High Profit And “Fear Factory”

Last week we talked about inventory management and supply chain management which play very important roles in business management. Under the influence of globalization, many large international companies are involved in the global supply chain management and inventory management. A classical example is Boeing’s supply chain. To produce one airplane need more than 20 international suppliers in 12 countries. Since each country has its own areas of expertise, these international suppliers use their best technology to produce the aircraft parts which reduce the cost and improve the quality. So I think Boeing is one of the perfect products of global supply chain management. However, each coin has two sides. Although global supply chain has many advantages, it still has some drawbacks such as high risk, transportation problem, and political issue. To be successful, global supply chain has to be able to deal with unexpected issues and find a good way to solve the problems. And it is also important for a company to choose an appropriate supplier and manage it.

There has an article from Wall Street Journal indicated that a phenomenon of the exploitation of workers exists in Apple’s factory in China. This report definitely has a negative influence on Apple Inc.’s reputation. Apple Inc. has released a list of its suppliers couple weeks ago. This list included 156 suppliers and a report about those suppliers’ working environment and welfare issues. According to the report, 62% of Apple’s suppliers allow their workers work more than 60 hours per week and five factories hire minor workers. Hon Hai precision Industry Co. located in Taiwan is one of the main suppliers of Apple. It was called “fear factory” since a series of staff suicide occurred in 2010. Last week, Apple Inc. released their annual financial report. Since the demand of iphone and ipad has dramatically increased during the vacation, apple earned a huge profit with 131 billion dollars. I think Apple, as a high profit and high influence international company should pay more attention on their suppliers instead of just pursuing high profit.

What do you think Apple can do to improve their supply management?



11 thoughts on “High Profit And “Fear Factory”

  1. I understand and totally agree that Apple should spend a little bit more to improve the work environment of their factories overseas, but then I also understand that the reason Apple and many other manufacturers don’t have the production part of its business in the U.S. is because they want to lower their costs. In other countries labor cost is way cheaper, and sadly people in need are willing to work for a very low wage. It would be nice if Apple and other companies would start spending more money in their factories employee wages for example, but honestly I doubt that would happen because most corporations are so greedy.

  2. Ideally, every organization would care more about human rights issues, but the reality is that the focus is only on the numbers. I don’t think it’s a matter of Apple not paying attention to their suppliers because they have to be aware of the conditions in these factories that they’re employing before they even get into business with them. As far as being able to “improve” their SCM, I hardly think the work conditions are their top priority since they’re there for the cheap labor in the first place.

  3. I believe the most important thing for Apple is to make money while making sure it is being done in the right way. In a sense, by purchasing from these suppliers, they are supporting them, and therefore they should not. They should either find new suppliers who are not being unethical, or demand these suppliers to comply to regulations. But then again, all these big corporations really only care about their bottom line; as long as it’s going up, they really do not care. Like we learned in class, there are a lot of things to consider in a supply chain, so this move if Apple decides to take it, will not be easy.

  4. Your article is very interesting and brings up a few interesting points. There are numerous rumors regarding Apple and its plans to purchase a few “key” suppliers in order to better their supply chain. However, it is nearly impossible for Apple to keep a tab on all of its suppliers. In a perfect world, human rights wouldn’t be an issue; however, it is important to understand that no country in the world is the same, and they will not have the same rules/law/regulations as others might.

  5. This article brings up quite a controversial matter. Just like Nike, Apple is mainly focused on taking advantage of the cheap labor in Taiwan. Unfortunately, in this day and age, money comes way before human rights and labor laws. However, there are far worst companies that use terrible suppliers but manage to stay under the radar. As long as Apple continues to increase its revenues, the labor conditions in Asia with remain secondary.

  6. This article is interesting and it is true that it is impossible to be able and keep track of all of Apple’s suppliers. The comments are all basically saying the same thing in the fact that is just the way things are. Apple should pay more attention to what’s going on at their supply chains. There have been numerous complaints with Apple’s Supplier Code of Conduct about the human rights and environmental issues. These issues need to be addressed if Apple wants to continue to stay on top.

  7. This article was very interesting to me. It made me think about the quotation “your only is good as your supply chain”. In reading and researching about apple, its notable in which its hard to constantly keep up with Apple’s suppliers, although I firmly believe that its a matter in which they should be more invested in.

  8. Very interesting article about Boeing and Apple. It shows how international corporations act globally and what are opportunities and threat exposed to them.

    Apple might be like a bubble ball and at anytime might face an issue and explode especially a global issue. One issue has recently happened after a Chinese company wanted to grant the iPad copyrights in China. I strongly agree that Apple shall focus more on its suppliers and as well on all the global issues it faces. Not paying attention to theses might lead Apple to have serious challenges in all aspects.

    Strong companies will always seek for more profits and will always find ways to do things cheaper to achieve their objectives. However, at the same time do not let things behind just to achieve a certain goal.

  9. Today Apple have a massive amount of loyal customers. It seems that the company was successful to turn the peoples’ attention on their revolutionary products rather than how and where they manufacture them. I am an Apple user and a fan of their continuous creativity, but I actually never thought of their manufacturing process or if they had ethical staffing issues.

    I agree that Apple should invest more in enhancing their suppliers management in the 3rd world countries, and to meet labor standards. Apple competitors will surly be interested to know more about this issue and use it against the company.

  10. This article is interesting and it is obvious that it’s difficult to monitor all Apple suppliers overseas. A huge international company like Apple for sure will be looking for ways to increase profit and reduce cost in order to compete with competitors globally and domestically. In the other hand, this does not mean that they should ignore the ethical side of depending on cheap and minor labor. It could be a good idea if Apple invested more in its supply chain in order to increase labor wages, if they do so they will end up having happy labors and productivity will rise.

  11. To be honest I was planning to right my blog about this concept!! I strongly believe that apple is the first company in the world ,they have create and no other organization could compete with Apple, from a business perspective what is the problem if apple do there manufacture in china which is cheapest for them and the labor cost will be lower than the united state , in any organization they will always try to minimize their cost and make higher profit .

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