Fluent Essays

DA 3: Review the following news item to motivate your discussion.News Item: Apples Supply-Chain Secret? Hoard LasersFor our discussion, I am including below link to an article in Bloomberg Businessweek Magazine titled Apples Supply-Chain Secret? Hoard Lasers. It discusses insights on how the company stockpile inventory of key items that they believe to be crucial for their long-term operational continuity in a supply chain context. Provide your opinion on what your learned from it in context of implications for operations management in the computer industry.Apples Supply-Chain Secret? Hoard Lasers (clicking this link will download the item as a PDF file)In addition to contributing to discussion, you are expected to reply one of your classmates.Discussion 350+ words, reply the student 150+ words. Do not use any reference.——————————————CTA 3: Fruits of NAFTA – The Mexican Medical-Devices Supply Chain.Links to short news item and video about Mexico medical-devices supply chain are included herewith. Thanks to NAFTA, Tijuana has transformed from a seedy party destination for overage college students to a thriving industrial hub for medical device production. Well-known names of US medical device companies produce their products in factories situated here. Mexico’s medical device industry buys much of its raw materials and capital machinery from American suppliers. Half of the factory’s final output is shipped back to the U.S. and much of the rest to American-owned companies elsewhere.News Item 1: Also Made in Mexico: Lifesaving Medical Devices (clicking this link will download the item as a PDF file)News Item 2 (video): Mexico Medical Device Industry in Tijuana (Links to an external site)Or use this link for the video：https://youtu.be/xCASqaKwpqQCritically analyze the information contained in news article and the video. Then write well-thought out answers to the questions below:What factors appear to threaten this medical-devices supply chain with its manufacturing hub in Tijuana, Mexico?Why is it hard to relocate these medical factories back to the U.S?CTA Assignment 650+ words. apple_lasers.pdf also_made_in_mexico.pdf Unformatted Attachment Preview Apples Supply-Chain Secret? Hoard Lasers - BusinessWeek Page 1 of 4 Technology November 03, 2011, 4:50 PM EDT Apples Supply-Chain Secret? Hoard Lasers The iPhone maker spends lavishly on all stages of the manufacturing process, giving it a huge operations advantage By Adam Satariano and Peter Burrows About five years ago, (AAPL)Apple design guru Jony Ive decided he wanted a new feature for the next MacBook: a small dot of green light above the screen, shining through the computer’s aluminum casing to indicate when its camera was on. The problem? It’s physically impossible to shine light through metal. Ive called in a team of manufacturing and materials experts to figure out how to make the impossible possible, according to a former employee familiar with the development who requested anonymity to avoid irking Apple. The team discovered it could use a customized laser to poke holes in the aluminum small enough to be nearly invisible to the human eye but big enough to let light through. Applying that solution at massive volume was a different matter. Apple needed lasers, and lots of them. The team of experts found a U.S. company that made laser equipment for microchip manufacturing which, after some tweaking, could do the job. Each machine typically goes for about $250,000. Apple convinced the seller to sign an exclusivity agreement and has since bought hundreds of them to make holes for the green lights that now shine on the company’s MacBook Airs, Trackpads, and wireless keyboards. Most of Apple’s customers have probably never given that green light a second thought, but its creation speaks to a massive competitive advantage for Apple: Operations. This is the world of manufacturing, procurement, and logistics in which the new chief executive officer, Tim Cook, excelled, earning him the trust of Steve Jobs. According to more than a dozen interviews with former employees, executives at suppliers, and management experts familiar with the company’s operations, Apple has built a closed ecosystem where it exerts control over nearly every piece of the supply chain, from design to retail store. Because of its volume—and its occasional ruthlessness—Apple gets big discounts on parts, manufacturing capacity, and air freight. “Operations expertise is as big an asset for Apple as product innovation or marketing,” says Mike Fawkes, the former supply- http://www.businessweek.com/printer/magazine/apples-supplychain-secret-hoard-laser... Apples Supply-Chain Secret? Hoard Lasers - BusinessWeek Page 2 of 4 chain chief at (HPQ)Hewlett-Packard and now a venture capitalist with VantagePoint Capital Partners. “They’ve taken operational excellence to a level never seen before.” This operational edge is what enables Apple to handle massive product launches without having to maintain large, profit-sapping inventories. It’s allowed a company often criticized for high prices to sell its iPad at a price that very few rivals can beat, while still earning a 25 percent margin on the device, according to the estimates of Piper Jaffray analyst Gene Munster. And if the latest rumors are to be believed, Apple’s operational expertise is likely part of what gives the company enough confidence to enter the notoriously cutthroat television market by 2013 with a TV set that