Objectives and Designs in Transportation Strategies

Objectives and Designs in Transportation Strategies

1.      Organization Background

Apple Inc. is one of the leading companies in the computer and mobile phone technology industry around the globe. It is an American company with its production facilities in both the United States of America and China. It is headquartered in Cupertino, California. It is used in the development of smartphones, iPhone and computers. It was founded by Steve Jobs and Steve Wozniak. It came into inception in 1976. The focus of this study is on supply chain strategies and a recommended long term transportation strategy that will enable it to improve its transportation and logistics (Apple, 2019).

1.1 Industry

Apple operates in the computer hardware, software, and mobile phone industry. This is one of the fastest growing industries across the globe. Advancement in this industry has led to increased access to information technology, fostering economic growth and development across the world.

1.2 Markets and Locations

The company serves the high-end market in many countries around the world using high quality and technologically advanced products. In 2018, the market share for the company in the smartphone market was above 50%. This high share implies that the organization has significant influence and control in the smartphones market. It has its operations in Europe, Africa, Asia, and America (Magee, Copacino, & Rosenfield, 2014).


1.3 Number of Employees

Apple Inc. has a total of 132,000 employees. This high number of employees is a significant increase from the 123,000 employees that the organization had in 2018. There are many merits that the entity has received from such a high number. It has significantly increased its daily production of mobile phones and other products that it provides to its customers. Through proper training of such employees, their satisfaction working in the organization has improved. Nevertheless, it also implies that the transportation costs for employees are high.

1.4 Products and Services

Apple Inc. is used in the production of the iPhone, IPad, and iPod as well as computers among much other electronic equipment. Providing customers with such a diverse list of products have increased the ability of the organization to meet different customer needs.

1.5 Suppliers

Apple Inc. has more than 200 suppliers. They provide the organization with components that the organization use in the production of iPhone, computers and other products. Some of the key suppliers are 3M Company, operating in both the United States of America and China. Others are AS Technologies Holdings and Alps Electrics among many others. Good relations with suppliers increases access to raw materials

1.6 Objectives

  • To identify a five-year transport strategy to enable Apple Inc. to reach people in all continents within a short time
  • To ensure that the new transport technology leverages on modern transport technology
  • To ensure that the recommended transportation strategy results in the delivery of the organization products to various locations with limited if any adverse effects on the environment

2.      The Extent to Which the Organization Supply Chain Support Its Strategic Goals

There are multiple strategic goals that Apple Inc. is currently pursuing. The industry intends to maintain its position as the leader in the production and sale of the iPhone. This goal has been sustained by its extensive distribution of it’s in virtually every continent. The entity is also focused on the differentiation of its products. The differentiation strategy has emerged as a strategic goal since there are many firms around the world including Google and Samsung that are investing heavily in productions of computer and electronic products that rivals those of  Apple. To maintain its competitive advantage around the world, Apple Inc. has established good relations with suppliers along its supply chain. Equally, by locating its production plants near the suppliers, transport of raw materials from the suppliers to the organization have been eased. A differentiation strategy requires that an organization establish its products through the use of high-quality raw materials. Equally, it requires that such firms provide excellent services to customers. One of the ways of satisfying customers is delivering products on time.

Apple Inc. has a highly diversified supply chain. It not only focuses on exporting its products to diverse markets across the globe but also initiates production of its products in different locations including the US, Taiwan, and China among others. Its products are often distributed locally via trucks, and abroad via ship and air. The entity has also adopted an online product distribution strategy, something that is expected to significantly enhance its distribution in the market (Kawa & Maryniak, 2019).

The Apple supply chain is to some extent very complicated. Apple buys many of the components of its products including the camera module and the microphones from suppliers. It deals with over 200 suppliers. In some cases, the suppliers have to deliver their products to the premises of Apple Inc., and in others, Apple Inc. has to seek such raw materials directly from the suppliers. Companies such as the Zhengzhou facility in Taiwan produces metal casings for the products that are provided by Apple Inc. The supply chain of Apple Inc. is intertwined. For instance, Apple buys some of the raw materials and sell them to its suppliers in China.

The implication is that in some cases the organization has to buy the products to deliver them to its premises and then transport them to the premises of the companies that produce its products. This process would be costly if not well managed. The transport requirements in Apple Inc. goes beyond the transportation of raw materials to the transportation of the finished products. The transport needs are thus extensive as the organization produces close to one million iPhone in a single day and many of them are sold on the same day that they are produced. The Foxconn facility in Zhengzhou covers over 2.2 square miles. It employees over 250,000 employees. Many of these employees are used in transport logistics as well as transport. By having adequate employees to be involved in the parking of products, the organization will increase the rate at which vehicles are packed and leave the organization. In modern manufacturing, the use of robots has become popular. Robots ensure that such organizations can have packing machines that are faster than humans.

