Question

Compare and contrast Apple and Amazon’s supply chains: comment on four key metrics make quantitative calculations. Are these fair comparisons if not, why not?

Answer 1

Gartner has ranked the supply chain of Apple to be number one and the supply chain of Amazon has been ranked continuously in the top 25 list of Gartner ranking. The key quantitative metrics considered in a supply chain include the number of points between assembly and the customer, distributor network count or distribution facility count, suppliers count and a number of distribution channels.
In these metrics, the supply chain of Apple and Amazon are compared. Apple has minimized the number of points in its supply chain drastically using the economies of scale gained through experience. Apple has moved to a level zero supply chain with direct shipments to customers from online orders in its website and mobile app store. Amazon has a fragmented approach as the product line is varied and the number of points between the customer and the assembly of the product is higher than Apple as the products listed in Amazon are sold by different sellers.
The distribution network count is limited in the case of Apple as it stocks its products in a central warehouse. The products are sent catering to the demand prevailing in the market from this central warehouse. On the contrary, Amazon has a large distribution facility count and increases its distribution facilities annually in more than 22 nations worldwide to come closer to the customer to enable faster delivery of products.
The suppliers count in the case of Apple include adherence to supplier codes set by Apple across the world. The warranty or recycle policy of Apple ensures that the customer comes into a closed loop of supplier network of Apple to reclaim or exchange their old products. Amazon’s supplier network is also huge with strict adherence to supplier code ensuring quality service and best business practices.
Apple’s distribution channel primarily consists of retail stores, distributors and direct sales while the distribution channel of Amazon is fragmented as the supplier network varies across different locations.
It is unfair to compare the supply chain of Apple and Amazon as they operate in different domains of business. Apple and Microsoft can be compared as they operate in similar business models. In this case, Apple is concentrated on technology products while Amazon caters to a wide range of products and accordingly supply chain varies. Apple adopts a vertical supply chain approach while Amazon adopts a fragmented supply chain approach and hence the business model and product vary making comparison biased or unfair.