would tightly integrate with existing Apple software like iTunes. The widespread skepticism over Apple’s ability to compete in such a price-sensitive market, where margins are often in the single digits, is “exactly what people said when Apple got into cell phones,” says Munster. Apple began innovating on the nitty-gritty details of supply-chain management almost immediately upon Steve Jobs’s return in 1997. At the time, most computer manufacturers transported products by sea, a far cheaper option than air freight. To ensure that the company’s new, translucent blue iMacs would be widely available at Christmas the following year, Jobs paid $50 million to buy up all the available holiday air freight space, says John Martin, a logistics executive who worked with Jobs to arrange the flights. The move handicapped rivals such as Compaq that later wanted to book air transport. Similarly, when iPod sales took off in 2001, Apple realized it could pack so many of the diminutive music players on planes that it became economical to ship them directly from Chinese factories to consumers’ doors. When an HP staffer bought one and received it a few days later, tracking its progress around the world through Apple’s website, “It was an ‘Oh s—’ moment,” recalls Fawkes. That mentality—spend exorbitantly wherever necessary, and reap the benefits from greater volume in the long run—is institutionalized throughout Apple’s supply chain, and begins at the design stage. Ive and his engineers sometimes spend months living out of hotel rooms in order to be close to suppliers and manufacturers, helping to tweak the industrial processes that translate prototypes into mass-produced devices. For new designs such as the MacBook’s unibody shell, cut from a single piece of aluminum, Apple’s designers work with suppliers to create new tooling equipment. The decision to focus on a few product lines, and to do little in the way of customization, is a huge advantage. “They have a very unified strategy, and every part of their business is aligned around that strategy,” says Matthew Davis, a supply-chain analyst with (IT)Gartner who has ranked Apple as the world’s best supply chain for the last four years. When it’s time to go into production, Apple wields a big weapon: More than $80 billion in cash and investments. The company says it plans to nearly double capital expenditures on its supply chain in the next year, to $7.1 billion, while committing another $2.4 billion in http://www.businessweek.com/printer/magazine/apples-supplychain-secret-hoard-laser... Apples Supply-Chain Secret? Hoard Lasers - BusinessWeek Page 3 of 4 prepayments to key suppliers. The tactic ensures availability and low prices for Apple— and sometimes limits the options for everyone else. Before the release of the iPhone 4 in June 2010, rivals such as HTC couldn’t buy as many screens as they needed because manufacturers were busy filling Apple orders, according to a former manager at HTC. To manufacture the iPad 2, Apple bought so many high-end drills to make the device’s internal casing that other companies’ wait time for the machines stretched from six weeks to six months, according to a manager at the drillmaker. Life as an Apple supplier is lucrative because of the high volumes but painful because of the strings attached. When Apple asks for a price quote for parts such as touchscreens, it demands a detailed accounting of how the manufacturer arrived at the quote, including its estimates for material and labor costs, and its own projected profit. Apple requires many key suppliers to keep two weeks of inventory within a mile of Apple’s assembly plants in Asia, and sometimes doesn’t pay until as long as 90 days after it uses a part, according to an executive who has consulted for Apple and would not speak on the record for fear of compromising the relationship. Not every supplier gives in. An executive who works with a major parts manufacturer says that Apple’s bargaining tactics tend to exert downward pressure on prices, leading to lower profits and margins. After months of negotiations, the company declined a $1 billion payment from Apple that would have required the supplier to commit much of its manufacturing capacity to Cupertino’s products. The executive familiar with these talks, who asked not to be named because the discussions were not public, says that while deals featuring $1 billion in cash up front are basically unheard of, his company didn’t want to be too dependent on Apple—and didn’t want to help it deflate prices. Apple’s control reaches its crescendo in the leadup to one of its famed product unveilings, a tightly orchestrated process that has been refined over years of Mac, iPod, iPhone, and iPad debuts. For weeks in advance of the announcement, factories work overtime to build hundreds of thousands of devices. To track efficiency and ensure prelaunch secrecy, Apple places electronic monitors in some boxes of parts that allow observers in Cupertino to track them through Chinese factories, an effort meant to discourage leaks. At least once, the company shipped products in tomato boxes to avoid detection, says the consultant who has worked with Apple. When the iPad 2 debuted, the finished devices were packed in plain boxes and Apple employees monitored every handoff point—loading dock, airport, truck depot, and distribution center—to make sure each unit was accounted for. Apple’s retail stores give it a final operational advantage. Once a product