Operations Case Study:

Influences (Legal Regulations)

- Apple are subject to the legal regulations of each country of operation - China's sub-par WHS and labour laws allows for cheaper production due to less spending - However, there have been many claims of violation of China labour laws in the employment of underage workers and the dumping of waste - Apple also faces complications regarding copyright patents and infringement claims on intellectual property with competitors

Influences (Government Policies)

- Apple manufacture in China due to the flexible government policies - minimal environmental regulation, cheap taxes, subsidies to local workers to work in Foxconn factories - Due to the localised nature of production, Apple face low trade taxes and rates

Goods and/or services in different industries

- Apple mass produce goods on an assembly line - They produce standardised products - They produce non-perishable goods

Outsourcing - advantages and disadvantages

- Apple outsources production through Foxconn, a Taiwanese multinational electronics contract manufacturing company. - Lower material cost, lower labour costs, more technical expertise, faster production, mass production, close proximity to suppliers - They are able to focus more on aspects such as design and development Wage costs per employee ($2.9/hour) - However, reduced quality, less control, security risks, cultural barriers, workplace condition criticisms

Transformation processes - influence of volume, variety, visibility and variation in demand, sequencing and scheduling, technology, task design and process layout, monitoring, controlling and improvement

- Apple provides a variety of products including tablets, smartphones, laptops and watches - Apple uses previous figures to estimate variation in demand and increase production during the release of a new product - Exposure of the transformation process is minimal, with production privatised and outsourced in China Sequencing and scheduling: - Apple has heavily invested in robotics technology to increase the speed and quality of products - Employees on the assembly line require certain knowledge and skills to ensure efficiency and quality - The large scale of operations at Apple requires machinery and equipment to be arranged in the sequences in which the product is assembled - As manufacturing is outsourced, Foxconn undertake the monitoring, control and improvement of the transformation process - A lack of employee training in 2015 led to many defects in the production of the new iPhone, costing $1.5b USD to the company

Outputs: Customer Service, warranties

- Apple provides high quality customer service, both in store, over-the-phone and online - This is evident in sales support and assistance, free software upgrades and prompt delivery methods Apple acts in accordance with Australian regulations in regards to warranty - They offer a one-year warranty for products that do not meet expressed and implied conditions

Global factors - global sourcing, economies of scale, scanning and learning, research and development

- Apple sources their components from a large number of countries around Asia to reduce costs and access leading edge technology - Apple achieves economies of scale through production in mega factories in China - Apple scans the global market to learn from competitors' various design, manufacturing and supply methods - Apple's strong brand reputation allows for the acquisition of highly talented and experienced employees from a range of countries around the world - Apple's extensive investment in R&D allows for new and innovate product features and designs to be implemented

Technology - leading edge, established

- Apple uses both leading edge and established technology - Leading edge use of robotics to reduce labour costs and increase efficiency on the assembly line 600,000 iPhones produced per day - Apple also use established technology in computers in the design of their iPhones and administrative sectors

Supply chain management - logistics, e-commerce and global sourcing

- Apple utilises a large range of suppliers to reduce risk and provide safety - All localised suppliers - less transport costs - 785 suppliers in 31 countries - increases supplier competition and reduces costs - creates exclusive relationships

Influences (CSR):

- Apple's operations are focused on the triple bottom line of people, planet, and profit. - Apple go beyond the law in terms of social and environmental concerns - Social - workstation design changes to improve WHS standards - 3 million supplier employees trained on their rights environmental - refer to above

Strategic role of operations management - cost leadership, good/service differentiation

- Apple's operations management have a focus on cost leadership and economies of scale - This is done through extensive outsourcing through Foxconn - Apple focuses on innovation and unique features such as Apple Pay, Siri and the App Store to differentiate the products from that of competitors

Inventory Management: advantages and disadvantages of holding stock, LIFO, FIFO, JIT

- Before the production of a new product, Apple must order the correct components and build inventory space for it - Forecasts for periods up to 150 days - a form of JIT Errors in forecasting usually lead to insufficient stock levels if demands are high - iPhone X

Quality management - control, assurance, improvement

- Important aspect for Apple due to heavy emphasis on quality - In the design and testing period, Apple have teams of quality assurance employees to troubleshoot and overcome issues with new models before release into the market - Control occurs through the adequate training of Foxconn employers, however inadequate training in 2015 led to defects and scratched screens of iPhone 5 - Apple also has an over-arching and ongoing commitment to improving their products

Performance Objectives: quality, speed, dependability, flexibility, customisation, cost

- Quality is a key performance objective for Apple in production - Apple increases production speed during the release of a new product to meet demands - Apple achieves dependability through constantly using quality management to meet expectations whilst also ensuring any defects are remedied immediately - Apple achieves flexibility by launching products that respond to changes in the market - iPhone 6 with bigger screen - Customisation through various colours, sizes and memory capacity - Cost is used as a performance objective through outsourcing

Influences (Environmental Sustainability)

- Renew initiative to allow for e-waste to be disposed of safely - number of initiatives have improved the quality of the environment - Apple have increased awareness of the environment throughout production - 96% of electricity used from renewable sources reduced 320k tons of carbon emissions in 2017 5.1b gallons of water conserved and reused

Overcoming resistance to change - financial costs, purchasing new equipment, redundancy payments, retraining, reorganising plant layout, inertia

- Throughout outsourcing in 2004, Apple had to make thousands of US employees redundant and thus provided many payouts - Retraining of new employees in Foxconn factories had to occur - Plant layout is structured in a way that fits the process - Every time a new phone is released, production must alter to fit the specifications of each product. For example, new technology is bought to install the facial recognition parts

Apple Quotable Executives

- Tim Cook - Arthur Levinson - Ronald Sugar - Anthea Jung

New product or service design and development

- Uses innovation and to develop new products that allow them to gain a competitive advantage - Launch of iPhone in 2007 greatly increased popularity and success as it was the first multi-use smartphone (Unit sales would increase by 300% from 2007-2010) - However, declining market share due to inability to differentiate products (15% overall unit sales decline from 2015 to 2018) Spend a significant amount on R&D each quarter - 300 million

Influences (Technology)

- gradually moving towards a completely automated assembly line - invest in robotics and machinery - Increases production efficiency and quantity - Able to add more complex features to their products (wireless charging, facial recognition)

Influences: (Globalisation)

- means Apple can reduce production costs and increase quality - Products designed in California - Japanese and Malay parts are used - Assembled in China

Influences (Quality Expectations):

- quality expectations are considered extremely high due to their brand image - Reflected in price of IPhone 11 ($1200) - Apple provide a multitude of additional features to reflect quality - warranty. Packaging, delivery, service and durability

Influences (Cost Based Competition):

- uses strategies to create cost advantages over competition Outsourcing - cheaper labour, tax incentives, more labour, more natural resources, cheaper importation tariffs - Investments in robotic technology achieves more efficient mass production

Interdependence

Finance: - operations needed extra finance to for the production of the iPhone X due to the new OLED screen technology and wireless charging Marketing: - Ops needs marketing to carry out market research for the development and design of new products - i.e. larger screen shift (2014) Human resources: - needs ops to manage WHS and ensure safe procedures are in place and to also articulate the amount of labour needed - Ops needs human resources to supply skilled and qualified labour - 100,000 extra factory staff needed for production of iPhone 6 in 2014

Inputs - transformed resources, transforming resources

Transformed - Apple uses screens, memory chips, speakers, circuitry, antennas, cameras and use a lot of research and development. They design their products in California Transforming - factories in China, retail and administrative employees, labourers hired by Foxconn, retail stores