Apple Procurement and Contract Management Strategies Case Study

Apple Procurement and Contract Management Strategies

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Introduction: Apple Procurement and Contract Management Strategies

The assignment is being done to evaluate the contractual and procurement plans that are being executed by the company of Apple to maintain its position in the market and to provide quality services to customers. The analysis of the total cost and the stakeholders are being done to evaluate the robust plans that are being exercised by the company. The structure of the delivery structure and the operations delivery are being evaluated and analysed. The essential risks that are being accompanied by the business of the company are also being evaluated, and the active risks are identified, assessed, and managed with the help of risk management plans.

Discussion

Procurement and contract delivery objectives: STEEPLE model

• Social: The procurement plans of Apple are actively responding to make the company one of the most reliable electronics brands and on top of the high-value electronics market. The procurement plan is made comprehensively to make the products of Apple at the pinnacle of the line of similar products and services which are available in the market.
• Technological: The procurement plan of the company includes planning essential steps, where the company identifies the needs of providing the services and the products in the market. Prospective supplier portal enables the procurement cess of Apple (Chan, et al. 2020). Companies all around the world often buy and provide the services which are only necessary to be bought in the organisations.
• Economical: It is a common practice nowadays that companies are concerned with self-tailored IT infrastructure where the IT services and features are customised according to the needs of the business. Apple plays a key player in the market to provide customized technology for customers.

Figure 1: STEEPLE analysis

• Environmental: After the plans are made to evaluate the needs of products and services of Apple in the market, the next stage is the selection of vendors, where the best providers of specific services and goods are selected to provide their services and products to the masses in the market.
• Political: The last stage is the payment and the implementation of the business plans of the company in the market. The payment for the services and the products is based on the level of customisation, the contract length and the other specific requirements of the customers.
• Legal: In the solicitation development phase, the Contract is created, bids are evaluated and the winner will get the contract. Strategies of negotiation are being formulated to compare to achieve competitive costs for the company, which can be advantageous for the company.
• Ethical: The contracts are being formulated and the terms and durations of the contracts are being decided and implemented with the vendors on the market. The system of reward is being used in the company Apple to maintain the satisfaction of the shareholders of the company.

Well-defined procurement approach and strategy for Apple

The services that are being provided by the company are first tracked, where the needs of the manufactured gadgets and services of the company are being analyzed in the market. The company has sold over 120 million iPhones, 60 million iPods and iMacs, of which 15 million in number only in the year 2020 (Ermolli, 2019). These heavy sales numbers are being brought to the company because of the procurement plans of the company.

Figure 2: Apple Procurement Process

The company Apple is the key player in the market of tailored electronics, where the services and electronic goods are being customised according to the needs of the customers. After that, the vendors who are leading in the market are identified and contracts are made with cost proposal plans where the vendors and the company make a contract to serve their goods in the market (Qiu, et al. 2023). When the cost proposals are accepted by the vendors of the market, the company implements the cost policies in the market and sells its products with high vigour.

Stakeholder engagement and project ideas were explored and an evaluation

Figure 3: Stakeholder Management

Stakeholders play a very crucial role in the management of the business of the company and to enhancing the business of the company. The shared responsibilities of the stakeholders are essential to facilitate the smooth running of the operation in the organisation. There are two kinds of stakeholders for the company: the external stakeholders and the internal stakeholders. Both of these stakeholders are essential for the enhancement of the business of the company. The external stakeholders are the vendors, the tenderers, the government, and the customers, who are the consumers of the company in the market. These stakeholders affect the business of the company from outside the company (Michels, et al. 2019). The internal stakeholders of the company are the employees and the board of directors of the company, who are responsible for making all the essential decisions based on the insights and plans of the company Apple and the investors. The communication of the shareholders is obtained from the information that is being supplied with the help of the Apple website. All the essential information for the shareholders, such as business information for the investors, career information for the employees and information about the products for the customers, are all exchanged on the website of Apple. The essential risks are being identified by the managers and the efforts of the stakeholders are identified and rewarded.

A robust costing analysis and forecast using the Total Cost of Ownership

Figure 4: Cost Analysis

The primary aim of the company, Apple is to sell a great phone or gadget, which can be a superb and classy experience for the customers. The pricing of the materials and services of the company is very high compared to the competitor’s prices. The company is one of the pinnacle companies in the market to provide classy and luxurious electronic gadgets to customers. The products of the company are generally placed at the top of the mass market, and the company is seen as a symbol of status. The costs of the products that are being decided by the company are based on a few factors such as, the costs of manufacturing the products, the miscellaneous costs of the company, the taxes that are being paid for international trade, the expenses of the company spent in the marketing of the goods in the finished market, and last is the cost that is being set to determine the profit margins of the company. This margin of profit depends on the conditions of the market and the company, and after all these factors are evaluated, the costs of the products and the services are being set. Apple follows strategies like price skimming to earn higher profit margins by then company (Lake, 2019). The profits of the company are well managed with their central manufacturing units in China and an effective supply chain. The total cost of ownership of Apple is higher in the case of Macs. The number of Macs used in organisations is more than PCs, which has provided more ownership to the company in the domain of PCs. The cost that is obtained by the company from this heavy ownership of Macs is very advantageous and adds high revenue to the company.