goes on sale, the company can track demand by the store and by the hour, and adjust production forecasts daily. If it becomes clear a given part will run out, teams are deployed and given approval to spend millions of dollars on extra equipment to get around the bottleneck. http://www.businessweek.com/printer/magazine/apples-supplychain-secret-hoard-laser... Apples Supply-Chain Secret? Hoard Lasers - BusinessWeek Page 4 of 4 Apple’s enormous profits—its gross margins were 40 percent last quarter, compared with 10 to 20 percent for most other hardware companies—are in large part due to this focus on operations, which is sure to remain a priority under Cook. The new CEO is known to give colleagues copies of Competing Against Time, a book about using supply chains as a strategic weapon in business. According to Martin, the logistics executive, Cook uses a catchphrase to hammer home the need for efficiency: “Nobody wants to buy sour milk.” The bottom line: Apple plans to double spending on its supply chain, to $7.1 billion, continuing its focus on streamlining and controlling manufacturing. Satariano is a reporter for Bloomberg News. Burrows is a senior writer for Bloomberg Businessweek, based in San Francisco. http://www.businessweek.com/printer/magazine/apples-supplychain-secret-hoard-laser... https://nyti.ms/2nGRGIH BUSINESS DAY Also Made in Mexico: Lifesaving Medical Devices By SARAH VARNEY MARCH 31, 2017 TIJUANA, Mexico — The North American Free Trade Agreement has transformed this sprawling border town from gritty party spot to something entirely different: a world capital of medical devices. Trucks choke boulevards lined with factories, many bearing the names of American-run companies: Medtronic, HillRom, DJO Global and Greatbatch Medical. Inside, Mexican workers churn out millions of medical devices each day, from intravenous bags to artificial respirators, for the global market. Nearly everyone in America who has a pacemaker — in fact, people all over the world — walks around with parts from here. When President Trump threatens to redo trade deals and slap steep taxes on imports in an effort to add more manufacturing jobs, he focuses largely on car companies and air-conditioner makers. But the medical devices business makes a particularly revelatory case study of the difficulties of untangling global trade. America imports about 30 percent of its medical devices and supplies. The trouble is, these jobs are among the most difficult to relocate to the United States. To ensure the safety of products that often end up inside the human body, medical devices are strictly regulated and require lengthy approvals from the Food and Drug Administration and other inspectors. If the companies do keep major operations outside the country, new taxes on imports would most likely increase the cost of their products — a change that could jolt not only the devices industry in coming years, but also health care nationwide. Here in Tijuana the factories are bound to stay put for years, at least. During that time, health executives say, a border tax could fracture the industry’s sophisticated global supply chain and force American hospitals to pay more for vital necessities — or worse. “The real danger is the supplies won’t be available at all,” said Dr. John Jay Shannon, chief executive of the Cook County Health and Hospitals System in Chicago. American hospitals rely on heaps of bandages and surgical gloves from China, suturing needles and artificial joints from Ireland, and defibrillators and catheters from Mexico. In all, the annual imports of medical devices more than tripled from 2001 to 2016, when it reached $43.9 billion, according to BMI Research, a unit of the Fitch Group. Mexico is the leading supplier, ahead of Ireland, Germany and China. And few places illustrate this changing landscape, or help explain the complexity of the industry, as well as Tijuana, 20 miles south of San Diego. The city houses the highest concentration of Mexico’s medical device firms, 70 percent of which are American-owned, according to the local development group. Companies including Medtronic, CareFusion, DJO Global and Hill-Rom-Welch Allyn — some that have their headquarters just up the road in San Diego — have invested heavily in Tijuana, constructing long, low-slung factories tucked into the hilly terrain. Giant banners hanging from manufacturing plants plead for workers to join them. The high-tech operations emerged after Nafta helped transform Mexican border factories, known as maquiladoras, into industrial powerhouses. Now, instead of being garment sweatshops, many maquiladoras in Tijuana employ a new generation of Mexican engineers and skilled technicians to make orthopedic devices, surgical equipment and catheters. The factories have helped remake the city’s reputation from a ribald party town to a locus of sophisticated industrial manufacturing. Roadside shanties made of corrugated metal and plastic abut new apartment complexes painted fuchsia and lime green; late-model S.U.V.s bounce along potholed roads. Workers pass through imposing security gates to begin shifts operating advanced machinery or delicately sewing pig tissue onto stents for heart valves, and trucks zip in a steady line across the border in preclearance, fast-track lanes into California. But the possibility of new protectionist trade policies is already looming over this buzz of activity. The question for many of the people here is whether it will