Nevertheless, this occurs at an extra cost to the organization. This indicates the complexity involved in the transportation of employees, raw materials and the final products produced by the organization. There are 94 production lines in the facility indicating a need for many vehicles and conveyors that the organization requires in moving its products internally.

In the movement of the final iPhone from China to the United States of America, the organization makes use of many trucks which transport the products to the Zhengzhou airport. The logistical and supply chain of apple alone has led to the expansion of the airport in the recent past. Initially, some of the products that were produced in China were transported to the US via the use of sea-based transport. Sea transport was mainly done for computers. Unlike computers, smartphones are easy to transport through the use of Air transport. Air transport enables the organization to transport such phones fast as compared to the use of ships which takes close to a month before they travel from China to the United States of America. A single Boeing 747 carries close to 150,000 iPhone tucked into aluminum canisters. Such planes transport the iPhone to Louisville where the products are transported to other parts in the United States of America. For the iPhone that is bound for sale within China where they are produced, the customs officials stamp them as exports and then restamp them as imports. The process occurs within the same custom facility. The moment the iPhone is stamped as imports, the customs collects 17% in value-added tax. It takes around two days for such phones to reach to Shanghai. To this end, it is clear that the current transport strategy in the organization is meeting some of its goals. For instance, it has liaised with the Chinese government very well in ensuring that there is a smooth flow of iPhone from the production facility in China to the airport. By using planes in the delivery of such products, the organization ensures that such goods reach customers on time in line with its goals of differentiating its service delivery from that of the competing firms in the market.

3.      Strengths of the Supply Chain

The transport system used by Apple Inc. facilitates the delivery of information technology-based products around the world. This has led to the significant economic and technological advancement of many countries. Another merit in the Apple Inc. transport system is that it makes use of multiple modes of transport. For instance, while transporting iPhones from China to the US, it makes use of air transport. This process ensures that such products are delivered to the target customers within a short time (Ashmarina, Mesquita, & Vochozka, 2019).  Equally, the organization transports its products in bulk. This reduces the need for many flights and eliminates the subsequent transport costs as well as a reduction in carbon emissions.  In its ground-based transport, the transportation of its mobile phones and other items in large trucks results in reduced levels of congestion in roads as opposed to the current scenario in the transport sector where many people are using small cars in transport thus congesting the roads. In the transportation of its products. Apple Inc. ensures that it assess the unit freight costs of transportation of goods to the client (Sun, & Grimes, 2018). As a result, it is able to include such costs to the overall cost of the product. Equally, it has a multimodal approach to the transportation of goods and services. This increased flexibility in transportation where urgently required light goods are transported by air while heavier products are transported via road and sea transport. Under the multimodal transport designs, the government links diverse modes of transport. For instance, Air and seaports are linked with rails and roads.  This creates a link between road transport, air, and water transport. Goods delivered by the sea can be airlifted. Equally, apple use trucks when delivering the iPhone from the production centers to the customs in China.  Such mechanisms ensure the free flow of products.

A major strength of Apple distribution is its use of online distribution strategy. The organization allows the customers to buy and pay for the products on the online platform. Such products are then distributed to the customers. For instance, instead of adding an extra channel to the Apples brick and mortar channel, the organization engaged in online distribution. This approach to delivering products to the customers have reduced the need for the organization to keep on monitoring intermediaries who are involved in the delivery of its products. Such monitoring may be a source of considerable costs to the organization.

4.      Weaknesses of the Supply Chain

Apple Inc. transports thousands of its iPhone via the use of air transport. Computers are transported via the sea. The transportation of such products is done without full consideration of environmental sustainability. The release of carbon to the environment has been a key cause of global warming, something that has led to desertification of some areas, the rise in sea level, the unpredictability of rain seasons among others. The organization should thus adopt a more sustainable approach to transportation. The planes transporting such products rely on non-renewable sources of energy, depleting natural resources.

A key challenge in the transport logistics of Apple Inc. is the security of its products while they are on board. In 2019, a box truck containing apple products was involved in an accident. In the crash, one person was injured while the other was killed. Both were retired police officers who secured the special raw materials and products that were being transported. The accident had the potential of exposing the apple secrets in its production processes. Exposure of such secrets could result in the loss of competitive advantage to the entity. The implication is that the organization should upgrade its transport system and the security of its products during transportation.

The distribution strategy of Apple Inc. is faced with the challenge of reverse logistics. In some cases, customers find that the products they purchased online do not meet expectations. Delivering the products back online to the company is always a difficult task.