A Procurement Timeline Through to Contract Award

Figure 5: Gantt Chart of Procurement timeline

The essential information of the company that is tender and sensitive is delivered with the help of the selection of the vendors and the tenderers. The vendors, who can serve the products of the company to the masses in the market are identified and chosen as key suppliers of the goods in the market. The contract of the supplies is being provided by the company to the vendors which are then recognised throughout the term of the contract. The contracts are based on many factors, the financial security is being identified, and the economic and social factors are evaluated before the making of policies. The competitive prices are analysed, a tender is obtained, then information regarding the choice of suppliers and tenderers is collected and then the vendors are chosen by lowering the risks of financial trouble for the company.

A contract Risk Management Plan

The supply of the gods of the company Apple is being transferred to the market with the help of the vendors who are responsible for the sale of the goods and services in the finished goods market. The risk that is attached to the contract of the company between the company and the vendors in the market are lack of trust, which can arise in times of economic challenging times when the vendors can lose their confidence and trust in the company. Another severe risk for the contract of the company is political issues where the government can intervene in the supply of the goods of the company worldwide. The international trade commissions are needed to be paid by the company effectively for efficient international trade (Investopedia.com 2020). The other risk is China's supply risk since China is the essential manufacturing unit for Apple, so any hindrance in the manufacture of the products can have severe effects on the contracts and supply of the goods. Another risk is the competition, which can make the vendors go in favour of other companies. To tackle this risk, competitive prices are needed to be focussed. The matrix of contract risk management is provided below, where the colours are used to denote the level of severity and priority of the risks on the contracts.

Risk	Severity	Priority	Management	Mitigation
Lack of trust	High	Moderate	Contracts are made for longer periods and a system of rewards is used to satisfy the vendors.	Terminate
Political issues	Moderate	Moderate	The political policies are followed and the taxes of international trades are paid on time.	Tolerate
China supply risks	High	High	Good relations are being kept with the Chinese government and the expense of manufacturing is provided on time.	Transfer
Competition	Moderate	Low	The competitive prices are being set. Price skimming is followed irrespective of competition.	Treat

Table 1: Contract risk management plan

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Conclusion

The assignment is done to evaluate the business processes and the essential market parameters of the company that are responsible for the position of the company in the market. Apple is one of the technological giant companies that has seen great heights and is one of the pinnacle companies in high-budget electronic goods. The risks which are associated with the company are evaluated and the strategies which can be used to manage the risks are also discussed in this assignment.

References

Book

Chan, J., Selden, M. and Pun, N., 2020.Dying for an iPhone: Apple, Foxconn, and the Lives of China's Workers. Accessed at: https://www.ukbooks.gov/PROCUREMENT+AND+CONTRACTUAL+PLAN+OF+APPLE+book&ots=CH9-IjnH6k&sig=8fYh2AUpdoKOSE0hqrVxxTYNVtk.[Accessed on 25/04/2023]

Journals

Ermolli, S.R., 2019. Digital flows of information for the operational phase: The Facility Management of Apple Developer Academy.TECHNE-Journal of Technology for Architecture and Environment, pp.235-245.

Qiu, H., 2023. Analysis of Apple Inc's Business Model Based on the SWOT Model and Financial Ratios.

Lake, O.P., 2019. Request for Proposal (RFP) for Supply, Installation & Maintenance of MacBook Pro with 2 Years Apple Care Pack under Rate Contract.

Khalfan, M., Azizi, N., Haass, O., Maqsood, T. and Ahmed, I., 2022. Blockchain technology: Potential applications for public sector E-procurement and project management.Sustainability,14(10), p.5791.

Saldaña, C.M., Welner, K., Malcolm, S. and Tisch, E., 2021. Teachers as market influencers: Towards a policy framework for teacher brand ambassador programs in K-12 schools.Education Policy Analysis Archives,29(August-December).

Aizcorbe, A., Byrne, D.M. and Sichel, D.E., 2020. Getting smart about phones: new price indexes and the allocation of spending between devices and services plans in personal consumption expenditures. InMeasuring Economic Growth and Productivity(pp. 387-411). Academic Press.

Article

Michels, J.D., Millard, C. and Joshi, S., 2019. Beyond the Clouds, Part 1: What Cloud Contracts Say About Who Owns and Can Access Your Content.Queen Mary School of Law Legal Studies Research Paper, Accessed at: https://link.springer.com/chapter/10.1007/978-3-030-75834-9_14[Accessed on 10.4.2023]