Multi-Organisational
Enterprises & System(BNM830)
Major: Supply Chain Management
Total word count: 5728
Net Word Count: 5023
PART 1
A.
Apple Inc. is one organization that is known by many to deliver a diverse and complex product-service system. The firm is a technology organization whose products are of high quality and more available to its clients. The company also provides varied services and has opted to venture into other complex activities that are not common with many, if not all, technology companies (Apple, 2015). One of its best selling products is the iPhone6 brand that is not only available in the American market, but is also used by global clients. Apple is one of the biggest Smartphone’s and Technology Company in the world. Since its inception in 1976, at the Silicon Valley, the company has made several milestones. For example, it was listed in the stock market in 2012. The firm also reached a hit record of $ 623.5 billion market capitalization as of June 2014. The organization became the world's largest company due to its innovative activities and high-quality products for three consecutive years. Apple was ranked among the world’s top 500 list in 2014 for the first time. In 2013 Sep 30th, Apple company strived to become the world's most valuable brands better than Coca-Cola, Google, and other companies operating in the same industry (Apple, 2015).
Therefore, with the developments in the Smartphone industry, Apple's range of iPhone phones have become more worthy of attention. From iPhone1 through to IPhone6, the organization has gained tremendous success in the sales of their iPhone6 products. Current analysis of iPhone6 range shows that this product has reached its maturity level but is still popular in many national and global households (Apple, 2015). The phone is already an integral part of people's lives. They not only use it to communicate but also for business, learning and shopping. This is the inevitable result of technological development. The tremendous success of the organization is attributed to effective collaborative enterprise governance strategies at work within the firm (Kaneshige, 2015).
According to Prusak, Heckscher, and Adler (2011), cooperative enterprise governance (CEG) is the method of using different forms of communication among corporate employees. It promotes social networking, effective communication, and an efficient work environment among employees. On the same note, adequate CEG also ensures that any firm develops efficient methods in working together for the betterment of the organization. For example, the management and leaders ensure that every employee in the company works with each other in teams, to enable the company achieve its goals and objectives.
Researchers have shown that Apple Inc organization uses distinguishable collaborative governance methods to help improve their effectiveness and competitive advantage in the sector (Sigroi, 2013). With the primary focus on iPhone6, the firm decided to be innovative in the production of its merchandise. Through collaboration and by working together as a team, the leaders in the organization encourage innovative ideas to improve their products such as iPhone6, to ensure that their clients were getting the most out of the product. On the same note, the leaders in the company encourage teamwork as opposed to personal autonomy when it comes to the development of their products (Mannsoori & Chakile, 2014). Therefore, leaders at Apple Inc. rely on the general strategy of innovation through collaboration, to help them align all their operations to their core value, which is the production of high-quality products.
Teamwork is one of Apple’s collaborative enterprise governance strategies in place (Masouri & Chakile, 2015). According to the report from the organizational managers, the company requires that all their employees in the various departments work together to meet the set goals and objectives. Several areas that require collaboration include the process of designing a new product. When coming up with a new product, for example, iPhone6, the leaders of the firm usually request the technical and development teams to propose their thought and ideas of how the new product should appear. They talk about features of the phone- it functions and usability- and how it will be of benefit to the intended clients. They also work with the research and development team to conduct a study to find out the changes and expectations of current and future customers (idc.com, 2015).
The study should unearth things like what the clients would want in a changing world of technology as well as how the new technology would impact their lives. Through collaborative efforts, teams work together to conduct research on the future changes expected in the smart and mobile phone industry. Apple expects their product not just to be the best but also to be great. According to their CEO, the organization leaders states that they know that they are here to stay but must deliver on the promise of quality products (Lashinsky, 2011). An available report on MobileMe, an online platform that would allow iPhone6 users to synchronize their phones to other platforms, shows that before this application could be a reality, a team of technology and communication professionals had to come together to design all its applicable features and test its usability before it could be released to the public. When this happened, the founder of the organizations realized that the application was not working. Instead of blaming one person, he called the entire team and reproached them for their failure. This is a show of how collaborative governance works at Apple Inc (Prusak, Heckscher, & Adler, 2014).