upend the economic incentives that led American companies to invest in the city in the first place. Mr. Trump has argued that a border tax is needed to keep well-paying jobs in the United States and dissuade companies from relying on Mexican workers who earn a small fraction of American wages. Technicians at medical device factories in Tijuana earn about $14 an hour, compared with about $25 an hour for technicians at factories in the United States. Critics of Mexico’s maquiladoras system contend that wages are kept unfairly low and that workers have been kept from organizing. For companies, though, the savings are clear — as much as 45 percent for labor-intensive products — and have helped fuel the wave of development here. Now, even the city’s unflappable longtime entrepreneurs are unsettled by the shift in trade talk. American companies draft plans to build new plants — or expand existing ones — years in advance, said Miguel Felix Diaz, vice president of the Baja California Medical Device Cluster, an organization that represents 63 medical device manufacturing plants that employ 60,000 Mexican workers. “For that reason now,” he said, “you don’t know if you start some operation tomorrow how it’s going to be affected.” If the United States does approve a border tax, Mr. Felix Diaz added, “the final customer is going to pay.” The final tally of just how much American customers — hospitals, clinics, nursing homes and doctors’ offices — would pay is unclear. Mr. Trump and Republican lawmakers have yet to release a detailed plan on trade tariffs or corporate tax reform. In addition, the final price on many medical devices is negotiated by group-purchasing organizations, which harness the purchasing power of hospitals and others and would try to mitigate any price increases. Mike Alkire, chief operating officer at Premier, which negotiates for some 3,750 American hospitals, said that while prices would initially spike if the Trump administration hit countries like Mexico or China with tariffs, “we’ve got enough diversity in the way we source products, we think we can manage the costs.” “Over the long term,” Mr. Alkire added, “we do think the market will stabilize and the most efficient place to produce products will occur.” But chief executives at some of the United States’ largest hospitals are nervously watching the gathering legislative, economic and geopolitical storm. The executives say this concern on trade is based on simple math. In Chicago, Cook County’s public clinics and hospitals spend $62 million a year on medical supplies, including 120,432 boxes of gloves, 44,434 boxes of syringes and 403,460 bags of fluids. Safety-net hospitals that care for poor patients would be unable to pass along price increases because the programs that insure those patients, Medicaid and Medicare, pay fixed rates for care. “It’s a bunch of dominoes,” said Doug Elwell, deputy chief executive for finance and strategy at the county hospital system. Private or for-profit hospitals, because they serve largely privately insured patients, “can pass along 10 percent in the bill,” he said. “But we can’t.” A border tax, experts say, would ricochet back and forth across the United States-Mexico border — and around the world — in unintended ways. Mexico’s medical device industry buys much of its raw materials and capital machinery from American suppliers. The American-owned Integer plant in Tijuana, for example, buys 90 percent of its raw materials, essentially duty-free, from the United States: stainless steel to be stamped into cups used for hip replacements and plastic to be molded into catheters. Then half of the factory’s output is shipped back to the United States and much of the rest to American-owned companies in Puerto Rico, Switzerland and Singapore. If Mexico imposes tariffs on raw materials from American suppliers, a likely response to any border tax imposed by the United States, production costs would spike for companies in Mexico or those companies would shift to suppliers in other countries eager to cut low-tariff deals like China. Imports from China contain around 4 percent of content from the United States, while imports from Mexico contain about 40 percent, and even more in products like medical devices. “The damage wouldn’t just to be to the Mexico operation, it would be to U.S. suppliers,” said Christopher Wilson, deputy director of the Mexico Institute at the Woodrow Wilson International Center for Scholars. Companies would also face a regulatory thicket should they move or change suppliers. The Food and Drug Administration inspects and certifies hundreds of medical device manufacturers in China, Europe, Mexico and elsewhere, and even minor manufacturing changes must be certified, a process that can take many months. “Medical devices is a very stringent process,” said Jorge Hernandez, director of operations at Integer in Tijuana, an American-owned company that makes components for pacemakers and defibrillators, among other devices. The Integer plant in Tijuana that Mr. Hernandez oversees looks like a vast scientific laboratory. Behind glass windows, in so-called clean rooms, employees in blue hair caps and bootees tend to machines that process gold and platinum into tiny components for pacemakers. In one room, workers sit shoulder to shoulder, peering into microscopes as they expertly remove tiny debris from freshly made parts. Even the smallest change in th ... Purchase answer to see full attachment