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Case Study

Apple’s supply chain transformation

By Carlos Cordon and Nick Georgiev

14 pages

May 2023

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Reference: IMD-7-2451

In 2022, Apple lost US$1.5 billion in Black Friday sales due to iPhone supply constraints. One in three retail stores across the US and Europe experienced stockouts of the new iPhone 14 Pro. China sales were down more than 30% year on year. Apple’s stock had dropped 29% in 2022. China’s zero-Covid policy resulted in massive lockdowns that made factory working conditions unbearable. In the second half of 2022, many Chinese workers quit their jobs at Apple’s Foxconn facilities. The Russia-Ukraine war that started in February 2022 and the ensuing Western sanctions spurred an unprecedented global energy crisis and double-digit inflation. Now that supply chain disruptions, component shortages and rising geopolitical tensions had become a reality, Apple had to decide on a transformation, knowing that the transition presented difficult trade-offs and would take years to complete: (1) Which elements to change in the company’s global value chain? How to approach change without hurting manufacturing continuity, product quality, revenue and profitability? (2) Should Apple further drive its vertical integration in the design of chips, semiconductors, screens and assembly? Or should it adopt the Android phone manufacturers’ model and develop a broader base of suppliers?

Learning Objective

Define Apple’s supply chain competitive advantages and dependencies
Analyze the factors driving the need for transformation and their impact
Assess the options available in Apple’s global value chain adaptation to a deglobalizing world
Evaluate the strategy and tactics for Apple’s supply chain transformation

Keywords

Operations, Strategy, Supply Chain, Value Chain, Transformation, Logistics, Offshoring, Friendshoring, Supply Chain Management

Settings

World/global
Apple, Consumer Goods, Consumer Electronics
1998-2022

Type

Published Sources

Available Languages

English

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