Process Improvement Project

Phase I: Improvement Opportunity

Quality Tool Analysis

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Apple has an opportunity to enhance its supply chain transparency to create a more closely monitored and unobstructed view of the company’s supply chain practice. Proper management of the supply chain transparency is known to be beneficial to the business as it assists in building the confidence of the consumers with regard to quality, safety, and ethics of the company. The opportunity in this is that Apple Inc. can design its supply chain to be more transparent by making each step in the production process more visible. This will help the company portray its integrity throughout each process, which can be essential in enhancing the company’s competitive edge to set it apart from its competitors such as Samsung.

In 2017, Apple got an award for attaining a top score in the Corporate Information Transparency Index (CITI) for the fourth straight year in a row. Ideally, CITI is a transparency tool provided by the Institute of Public and Environments Affairs (IPE) that is focused on providing environmental protection. Apple works with the IPE to identify opportunities for the suppliers to improve their environmental performance (Apple, 2018). This includes partnering with the IPE staff in carrying out third-party validation on improvements to rectify any identified gaps. The suppliers share their annual environmental monitoring data through IPE’s platform as a proof that they are achieving the sustainable means and improvement. Apple should capitalize on the partnership with IPE to show its commitment to attaining its Zero Waste Program aimed at reducing the company’s impact by reducing the amount of waste generated while manufacturing Apple products. The approach assists the suppliers to improve their environmental management systems and acquire sustained energy savings. Apple can utilize this to enhance its competitive advantage. 

Stakeholder Analysis 

The stakeholders within Apple’s supply chain include researchers, developers, third-party companies, marketers, raw material suppliers, manufacturers, and distributors. Apple’s supply chain is comprised of different components through which its products move to reach to the final consumers. The stages entailed in this include research & development, concept testing, pre-launch, launch, and the quarterly review. In the research and development stage, there is the development of new technologies, acquiring licenses for the intellectual property, and accessing third party business. The concept testing stage involves carrying out a market research testing, costing, and identifying possible quality defects. The pre-launch entails providing new products and managing material purchase commitments. Apple is known to accelerate the movement of products by acquiring licensing and third party businesses (Maziliauskaite, 2014). Apple also makes pre-payments to some supplier to secure strategic raw materials. Apple Inc. makes purchases of raw materials from different sources that are later shipped to their assembling plant in China. From the assembly, the products are taken to a warehouse and later shipped to the consumers. Other distribution channels include retail stores, direct sales, and other distributors. The supply chain allows the customer to send products back to the nearest Apple stores or dedicated recycling facilities.

Improving the supply chain transparency enhances the reputation of the company, which is directly connected to the practices of its supplier. Apple needs to continue ensuring transference of core values and compliance to the company’s regulation with its supply chain in order to prevent any damage to the company’s brand image. 

Phase II: Planning and Implementation

Planning of the Project

In the project seeking to improve the supply chain transparency, Apple will be aiming to use the supply chain as a vehicle to carry the brand story and use it as a means of inspiring loyalty thereby securing profits in the long term. The first means to continued top scores in CITI index is to continue providing greater public disclosure. This will require Apple to increase the breadth of its partnership with IPE, increase the measurement and reporting of impacts from key components of the supply chain, and ascertain its environmental footprints. This helps to connect to the consumers who are increasingly becoming more aware and concerned about the working conditions, human rights, and environmental safeguarding. The company should continue providing the disclosure in its supplier responsibility report to highlight the company’s corporate social responsibility initiatives.

Another important method to attain supply chain transparency will be to identify and prioritize the risks to the supply chain. The methodology that will be used to achieve this will be the Failure Modes and Effects Analysis Scoring System. This will be essential in identifying and prioritizing supply chain risks. This methodology is appropriate than others as it provides a scoring for the risks and assesses the risk severity, likelihood, frequency, and detection. From the scoring system, the risks will be visualized across the chain in terms of volume. This will be essential in providing a visual picture of any potential vulnerabilities and information gaps (Kashmanian, 2015). 