5.      Metrics Used In Supply Chain

There are multiple metrics that Apple Inc. utilizes in its supply chain that may have an impact on its transportation. For instance, the customer order cycle time informs the transport groupings adopted by the organization in some cases, it may be invisible to transport only one product to the customer in a long destination (Sarkar, 2017).  As a result, grouping of customers in terms of the regions where they come from aids in the mitigation of these challenges. The inventory days of supply are also measured by the organization. The mode of transport used is dependent on how urgent raw materials are (Apple, 2019). This is one of the key reasons that promoted apple Inc. to initiate its operations in china as some of the materials required in the production of its products are inadequate numbers in china.

The freight cost per unit is a key metric that is adopted by Apple Inc. in assessing the cost-benefit analyses of delivering the products to the customers.  For instance, when customers order the products online and require that such products be provided the organization, the entity has to put into consideration the freight cost per unit which is charged on the consumer. Without such a metric, it would be difficult to manage the transport costs of products to the customers.

6.      Current Implemented Transportation Initiatives and Innovations

Currently, Apple is distributing its products online. It has distribution networks within the United States of America, opening its mega shops while at the same time distributing its products via the use of middlemen. This has led to the increased ability of the organization to reach a high number of customers in the market (Pisano, & Shih, 2012).  Equally, online distribution, as well as direct exports, has led to the increased sale of the products offered by the organization in the global market (Waters, 2018). Such strategies have nevertheless led to limited market reach as not many people in the developing world are conversant with online purchase of goods and services, and some lack internet connection.

In the transportation of its products, Apple Inc. makes use of air transport for light goods and ship transport for heavy goods when they are being transferred from one location to another. The organization ensures that it delivers these products in economic order quantities (Kawa, & Maryniak, 2019). It equally ensures that the goods are transported in bulk. This results in the reduced unit cost of transporting such products from one location to another.

In its current innovations, Apple Inc. is making use of technology in the tracking of its trucks whenever they are sent to deliver products to warehouses and wholesale outlets. There are multiple advantages that the organization is going to realize by adopting a fleet management system. Through such tracking, the organization will be in a position to identify the location of the trucks. It will equally assist in enhancing efficiency in the transportation of its products. It is worth noting that delivery of products at the right time is something that impacts on the level of customer satisfaction. Equally, delivery of raw materials to the organization on time will boost the rate of production. In the contemporary transport sector, the use of GPRS tracking of vehicles have ensured that the employees’ productivity is also enhanced. Employees tend to stick to the deadlines when they know that they are monitored as opposed to when they know that nobody is tracking them.

7.      Transportation Initiatives and Innovations That It Should Consider

In the development of the new transport designs, it is clear that the organization will focus on three key areas (Nap.edu, 2019). The first area is that of the location of its production facilities in diverse countries around the world. In particular, the organization will initiate more production facilities in BRIC countries which are Brazil, India, China, and Russia. The initiation of production in these fast-growing economies will ensure that the organization does not incur extra costs transporting products to these locations (Magee, Copacino, & Rosenfield, 2014). When the goods are produced near the market, the distribution of such products will be easy. The decision on the location of the manufacturing firms and the organization’s retail outlets emphasizes on Porters distinction of coordination and configuration.  Proper coordination will ensure there is a proper link between the production facilities and the stores/market. In international operations, the essence of location should be clearly determined. Proper location of the facilities will ease transport, reduce costs and act as a source of competitive advantage to the organization (Mejiboom, & VOS, 2017).

The Next move will involve the use of electricity based transportation. Electric based transport system is a form of ‘green’ approach to transport. It will ensure that the level of carbon emitted to the atmosphere is significantly reduced. In the wake of global warming and pollution, continued use of fossil fuels has the potential increasing pollution and global warming. The use of electricity in transportation has been enhanced by the increasing levels of connectivity. More so, electric trains will be the most viable option in this particular case. There is a high level of connectivity of firms to electricity and hence this source of energy will be highly available.

In its new transport infrastructure, the organization will ensure that there are better-designed vehicles for transportation. This will ensure that the vehicles can make direct transport of final goods and services without experiencing multiple touch points along the way (Matthews, & Liguori, 2018).  High level of touch points results in damage of the products as well as delay in the delivery of such products. In the new plan, the organization will not only focus on the movement of goods but also people. The organization will ensure that all the pathways to its premises around the world are modeled for use even by people with wheelchairs. This will ensure that movement in the organization also considers the needs of people with disabilities.  The new developments will thus not only result in ease in transportation, but will also ensure that its operations are socially responsible. Improved transportation will result in increased speed of delivery while at the same time cutting on the cost of operations.

