail storefronts. Apple does not discount via direct channels and this makes it have a unique distribution strategy. The company discounts only refurbished goods and do not change the prices of its commodities on the season. For instance, their prices are kept stable. Although it is illegitimate to set price to the clients, the company is still in position to keep the retail price stable. Apple online and the retail storefront are special and unique. Their strategy emphasizes more on the support and education than selling. Their plans are simple with minimum crystal and signage of vivid messaging. In fact, their goods are positioned as the unique groups. Additionally, the organization employs resellers for selling their products as special quotas as opposed to the side by side selling to the next rivals either on the online and storefront. For instance, the suitable buy online comprises of the section tagged Tablet PCs and iPad.

Sustainability and Corporate Social Responsibility (CSR)

Companies in the contemporary are striving with the current roles which are to achieve the requirements of the current generation without infringe the ability of the coming generations to realize their own demands. Corporations are being urged to assume the responsibility for methods of the operations effect community and in the natural business environment. Organization is being driven to employ the sustainability norms in the way they run their business. Boiral (2016, p.241) defines sustainability as the organization’s operations which are considered to be standard and which demonstrate the inclusion of the environmental and social concerns in the business activities and in the interactions with the entity’s stakeholders.

In this current regime, organizations are not allowed to experience rapid economic growth in the isolation from the agents which is effected by the actions. As result, firms are required to focus their attentions on the increasing their good corporate image and bottom line. Additionally, the companies are urged to embrace the international trends and remain committed to the financial roles to deliver both public and private gains which shape the corporation’s rules, business model, and frameworks. Further, entities should improve their current efforts and understand the main socially responsible company and consistently update their long and short terms agendas to remain ahead of the faster changing issues.

The complex shift and stark occurred on how corporations could pursue themselves in the relation to the broader variety of both global and local stakeholders. The quality relationship that organizations has with workers and stakeholders such as communities, activists, state and public officials , suppliers , investors ,and customers are the main drivers of the success in the corporation and the company’s ability to respond to the corporate social responsibility ( CSR) and competitive conditions (Gungor 2016,p.151). These robust transformations need global and national organizations to handle their operations in terms of the sustainable development and both individual and organizational management plays a core function in this adjustment.

Companies have created a variety of the approaches for handling intersection of the corresponding business, societal demands, and natural environment imperative. Organizations are considered on the development of the continuum with the respect to the how and deeply they are consolidating social responsibility strategy in the day to day global activities and at the end of continuum are corporations that does not embrace any role to the environment and the responsibility. Additionally, other continuum are the companies which perceive the activities as the having the importance effect and the reliance on the ecological tiers, social, and economic hence creating the responsibility beyond traditional limits of the institution

Sustainability and social responsibility is therefore the prominent element of the society literature and business, corporate social performance , stakeholder management , international corporate citizenship , and analysis the units of the business ethics (Blanchard 2010, 350). Management enlightenment is a significant reference of the current concepts in changing an integrated instated of the fractured knowledge of the economy, but this implies the meaning and role of the responsible leadership required to be frequently updated. However, more studies are required to develop a mutual understanding of what exactly is needed both in the leadership development and leadership itself.

Samsung is more successful in supporting local communities than Apple. The company has started SMART schools program where students from marginal communities benefit from better learning environments. Samsung Tech Institute aims at creating self-reliant and independent youth through vocational training. Samsung Solve for Tomorrow involves non-profit firms and students in identifying problems and solutions to burning issues in the society. Samsung Care Drive is involved with health matters while Samsung Nanum Village aims at eradicating poverty by identifying the root cause of poverty in disadvantaged areas. Apple on the other hand has one major program for assisting local communities called Global Volunteer Program started six years ago to engage employees in community projects and to give them a right to choose the projects in their societies they are willing to engage in.

Importance of Quality

Organization needs to enhance quality in order to satisfy its clients and maintain their loyalty for them to continue acquiring their products now and in future. Quality items contribute greatly to the profitability and the long term revenues for the company (Dale 2015, p.102). Considerably, high quality enables the company to charge high prices without losing customer attention. Quality management in the organization is a crucial aspect. It reduces the risks and costs such as replenishing goods with faulty. Therefore, corporations can establish quality reputation through accreditation by the certified quality standards such ISO 9001 established by the international organization for standardization (Dale 2015, p.103).

Company Reputation

Quality builds the organization reputation. For instance, if the quality is good the organizations’ reputation is also well established. The social platforms such as Facebook, What Sapp, twitter, and email enables the clients to share the quality of the organizations product on the quality forums (Boiral and Roy 2016, p.228). Strong quality differentiates the organizations in the market. As a result, the corporation with poor quality is likely to attract less customer or not at all and damages the image of the company.



References

Blanchard, D., 2010. Supply chain management best practices. John Wiley & Sons.

Boiral, O. and Roy, M.J., (2016). ISO 9000: integration rationales and organizational impacts. International Journal of Operations & Production Management, vol. 27, no. 2, pp.226-247.

Corominas, A., 2013. Supply chains: what they are and the new problems they raise. International Journal of Production Research, vol. 51, no. 23-24, pp.6828-6835.

Coskun, S., Ozgur, L., Polat, O. and Gungor, A., (2016). A model proposal for green supply chain network design based on consumer segmentation. Journal of Cleaner Production, vol. 110, pp.149-157.

Dale, B.2005. Perceptions about the ISO 9000 (2000) quality system standard revision and its value: the Dutch experience. International Journal of Quality & Reliability Management, vol. 22, no. 2, pp.101-119.

Hugos, M.H., 2011. Essentials of supply chain management (Vol. 62). John Wiley & Sons.

Kaur, S. and Arora. 2015. Case Study of Supply Chain Management: Two foremost Smart phones. International Journal Of Business Management, vol. 2, no. 2., Pp. 940-949.

Skulley, G.W., 2003. Universal serial bus interface housing for communications devices. U.S.Patent D475,996.