Apple Inc uses communication as another form of strategy when developing their new products. For example, before they could come up with iPhone6 they had to convene several inter and intra-departmental meetings that would help the organization in creating a new product that the whole world would long to have. They ensured that the product would be great, satisfy their client, and be of high quality (Browne and Zhang, 1999). Communication is a key factor in collaborative governance as it ensures that information is received clearly, concisely and to the point. Another collaborative management strategy used during the production of iphone6 was innovation. It is important to note here that, before iPhone6 there were other versions such as iPhone3 and iPhone5. This means that the team that worked on iPhone6 had to come up with innovative features that were not available in the previous two versions.
They also needed to be creative enough to ensure factor such as the ability to synchronize the earlier versions to the new model of the iPhone. Similarly, they had to come up with compelling ideas for making the new version user-friendly and accompanied by other interfaces that made the product more profitable to the user. Similarly, the organizations ensured that they relied heavily on research and development to come up with a product that would adequately satisfy their clients in different ways. Therefore, after consulting one another and working as a team, they came up with iPhone6.
Enterprise Matrix
The enterprise model below is used to discuss the firm’s future CEG. It will then be used to map iPhone6 production process and to reflect on knowledge to see what sort of enterprise it is. The matrix will then use the Dynamic Enterprise Reference Grid to forecast where the Apple Company might be heading. Finally, it will assess options and make the change as appropriate (Paton et al., 2011).
Stage 2: Reflect on the knowledge to see what sort of enterprise it is. From the above-provided table, it is clear that Apple's supply chain in the mobile phone industry mostly relies on a vendor (Joana, 2015).
The company is only responsible for the design, warehousing and distribution, and some simple production, and this shows that Apple the Company’s mobile phone business is relying on suppliers. Although there are exist advantages that can save labor costs, reduce management and reduce production costs at this stage, it might also be of disadvantage to the company. This is because many suppliers need efficient management, logistics, and distribution on time (Ifkitar, 2013). From the look of it, Apple suppliers might encounter risks because it may not lead to a timely supply of orders. If the orders cannot be completed, then the firm might lose interest. The loss of interest in suppliers might cause damages at the highest level of participation of Apple designs because it is done solely by the firm. The design process is followed by the assembly in Foxconn and Pegatron,
Stage3: Dynamic Enterprise Reference Grid (DERG)
The Dynamic Performance Enterprise Reference Grid (DERG) shown in Figure1 indicates the strategies that Apple uses to remain agile and act against dynamic forces acting on it. The DERG representation, and summarizes the four different types of current and future domains and the type of organizational structure and their participation, capacity related to core competencies. In Figure 1, solid arrows show planned changes; broken arrows show unplanned change (Clegg and Wan, 2013).
In DERG, there are four different business models, which include the Extended Enterprise (EE), Virtual Enterprise (VE), Vertically Integrated Enterprise (VIE), and Defunct Enterprise. An extended enterprise is a group of companies that are brought together under a joint strategic purpose; it is focused on core competences that might either compete or co-operate (Evans, 2013). Virtual Enterprise is a temporary configuration of companies linked in some way to core competencies that have the purpose of meeting a specific market requirement. Vertically Integrated Enterprise is a firm entering other businesses within its business system by using for forward or backward integration (Browne and Zhang, 1999).
Apple is a typical example of VIE company because it relies on its core competency of producing great products to its clients. The firm takes part in the distribution of its existing core competence. It is evident based on its future that the core competitiveness of attractive development potential is high in the mobile phone industry. Similarly, the organization still can upgrade, develop and come up with new products to meet the requirements of future generations (Apple, 2015).
Stage4: Assess options and make change,
Research studies show that Apple's market share has been at a disadvantage. Therefore, for the company to be more competitive, they need to modify the existing structure (Fadaei, 2015). EE structure is an ideal structure, and thus they need from to change to VIE to change, we must first change some of the inherent existence of the system to adapt to the development of new products, followed by changing the funding sources, let it do lean and agile (Mansouri & Chakile, 2015). Diversion the profits to the supply chain, to ensure the durability of the supply chain. Develop new markets, in addition to the mobile phone market investment to other markets.
