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Case study: Apple supply chain and power

Apple is a very successful company with very loyal customers who love their innovative and design driven products.

The company is also consistently at the top of rankings of best supply chain company in the world and is a master at getting products to the market in large quantities.

They design but do not make their products, outsourcing the manufacturing and customer fulfilment to companies around the world.

In spite of this success they still demonstrate some features which do not accord with best practice in supply chain transparency or in this case their use of their market position and therefore their power.

Read through this recent article (14/11/14) ‘The desperate struggle at the heart of the brutal Apple supply chain’ on the Guardian website.

There are also some concerns about the use of this power to impose contractual terms in their favour, without perhaps enough recognition of the needs and capabilities of their suppliers.

Of course the prospects of large future orders with the biggest company in the world might influence the decisions of the suppliers to say yes too readily. However driving a supplier into bankruptcy must cause some disruption to business processes. Such behaviour is not without its risks to the user of the power.

Can you think of situations where you have been at the receiving end of someone or some organisation exercising its power over you? How did you feel?

Could you fight back against this aggression at the time or later?

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This article is from the free online course:

Contract Management: Building Relationships in Business

University of Southampton