The new strategy will be multifaceted. The organization will thus identify international locations where it can initiate production (Xu, & Shiina, 2018). Initiating production in the location where the organization will be selling its products will increase its ability to cut the cost of operations. It will not only ensure that the organization can distribute its products within a short time to the customers, but will also ensure that there is limited level of carbon that is released to the atmosphere between the location where the organization develops its products and the location where it delivers these products to the customers in the market. Besides the opening of new production centers, the entity will increase its use of electric trains in the distribution of its products in China and other locations around the world (Waters, 2018). An electric train enables n organization to distribute its products in bulk. This will enable it to cut on its overall cost of distribution (Lashinsky, 2012).  Equally, electricity is a source of green energy. By distributing its products through the use of electric trains, the organization will reduce its reliance on transport vehicles that rely on nonrenewable sources of energy (Waters, 2018). This will result in the organization adopting a green strategy in its distribution, something that will promote social and environmental sustainability. Reducing the number of touch points through the use of direct routes in the distribution of its products will also cut on the risk of deterioration of the quality of its products as a result of mishandling in various loading points. This strategy is expected to cut the costs of transportation and emissions in the organization by 50% in the next five years (Ashmarina, Mesquita, & Vochozka, 2019).

In the new five year strategy, the organization will start by growing the number of its vehicles in line with the growth of sales. The organization will grow the fleet of its cars by 20% each year.  This will ensure that the increased capacity does facilitate the transportation of goods in the market (Dumont, 2016).  Equally, in its five-year strategy, the organization will employ 2 more fleet managers from every production store each year. This will ensure that there is proper tracking of vehicles in the field as well as ensure that the available vehicles have the right capacity (Waters, 2018). They should be in a position to deliver economic order quantities to the destination. In this case, the destination refers to the premises and customers. Light vans will be part of the vehicles used in transportation by the organization. These small vehicles will be used in transporting light weights to the customers. In the design of the transport system, it will be important to establish an airfield on the facility produces or where goods delivered requires urgent transport by air.

In its supply chain, the organization needs to consider the environmental sustainability of the mode of transport. It should equally consider the economic impact of its supply chain. For instance, by employing the locals as drivers, the organization end up creating employment for such people.

At the delivery level, it is important for the organization to enhance its supply chain integration. This move will result in better management of transport. Equally integration of the supply chain will assist in reducing inventory levels. In some cases, firms fail to deliver products in the market on time (Mejiboom, & VOS, 2017). As a result, such products ends up piling within the organization. This limits production.  Through efficient transport systems, all goods are transported on time. Use of faster modes of transport will thus boost efficiency in the organization’s supply chain.

8.      Next Step to Improve Supply Chain

From the implementation of the above recommendations, it is evident that Apple Inc. will have a better transportation system. The new system will be faster and will result in lesser environmental and financial costs of distribution. By locating its production facilities near the market, the cost of transportation will also be significantly reduced (Shsrestha, & Hounsell, 2017). The new changes will also result in better transport through the reduction of touch points during the delivery of products reducing the chances of deterioration in the quality of such products as they are being transported (Xu & Shiina, 2018). In countries such as China and the United States, there has been the development of fast speed electric trains. Such trains tend to have a less adverse environmental impact as compared to other automobiles that rely on fossil fuels. The organization should thus liaise with stakeholders such as the government in the promotion of the development of cargo fast speed electric trains.

In order for Apple Inc. to boost its supply chain, it will need to engage in better demand forecasts. This will ensure that the products are delivered in diverse locations in economic order quantities thus reducing the overall cost of distribution. It is also important that the organization enhances the driving skills of its drivers (Waters, 2018). This will result in reduced accidents of trucks carrying its products reducing the loss of damage of such products. Enhanced security of products while on transit should also be enhanced.

The transport strategy of Apple Inc. may be enhanced by establishing new stores in markets where the organization operates. This implies that the organization have more store where it can deliver its products in bulk and the customers can easily reach them. Having large warehouses will increase the access of customers to the premises where even retail stores can access products. This will shift the cost of transporting such goods from the organization to retail outlets and customers from Apple to such entities.

9.      Conclusion

Based on the above study, it is evident that improved transportation will reduce the cost of transport while at the same time ensuring that the organization delivers its products to customers with speed. Improvement of the supply chain will also ensure that the products developed by the entity are safely delivered in the market. Continued use of online distribution will also enable the organization to deliver its products in multiple markets where the intended customers have access to the online platform. From the above presentation, it is evident that there is a need for Apple Inc. to make use of environmentally friendly means of transport. The use of electric rains in the distribution of its products not only ensure that the products are delivered fast in the market but also ensure that such delivery is done with minimal environmental degradation. From the above analyses, it is evident that Apple Inc. will boost its transportation by enhancing the security of its products while it’s on transit. This will reduce the risk of losing products in the organization.



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