Apple Supply Chain Case Study

Supply Chain Risks

A supply chain is a global network used to deliver products and services from raw materials to end customers in an engineered flow of information, physical distribution and cash (Blackstone, 2008). Supply chains are networks of suppliers, companies, resources, activities and technology included in the creation, production and sale of products.

Risk is the possibility of an unforeseeable event which can harm and undermine the establishment. Supply risk is the probability of an incident associated with inbound supply from individual supplier failures or the supply market occurring, in which its outcomes result in the inability of the purchasing firm to meet customers’ demands or cause threats to customer life and safety (Zsidisin,

The six categories of risks are disruptions, delays, systems, information processing, intellectual property, procurement and weak receivables.

Apple’s Foxconn Explosion

Apple Inc once endured disruptions with one of its major suppliers in China. Apple’s supplier and manufacturer, Foxconn, suffered an explosion at the factory where iPads were manufactured. This explosion, caused by ultra-light dust, killed 3 people and injured 15 (BBC, 2011). This unfortunate occurrence immediately ceased production of the iPad2. Consequently, Apple couldn’t produce adequate iPads to satisfy the consumers’ demands. This delayed iPad shipments and caused an increase in cost of production, therefore, Apple’s pricing increased for the remaining iPads available in the market. However, Apple was at a competitive disadvantage as many loyal customers resisted purchasing the iPad2 and eventually turned to Apple’s competitors who produced inexpensive tablets. Disruptions in Apple’s supply chain adversely affected its sales subsequently decreasing revenue and overall profits. Also, this explosion interrupted Foxconn’s profits drastically, causing financial strains on the

Supply Chain Management includes coordination and collaboration between partners, which can be suppliers, intermediaries, third party service providers and customers. Supply Chain Management integrates supply and demand management within and between companies to serve the needs of the end-customer (Council of SCM, 2017).

Supply chain risk management (SCRM) is the coordinated efforts of an organization to help identify, monitor, detect and mitigate threats to supply chain continuity and profitability ( Rouse, 2018) . Supply chain risks are the elements which causes non-performance in operations. Effective supply chain risk management is mandatory to have a successful business. An integrated and engaged leadership team can identify risks before they cause disruptions and deliver quick and systematic responses to any incidents that may transpire. Conclusively, management, reporting and proprietorship of supply-chain risk should be established by senior management. Supply chain risk management focuses on the