Wednesday, September 4, 2013

Is Apple's Supply Chain Really#1?

I cam across this article after reading Nisha's post which talks about Amazon increasing the number of warehouses it has.  Gartner IT recently ranked Apple's supply chain #1 for the 3rd consecutive year.  The article explains some of the key unique points in Apple's supply chain such pre-payments for some key raw materials.

To get back to Nisha's article, it then proceeds by comparing the complexity of Apple's supply chain to that of Amazon.  Apple's inventory turnover is 59% while Amazon's turnover is only 10%.  This partially explains Amazon's need to increase their storage space.  The explanation as to why the turnovers for these two companies are so different is because Apple contract each part of the process to different companies and is really only marketing firm now.  The article then illustrates that Apple has 156 key suppliers while Amazon has more than 3 million (95% of inventory comes from 300,000).  Also, Apple currently has 1 central warehouse whereas Amazon has 28 coast to coast giving Apple has the efficiency advantage

Next, we compare the number of store keeping units (SKUs) of Amazon vs Apple.  Amazon has roughly 135 million phyisical products while Apple has approximately 26,000.  Relating to the articles assigned for today, the uncertainty at any time is much less to Apple than it is for Amazon, making forecasts much more accurate.

The questions I ask is, Is Apple really #1, and how similar is Apple to Amazon?

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