Procurement is the process through which goods and services are typically obtained for business purposes. It is a regular activity in businesses since companies must purchase goods and services on a large scale (Bag et al., 2020). Hence, procurement, purchasing, or supply management generally refers to the process that leads to the final decision to purchase a product (Bag et al., 2020). However, the primary focus is obtaining goods for a world-class company. In this regard, this paper examines how Apple demonstrates world-class procurement practices for its goods and services.
Apple’s Procurement Organization
Apple company procurement organizational structure is hierarchical, with a procurement director or Vice Procurement President at the top. They are followed by managers overseeing various categories or regions and then individual procurement specialists or buyers responsible for sourcing specific goods or services (Andipara et al., 2020). The size of the procurement team depends on the size and complexity of Apple’s operation; nonetheless, it includes several hundred individuals.
The Chief Procurement Officer’s (CPO) responsibility is to oversee the entire procurement process. Together with the Vice President of procurement, they are in charge of the procurement leadership (Andipara et al., 2020). The team is responsible for supply chain management, quality control, compliance, and sustainability. The strategic sourcing team is responsible for identifying and evaluating potential suppliers, negotiating contracts, and managing relationships with leading suppliers (Andipara et al., 2020). The Supply Chain Management team supervises the flow of material components from suppliers to Apple manufacturing facilities. The quality control, compliance, and sustainability department is dedicated to specific procurement categories, such as hardware, software, and services. Generally, the procurement organization at Apple has been structured to ensure that the company has access to high-quality materials and components (Andipara et al., 2020). It also looks forward to ensuring that the company maintains a strong relationship with key suppliers and promotes sustainability throughout the supply chain.
Apple Procurement Philosophy
Apple’s procurement philosophy focuses on delivering value via strategic sourcing and supplier management. The process involves leveraging the company’s scale and purchasing power to negotiate competitive prices and terms with suppliers while ensuring they attain high standards of quality and innovation (Bag et al., 2020). Therefore, the organization may prioritize sustainability and ethical sourcing in its procurement practices, as these values align with its overall brand and culture.
Procurement Activities That Make the Company a World Class
Suppliers at Apple
Apple expects all its suppliers to attain the highest standards for all goods and services, such as commitment to rigorous quality assurance. The suppliers must also be dedicated, as the company is to ensure high social responsibility standards (Apple, n.d.). Ideal suppliers are considered to be the ones who understand the company’s culture and expectations. The business under which Apple operates is highly competitive and fast-paced (Apple, n.d.). Therefore, the suppliers ought to understand this dynamic and be flexible in responding to agile and flexible changes in business conditions, and above all, Apple values innovation.
Supplier Diversity Program
Apple Supplier Diversity Program was established in 1993. Since then, the company has been growing and supporting participating suppliers. The firm actively engages in the industry’s diversity leadership activities through many non-profits, including “the National Minority Supplier Development Council (NMSDC), Women’s Business Enterprise National Council (WBENC), and the National Veterans Business Development Council (NVBDC)” (“Purchase agreement purchase order terms and Conditions,” n.d.). There is also the National LGBT Chamber of Commerce (NGLCC), Disability: IN, Canadian Aboriginal & Minority Supplier Development UK, Minority Supplier Development China, and Supplier diversity business opportunity trade fair worldwide.
Major Strategic Sourcing Initiatives That Apple Has Done
Apple has engaged in several strategic sourcing initiatives to ensure convenient access to materials and services needed at the best value. Examples of these initiatives comprise negotiating long-term contracts with key suppliers to secure stable and competitive prices, such as its multi-year agreement with Corning to supply Gorillas Glass for its devices (“how we work with suppliers,” 2022). The company has also made investments and partnered with suppliers to enhance their capabilities and lower the cost of operation, such as the $1 billion fund for clean energy projects with its manufacturing partners in China (“how we work with suppliers,” 2022). In addition, Apple has leveraged its size and purchasing power to drive innovation, such as its Supplier Design Labs program, which enabled suppliers to work closely with Apple engineers to develop new products and technologies (“how we work with suppliers,” 2022). The company has also implemented sustainability initiatives with its suppliers, such as its Supplier Responsibility Standards, which require suppliers to meet strict environmental, social, and governance standards.
Apple Company has also invested in advanced manufacturing technologies, such as automation and robotics, to reduce reliance on labor-intensive processes and increase efficiency. It has developed and implemented sustainability initiatives to minimize environmental impact, such as reducing greenhouse gas emissions and waste in the supply chain (Apple, n.d.). Collaborations have also been created with suppliers to drive innovation and develop new products and technologies, such as the iPhone and Apple Watch (Apple, n.d.). Finally, the company has involved itself in leveraging data analytics and other tools to gain insight into supplier performance and identify cost-saving and process improvement opportunities.
Apple’s strategic sourcing has enabled the organization to carefully select its suppliers to ensure access to the materials and components required to produce its products. The initiatives involve developing long-term relationships with key suppliers, negotiating favorable terms for purchasing materials, and working closely with suppliers to improve their operations and reduce costs (Apple, n.d.). The company’s strategic sourcing initiatives have ensured a steady and reliable supply of materials it needs to manufacture its products while maintaining high standards of quality and sustainability (Apple, n.d.). As the art of the overall business strategy, these initiatives have also helped the company improve its supply chain effectiveness and maintain a competitive advantage in the marketplace.
Opinions on the Procurement Practices of Apple Company
The company’s simplified supply chain management has made it more successful in the technological industry. One of its secrets is that it considers hardware products, such as iPhones, iPads, and MacBooks, as perishable inventory with expiration dates (Apple, n.d.). For instance, the inventory for certain food products needs to be refreshed as quickly as possible, and this is also true for Apple. In this regard, Apple Company can achieve fast inventory turnovers. They combine sleek design and innovation with revolutionary supply chain strategies that can serve as a role model for many technology companies (Apple, n.d.). I think that the supply chain of Apple Company is a source of inspiration to many that through the implementation of appropriate procurement strategies, one’s business might become the next Apple.
References
Andipara, V., Durrani, E., Iqbal, S., Kunnathur, M. U., & Ughetto, E. (2020) Analysis of an NYSE listed company. Web.
Apple Inc. purchase agreement purchase order terms and Conditions. (n.d.). Web.
Apple Inc., A. (n.d.). Apple and procurement. Apple. Web.
Bag, S., Wood, L. C., Mangla, S. K., & Luthra, S. (2020). Procurement 4.0 and its implications on business process performance in a circular economy. Resources, conservation, and recycling, 152, 104502. Web.
How we work with suppliers. (2022). Web.