Apple:The Major Markup

Picture Courtesy Apple

People today almost always have smartphones, and a large majority of people with smartphones have Apple iPhones. Apple recently came out with the iPhone 6, coming in at a suggested retail price of $649. Of course, most people don't pay the full $649 here in the United States because of carrier plans and more, but there are places and people who pay $649 per iPhone.

So how much does the iPhone 6 cost?

$200.10

The standard 16GB iPhone 6 costs Apple about$200.10 according to multiple sites such as CNN, Forbes, Time Magazine, and more. So think about that, people are paying in some cases a 324% markup to Apple, when they're buying the iPhone 6. The most expensive part that you're paying for is the touchscreen at $45. Talk about great margins...

Here is the link that CNN Money posted around release time about their exact costs.

How does Apple do this?

Supply Chain and Logistics

While Apple is highly known for their technology (and for obvious reasons) most people don't see the thing they arguably do best, managing their Supply Chain. They are able to have better than average operations while having margins on their product like the iPhone 6 we talked about earlier. They purchase items from all over the world, and are able to find the cheapest products they can while maintaining quality. According to this article, Apple makes sure that all of their suppliers will agree to meet their production standards. Buying in bulk is one method that any company can use to lower prices, as long as their supplier has the manufacturing output necessary. 

One of the things that Apple also saves money on is their manufacturing/sourcing locations. This could be an ethics topic, but the main focus point here is that the vast majority of their supplier locations are outside the US. If you're interested in seeing more of the manufacturing locations this website has some interesting data. 

I hope this was able to give you some insight as to how important Supply Chain and Purchasing is for all companies.

Thanks for reading!

Andrew

Amazon's Supply Chain: A Perfect Rolemodel

With over 230 million customers from all over the world, amazon is changing the way we shop. Amazon has a commitment to get the customer their product quickly and efficiently. Something that most of us don't think about after clicking on the check out button, is what is really going on behind the scenes between warehousing, shipment, and product management. According to Garters Amazon has the #3 supply chain in the world behind Apple, and McDonalds. While there is so much detail that stands out about Amazon's supply chain, I will only be going into detail about their warehouses. hopefully giving you an idea of how the item gets to your door.

Before getting into Amazon's supply chain methods, it is important to point out that they have business ethics in the forefront when making supplier decisions. They talk about bribery, child labor, hours of work, business ethics, and more on their website. This is important because some of their competitors (Walmart & Apple) get ridiculed for having their suppliers get (or make) their product in poor conditions.

What happens when you click purchase?
In Amazon's 96 warehouses world wide the obvious goal is to store all of the products their customers may order online in the future, as well as how to pick and ship them quickly. So as soon as you click purchase, Amazon's warehouse robots called "Kiva" drive to a bin location (where the product is), picks up the cart, and then drives it to the picking and shipping area to be picked and shipped, then taking the cart back to the proper location.

Courtesy: Amazon

As soon as the Kiva gets the item to the picking location the picker then scans the proper item on the customers order getting it ready to be shipped.  After your order gets picked, and scanned, the order needs to be packaged, and can be sent to your front door. This is an efficient process for Amazon as they are proud of the customer order, order fulfillment time span that they do have.

Future
Amazon takes great pride in that they are a role model for technology at their company. This doesn't stop at their robots, as they have been looking into using drones to ship small items. Amazon also has been selling groceries to some of their customers online, with the USPS being a possible shipper for those.

Check out one of the videos below for more information about Amazon's Warehouse & Technology.
60 Minutes: Amazon
Kiva Robot

Hope you were able to learn a little bit of the work that goes on behind the scenes at Amazon to get you your product.

Thanks for reading!

Andrew Niedert