Transforming supply chains in digital content delivery: A case study in apple

Abstract

Agility, or the ability to respond quickly and effectively to market demands has become an important competitive tool in the manufacturing industry. Firms deploying global sourcing strategies have to balance the benefits of cost-effectiveness against the limitations of off shore productions. Improving supply chain performance is a key to achieving cost effectiveness, and the improvement largely depends upon the degree to which uncertainty can be reduced in the supply chain. This paper conducts a case study of Apple as it moves into the arena of digital content delivery and initiates hardware innovations in an industry that is characterized by increasing product variety, new technologies, price erosion, and fast inventory turn-overs. The purpose of this paper is to explore Apple's supply chain and some of the challenges it has faced in agilely managing its offshore manufacturing in facing demand. Secondly, the paper also explores the manoeuvering, shift of power and change of roles within the supply chain as it moves into the arena of digital content delivery. As a result of our study, we reach the conclusion that the traditional suppliers in the media content industry are yet to make the transition in mind to becoming pure digital players. As more and more consumers make a complete switch to digital media and become used to not owning physical media, the suppliers who retain control through copyrights fall back on strategies that reflect the workings of the non-digital era. Successful companies stand to face the dual task of changing the mindset of its suppliers on one hand, and meeting and setting up an uncharted path for its customers in digital content in a pioneering role for the industry on the other. We find that while managing the supply chain in the traditional 'non-e' market provides challenges related to cost-effectiveness and physical barriers, in the 'e' marketplace managing the supply chain encounters barriers not physical but rather strategic that is entrenchedin more traditional operating modes. © 2008 International Federation for Information Processing.