By Soheila Lunney
Since the death of Steve Jobs on October 5th, there has been a great deal of media coverage about his life and his leadership style. The Reed College dropout co-founded Apple in his garage back in 1976. Jobs was the visionary, the man who remade the struggling company and transformed it into one of the most valuable publically traded companies in the world today. Apple products have dominated different market areas, from laptops and computers, to mobile devices, even software and music.
In recent years, while a majority of companies have been struggling financially, what has made Jobs and his company so successful by contrast? I strongly believe that by the time that Jobs returned to Apple in 1997- when Fortune 100 companies had started paying attention to procurement and supply chain management- he realized that these two functions could become the competitive weapon that Apple needed to succeed in and eventually dominate the marketplace.
Jobs and his management team built a closed ecosystem wherein they exerted control over every piece of the supply chain, from product design to retail store. Due to its large volume, Apple received and continues to receive big discounts on parts, manufacturing capacity, and logistics. Operational edge has been an asset for Apple, as well as product innovation and marketing. Although suppliers enjoy high volumes of business with Apple, they are required to share detailed cost breakdowns including material, labor, and overhead costs as well as projected profit margin when they quote for a product or a service. Key suppliers are also required to work closely with the Apple team from the product design phase all the way to the timely delivery of products to retail stores and consumers.
Beyond Jobs’ presence, he left behind a well qualified management team and a strong product roadmap for years to come. Apple’s high profit margins (40% last quarter) are in large part due to its executives’ focus on operation and supply chain management.
Tim Cook, the new CEO and former COO and Supply Chain officer, knows the importance of operational efficiency and the role that supply channel partners can play in Apple’s success. He is known to give his staff and colleagues copies of Competing Against Time, a book about using supply chain as a strategic weapon in business. According to an article published by Bloomberg Business week (http://www.businessweek.com/magazine/apples-supplychain-secret-hoard-lasers-11032011.html) Apple plans to double spending on its supply chain in 2012 to $7.1B, continuing its focus on streamlining and controlling operation and manufacturing.
It is obvious that Apple’s management team will continue unlocking profitability by utilizing the lever of supply chain and procurement. Don’t you think Apple executives get it?
Dr. Soheila R. Lunney, president of Lunney Advisory Group has more than 20 years of supply management, procurement, and business experience, involving both domestic and international (Far East, Europe and Russia) activities. She has extensive experience in consulting, coaching and training in supply management, procurement, reengineering the supply management process, the management of procurement function, sourcing of materials and services, reducing total cost of ownership and negotiation of complex contracts.
Prior to founding Lunney Advisory Group in 2007, Soheila joined Education Management Corporation (EDMC) as the vice president of procurement in January 2004. Prior to joining EDMC, Soheila was director/deputy to chief procurement officer at Bayer Corp. During her 17 years of service at Bayer, she held several positions with increasing responsibilities in research and development, logistics, customer services, materials management, and procurement.
Soheila obtained her bachelor’s degree in science from National University of Iran followed by MS and Ph.D. from University of East Anglia in Norwich, England. She is a member of Board of Directors of Pittsburgh Institute for Supply Chain Management (ISM) and also served on the Board of Directors Pittsburgh Regional Minority Purchasing Council. In addition, since 1998, she has been a member of the Advisory Board of Supply Chain Management at Duquesne University in Pittsburgh where she taught a course in procurement/supply chain management. Soheila is a frequent speaker on different supply chain management topics, the sole holder of a U.S. Patent relevant to polyurethane technology and author of several publications.
Contact Dr. Lunney by email:email@example.com
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