Executive Summary of Apple’s I-Pad Supply Chain at Risk

            In this paper, it is analyzed in detail that how Apple is facing risks in terms of its supply chain for I-Pads, and what the actual situation is. Apple I-Pad is one of their renowned products in the world. In 2014, approximately 10 million I-Pads were sold by Apple, which shows that how important this product is for the Apple Company. The important thing to mention is that I-Pad is made from different parts, and one of its important parts is its disk drives. This 1.8 inch disk drive is supplied to Apple from Pod Parts, a disk drive supplier, who is located in the Laguna Technopark (LTI) in Philippine. Pod Parts is able to fulfill the supply and demand needs of Apple Company for making its I-Pads, but fact of the matter is that Pod Parts is the only source for this product, which keeps Apple’s supply chain at the risk. It is at risk because if anything happens to this factory due to any issue like any natural disaster such as earthquake, typhoons etc., then Apple does not have any other supplier to get disk drives for its I-Pad. In this situation, they need to find solution for this supply risk, and act accordingly. So, some possible solutions will be discussed in the end, and two viable options will be selected for Apple to ensure their uninterrupted supply of I-Pad disk drives.

Brief Situational Analysis of Apple’s I-Pad Supply Chain at Risk

        It is important to understand for any company that they have to keep their supply chain process in right direction so that they can meet the demand. If supply chain process has any issues, then it is hard for a company to meet its demands and keep things on right track. If products are not being manufactured and supplied in time, it means that there will be delay for those products to reach to their potential users. This is what the situation is at the moment for Apple. Apple’s company produces various famous products, and I-Pad is one of those products. I-Pad is sold all over the world, and it has gained so much attention from the users over the years.

        Apple I-Pad is made from different parts, and when it comes to its disk drives, they are being supplied from one factory, located in Philippine. It is important to mention here that Philippine is renowned for making various kinds of high tech gadgets including disk drive parts for Apple I-Pad. So, one thing is quite evident here that in terms of its supply chain process, Apple is dependent on parts made in Philippine. 50 Kilometers away from Philippine’s capital city Manila, there is located industrial park with the name of Laguna Technopark (LTI). In this park, a factory with the name of Pod Parts is responsible to make 1.8 inch disk drives for Apple’s I-Pad. More than 6000 employees work in this factory, and they help in making and shipping 30000 disk drives per day for Apple. On the other hand, Apple needs to have 50000 disk drives per day to make its final product.

        Now, the major issue for Pod Parts and Apple is the threat of national catastrophe in Philippine. Just 30 Km away from the Pod Parts factory, there is a Taal Volcano, considered very dangerous producing severe earth quakes. Overall, earth quake ratio in Manila and surroundings is also very high. Typhoons along with tropical storms are other threats, which happen on regular basis in Philippine. These are all considerable threats to the Pod Parts factory, because if any serious disaster happens, it can destroy the factory, and they will not be able to supply disk drives for I-pad to Apple, whereas Apple is primarily dependent on this factory for I-Pad disk drives. There is only one other factory in China, which are making 20000 disk drive part per day. The risk for Apple is if any disaster destroys the factory, then they won’t get disk drives supply, and to avoid this risk, they have to think of a permanent solution for their supply of I-Pad disk drives.

Possible Options for Apple to Cater the Risk of Apple’s I-Pad Supply Chain at Risk

        It is a fact that when things are analyzed in detail and every direction is reviewed, there can be several possibilities to deal with any risk or threat. Keeping this fact in mind, Apple can also find various other options in terms of dealing with the supply risk being faced with regards to I-Pad disk drives. They should ensure that for every supply process, they have a plan B and C for avoiding any risky situation. First available option is to make contracts with other factories producing disk drives in the Laguna Technopark (LTI) other than Pod Parts. The second option could be to look for any other supplier from Asian region so that they can get supply in affordable prices. The third possible option could be to stop getting supply of I-Pad disk drives from any outside supplier, and make a production unit of its own to get uninterrupted supply. This unit can be developed in any third world country, where labor and other expenses can be cheap as compared to United States. The fourth option for Apple Company can be to make a contract with the Chinese factory, which has the capacity to provide 20000 disk drives on daily basis. The fifth option could be to contact any local supplier who can assure the company to provide its demand of disk drives for I-Pad.

Two Best Options for Apple of Apple’s I-Pad Supply Chain at Risk

        The first most viable option for the Apple is to get in touch with the Chinese supplier, which has the capacity to provide 20000 disk drives per day. The top management of supply chain department should hold meetings with the Chinese Supplier and discuss the situation. They can ask the supplier to sign a contract with them, where Chinese supplier would increase its production capacity from 20000 to 30000 disk drives per day in 6 months’ time. This production will be equal to the production of Pod Parts. The Chinese Supplier does not face any catastrophe risks like Pod Parts in Philippine so they can keep producing the supplies for Apple. This is great option for them as it would not increase any costs for them, and it is more safe option. The second viable option for the Apple is to slowly move out from the business relationship with Pod Parts, and make a contract with any domestic supplier to meet its demand. It would be headache of domestic supplier to find disk drives anywhere from the world, and deliver it to Apple. This option could be a costly one, but still it is safer option as compared to keep relying on Pod Parts with so many risks in view. This option will increase the speed of their supply chain with the safety of getting the supply without any issues.