Apple Inc: Setting New Inventory Management Standards

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Case Details:

Case Code : FINC079
Case Length : 17 pages
Period : 1993-2011
Pub. Date : 2012
Teaching Note : Available
Organization : Apple Inc.
Industry : Computer and Technology Industry
Countries : India,US,Global

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Reentry of Jobs

On September 1997, the Board of Directors of Apple replaced Amelio with Jobs and Jobs assumed the role of interim CEO, later Jobs became CEO. After returning to Apple, Jobs formed a core group of seven executives, five of whom were from NeXT. At that time, Apple had more than 15 product lines and was losing focus on its core businesses. Jobs stopped production of 11 products line and concentrated only on four of them...

The Turnaround

After streamlining the activities and reducing the product lines, Jobs concentrated on innovation for new products at a lower rate.

Business Strategy | Case Study in Management, Operations, Strategies, Business Strategy, Case Studies

He launched the iMac in ten months at a price of $1,299. With this launch, Apple entered the low priced consumer market. The launch of the iMac was supported by a $ 100 million advertising campaign. The product was a big hit and sold over 278,000 units in the first six weeks. In the financial year 1998, Apple ended its stream of losses and turned profitable. The company generated a profit of $309 million that year. The company focused on streamlining its operations and specialized in limited product lines. Due to its small product lineup, the company also developed exclusive relationships with its suppliers...

Inventory Management from 1995 to 1997

During 1995 to 1997, the company's revenue growth was declining and in the same line the net profit also declined from $424 million to ($1,045) million from the financial year 1995 to 1997. However, every product or raw material was stocked in a warehouse. The company accumulated inventories of $1,775 million in the financial year 1995...

Inventory Management from 1998 to 2011

In 1998, Timothy D. Cook (Cook) joined Apple. He was in charge of Apple's worldwide operations. Jobs and Cook focused on reducing the inventories of the company. They applied the strategy "slash inventory, shut warehouses, run manufacturing close to the bone. This helped Apple get back on to the path of profit and set a new bar for the electronic industry like competitors like Dell." They closed down factories and warehouses all over the world. They established relationships with contract manufacturers. They were successful and the company generated a net profit of $309 million during the financial year 1998...

Road Ahead

Cook developed a good ecosystem for the company's business. He had gained good experience in operational and inventory management. Under his leadership, Apple developed an entire ecosystem of suppliers, who supported its business operations. The company set itself the goal of obtaining stellar products and services within limited timeframes, at a cost that represented "the best possible value" to both customers and shareholders...


Exhibit I: Apple's Product Lineup
Exhibit II(A): Apple's Consolidated Statements of Income from 1993 to 2001
Exhibit II(B): Apple's Consolidated Income Statements from 2002 to 2011
Exhibit III(A): Apple's Consolidated Balance Sheet from 1994 to 2002
Exhibit III(B): Apple's Consolidated Balance Sheet from 2003 to 2011
Exhibit IV: Apple Inc. Holding Percentage of Inventories with Net sales and Cost of sales from 1994 to 2011
Exhibit V: Days Supply of Inventories for Major IT Companies
Exhibit VI: Days of Inventory Holdings by Major Companies
Exhibit VII(A): Movement of Apple's Working Capital from 1994 to 2011
Exhibit VII(B): Movement of Apple's Working Capital from 1994 to 2011

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