The Motive of the Article Is to Analyse The

Introduction

The motive of the article is to analyse the

Apple

Before the implementation of the first hub, Apple monitored metrics such as inventory turns , cost of inventory as percent of goods sold, inventory obsolescence cost and number of days of inventory on Apple's books with respect to inventory

Apple had many advantages such as deferred duty payment, transfer of ownership of inventory to suppliers until the use, Flex information systems for tracking the flow of goods and reducing inventory at the plant. Fritz performed inventory related metrics such as weekly counts and inventory reconciliation and sent the reports to suppliers.

In the case study, it looks like Apple exerted its power truly over the suppliers and gained the most out of the three way relationship. Apple seemed to have viewed itself independently to achieve its goals .As the suppliers are working towards Apple's corporate goals as well, it would have been better if Apple collaborated with suppliers to ensure better performance is being met. For example suppliers were not viewing the FLEX system unless there would be some problem. If Apple invested in more resources in the Suppliers rather than focusing on itself the whole time by activities such as training the suppliers to better use the Flex system, kept them more involved all the supply chain, collaborate between the suppliers to achieve best practices, it would not only have helped the suppliers improve the efficiency but also would have helped itself streamline the processes further which would have helped the costs of whole supply chain to go down.

Even though Apple shared the daily demand forecasts with the suppliers, the tweaking of demand during the build up by Apple, the quality problems with the suppliers and delays in receival of parts at the hub meant that suppliers have to carry excess inventory in the pipeline to offset high demand variation. This meant extra inventory costs for the suppliers. Apple had an opportunity to mitigate this problem through working closely with the suppliers, which would ensure the demand fluctuations are properly throughout the pipeline. If Apple worked as closely as Toyota works with its key suppliers by investing in the suppliers and building close relationships with them, it would have reaped long term rewards through building a more efficient supply chain.

Was the supplier hub at Fountain really required?

The major difference between the supplier hub at Sacramento and Fountain lie in the location. The hub at Sacramento enjoyed benefits such as being closer to the port, had better weather conditions and had multiple major companies for suppliers to supply products to through the same supplier hub. The supplier hub at Fountain did not any of these benefits. In spite of that, Apple implemented the supplier hub at Fountain. This suggests Apple was not worried about suppliers facing the risk of longer lead times due to farther distance from the port, unfavourable weather conditions to supply the product on time and lack of major companies like HP and DELL to do business with from the hub at Fountain.

Clearly, Apple was thinking about its personal benefits rather than thinking about the whole supply chain. As Apple would gain through interest on the deferred duty and transfer of inventory risk to the suppliers until use among other benefits, it seems Apple went on with the Fountain hub even though there wasn't a dire need for it.

Metrics

Metrics can be classified into three different constructs: 1) Individual metrics 2) Metrics sets and 3) Performance metrics (Stephen, Doughlas & Morgan 2004). It can also be divided as Resource measures, output measures or flexibility measures. (Elrod et al 2013).

Apple used four performance measures to track effectiveness of

Apple can use metrics such as be order variance ratio, Inventory variance ratio to improve their ‘internal