The types of supply chain information that Apple needs to continue improving means of the public disclosure include; supply chain membership, provenance, environmental information, and social information. In supply chain membership, Apple will provide accurate information about the suppliers engaged in the supply chain. Provenance will require the company to provide information on the materials used in the manufacturing process of a product, the source location of the materials or ingredients, and methods of acquiring the product. The aim here is to ensure that there are no harmful or hazardous components in the final product. In the electronic industries, there is an outcry of the raw material sourcing in locations with armed gangs and cases where the mining process is detrimental to the environment. In providing information on environmental information, the company will continue providing details in its reports on the programs and initiatives undertaken to reduce negative environmental impact. The social information that the company needs to continue providing is related to labor policies, human rights, and social impact within the supply chain (Marshal, McCarthy, McGrath, & Harrigan, 2016). 

Some of the business functions to be affected by this plan will include the human resource function, manufacturing, and distribution. The human resource function is mainly affected by the plan, as the company will require disclosure of information pertaining to work hours, holidays, wages, benefits and working conditions to be made publicly available. The manufacturing process will be affected since the plan will only allow sourcing of raw materials from suppliers cleared as conflict-free and those using safe mining processes. The distribution business function will be affected because the plan requires full disclosure of all the company’s distributors. The distributors are also expected to abide by the prescribed code of conduct by the company in terms of disclosure of information. There can be the use of third-party validation as a means of enhancing the collaboration/cross-functionality necessary to achieve the success of the plan (Bell, Mollenkopf, Meline, & Burnette, 2016). 

The timeline for the implementation of the plan will be one financial year. Within this period, the critical components of the plan that will be required include providing information on supplier location, the material used, material location, and material location, identification and prioritizing of risks, and third-party validation. 

The stakeholders identified in the stakeholder analysis include the raw materials suppliers, assembly manufacturers, warehousing, distributors, and third-party licenses. To communicate with the suppliers, the company will continue using the Supplier Code of Conduct that indicated the details stipulated in the plan. The company will make public disclosure through its Supplier responsibility report published on its website. The company should carry out its internal audit to ensure compliance with the stipulated plan.

Phase III: Evaluation

The effectiveness of the plan will be assessed using the Corporate Information Transparency Index (CITI). The evaluation will be done to assess the improvement of the CITI score after the implementation of the plan (Apple Inc., 2018). The index is used to asses to government compliance data, online monitoring data, third-party environmental audits, and changes in the environmental performance. Apple has topped the ranking of Corporate Information Transparency Index (CITI) carried out by the Institute of Public Environmental Affairs (IPE) for four years consecutive. The effectiveness of the plan will be ascertained by ensuring that the company maintains its score by having the best performing supply chain and improving the overall score. CITI is based on the amount of government-issued and public data on suppliers; thus, the effectiveness of the plan will be measured since the plan involves making more public disclosure of data.

Another means of evaluation of the success of the plan for improving the supply chain transparency for Apple will be through the Supply Chain Operations Reference (SCOR) model. This essential tool evaluates how the company’s suppliers are achieving the business and management expectations. The approach will seek to ascertain the level of awareness of relevant regulations and requirements, the installed controls geared towards ensuring compliance and meeting the audit requirements. The SCOR approach connects the business processes, performance metrics, practices, and the employees’ skills in a unified framework (Eshkenazi, 2016). Through this channel, it will be possible to ascertain how the plan on enhancing supply chain transparency is assisting the company and its supply chain players in improving their environmental performance geared towards attaining the vision of improving lives and taking care of the environment.

References

Apple Inc. (2018). Apple Supplier Responsibility 2018 Progress Report. Retrieved from: https://www.apple.com/supplier-responsibility/pdf/Apple_SR_2018_Progress_Report.pdf

Bell, J., Mollenkopf, D., Meline, S., & Burnette, M. (2016). Creating a Transparent Supply Chain Best Practices. Knoxville: University of Tennessee.

Eshkenazi, A. (2016). Apple: A Sustainable Example for Supply Chains. Apics.

Kashmanian, R. M. (2015). Building a sustainable supply chain: Key elements. Environmental Quality Management24(3), 17-41.

Marshal, D., McCarthy, K., McGrath, P., & Harrigan, F. (2016). What’s Your Strategy for Supply Chain DIsclosure. MIT Sloan Management Review, 37-45.Maziliauskaite, K. (2014). What Can We Learn From Apple’s Supply Chain? All Things Supply Chain. Retrieved from: https://www.allthingssupplychain.com/what-can-we-learn-from-apples-supply-chain/

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