B. Value Stream Map
This part will discuss the value stream mapping of Apple Inc and how the firm uses it to streamline lean production steps for iPhone6. Value Stream refers to all the measures taken with the aim to provide information o areas that are not lean in the firm. Some of these areas that require lean management processes include products, services and customer value and satisfaction (Mauborgne, & Kim, 2015). The VSM emphasizes on the core activities of lean production and management methods of materials and information flow to maximize customer value and reduce waste during the production process hence providing lean activities.
The Value Stream Mapping indicates the Apple’s lean manufacturing system framework is used as a tool to describe the logistics and information flow visualization. It utilizes lean manufacturing tools and techniques to help companies understand and streamline production processes. Value Stream mapping aim is to identify and reduce waste in the production process. Waste is defined as processes that do not provide benefit to the product of any activity, and is used to illustrate the regular amount of "waste" in the production process and how it is reduced (Carlos, 2008).
Using a visual stream map to achieve lean management helps managers, engineers, manufacturing personnel, process planners, suppliers, and customers to find waste locate the starting point of the root causes of waste (Osterling & Martin, 2013). Thus, the VSM help the leaders to eliminate waste, encourage lean production management, and help in the enterprise's production and business activities. Similarly, VSM helps to reduce waste and distinguish the production of two primary components, which include value-added and non-value-added activities (Womack, Shook, & Rohter, 2014). For the firm to benefit from the use of the assigned work elements to obtain consistency of the cycle time, they must take every work directly, and apply the right criteria. It works to generate standardized operations, ensure business at the right time and aids them in appropriate quantity of production (Mike and John, 2003).
The leaders should use the VSM for selected product family and draw the value of the current state of current VSM to aid in lean production. They should also look for opportunities for improvement of VSM and consider the future state of future state VSM as a map for the development of an action plan towards lean processes. In this process, first, the current VSM is selected IPhone 6. Then drew the VSM by looking for iPhone 6 opportunities for improvement in the production process and how it aids I lean processes according to the drawn VSM. It should then depicts a future state VSM (FSVSM), according to FSVSM, in developing an action plan (Mora, 2010).
Current Value Stream Map (CVSM)
The diagram below is of Apple’s iphone6 now VSM. Apple controls the entire production process of the product to ensure lean production processes as indicate here in. The firm has issued an order requiring TSMC, SONY, TOSHIBA, TDK, LG, Japan Display Inc. and other vendors to develop the production of spare parts, including Key Chip. They should also deliver other components and other parts for the completion of the product. It should then be offered to the responsible supplier's warehouse for the assembly. Once the assemblage process started, Apple’s production line production orders began to accept parts of 400 units. Thus, each process took 60 seconds and stayed 5.35 seconds. The next process took seven seconds, and travel through parts 400 units. Then welding the base took 40 seconds each, and once completed 40 Unit stay 5.33 seconds. The assembling took 4 seconds each production parts of 400 units within 5.33 seconds each. Finally the finished products are shipped, 8 seconds each, delivered to the warehouse by Apple in nine days, thus it takes 119 seconds to produce a cell phone at the firm. This lead to a lean production process as shown in the VSM diagram below.
Future VSM
Future State Value Stream Mapping (FSVSM) is the process of eliminating the need for setting up and welding procedures, which leads to waste hence hindering lean production. Suppliers should produce finished parts at the assembling plant, warehouse (Apple, Developer, 2013). They need 400 units in which each process takes 60 seconds and stay for 5.35 seconds. The setup process takes seven seconds, and travel through parts 400 units 5.33 seconds directly. The assembly process takes every 4 seconds for 400 units. This is followed by transportation which consuming eight per second, and finally, direct delivery to retail outlets each warehouse. Each mobile phone assembly production time is reduced to72 seconds and the delivery time changes to four days. Another method of providing lean production by using the VSM to reduce waste of time and resources and hence achieve client value.
The Future State Value Stream Mapping helps the leaders to first solve the problem of setting process. It shows that Apple may require assembly plants in several lines to set different workflows and detailed assembly procedures. They should first assemble small parts into large parts and finally, add the base and the outer member (Armitage & Scholey, 2006). Welding steps need to contact Apple parts manufacturers, it can produce no soldering base, and parts can be assembled without soldering together. Thus, the future FSVSM omits these two steps, thus saving production time. During transportation of the finished product, Apple may require logistics companies, direct distribution to warehouse sales outlets, including outlets around the world, stores, distributors, or even through online shopping transported directly to the customer (Shook & Rother, 2003). To complete this step, Apple must do three things to achieve lean production methods. Thus they should conduct the production and assembly processes to monitor the quality of products. Secondly, the firm needs logistics, management of the orders, and delivery of goods at the appropriate time (Mike & John, 2003). The final step is to coordinate relations with outlets, franchisees and distributors in the beginning and then slowly expanded to other forms of marketing.
Part 2
C: Enterprise Resource Planning
The Entereprise resource planning (ERP) is the most appropriate for this business. This would ensure that there is maximisation of the busisness effects through the ERP capabilites. This is because it can help reduce the risks involved in manufacturing process. An Enterprise Resource Planning (ERP) is process management software used in businesses to enable firms to utilize system-integrated applications for organizational management. It is also used to automate various activities in the company that relate to services, human, and technology resources.
Benefits of ERP
Some of the benefits of ERP are that it provides integrative solutions, which are appropriate to support the business strategy for Apple Company. For example, the leaders ensured that they built Apple’s Enterprise Resource Planning (ERP) on information technology. They also ensured that they used ERP ideas based on innovation and systematic management skills. The ERP used at the firm also enabled the managers and leaders to rely on decision-making in the business to run the means to provide decision management platforms (Osterling, & Martin, 2013).
Similarly, the firm uses ERP for the management of material, human, financial, informational resources. The ERP help them in the incorporation of integrated enterprise management software system. The system tracks business resources with cash, raw materials, production capacity, and the status of business commitments. Apple’s software system also takes care of orders, purchase, and payroll. The ERP that makes use of the system also makes it possible for leaders to share data across various departments it provides the data. It can aggregate traffic from all sectors, and directly with external stakeholders to contact. (Margaret, 2015).
ERP systems at Apples
Apple’s ERP includes four different departmental systems namely manufacturing and production, sales and marketing, finance and accounting, and human resource systems. Sales and marketing systems include marketing, sales area, which should have a customers’ data, product data, taking orders. It also follows up on the sales orders, two years sales forecast and other data that concern sales. Marketing area includes identifying customers, determining what customers want, planning products, advertising and promoting products (O’Leary, 2000). It helps in determining prices for products similar information; including the production and quality control in the two regions. Manufacturing and production systems when and what quantity of products to produce, production plans, generating work orders and updating inventory levels and other information (Caiola & O’Sullivan, 2014).
Finance and accounting systems deal with accounts and fund. Finance area should contain similar financial assets, investment management, banking, long-term budgets, financial reports and other information. Similarly, the accounting systems in Apple deal with payments from customers, client, credit data, payrolls, expense data, as well as payments to vendors. Regional human resource systems, contain information belonging to human resources such as employees data (personal data, salaries & benefits, long term labor requirements, tracking vacations and sicknesses, tracking employee skills, employee training, and certifications among others (Reuven Karni., 2009).
How ERP supports Apples business strategy
The leaders at Apple Inc consider ERP as an enterprise re-engineering solution. They ensure that the ERP is type information technology, the enterprise's business strategy and business model. They use ERP with the aim of importing the entire enterprise information system as the backbone of the company. ERP is required not only to change the approach in science and technology, but the internal organization in general. It should also help in shaping all cross-regional or cross-process integration management on international personnel, finance, logistics, and manufacturing in the firm (Nah, 2003).
Similarly, ERP is an advanced network that deals with management and information systems, commercialization of software products, aspects that are necessary for successful operations at Apple (Parthasathy, 2008). Similarly, the use of ERP coupled with its tangible assets, which include financial resources, materials, and human and other resources effectively help in maximizing resource utilization. It replaces the old standalone computer systems in finance, human resources, production and warehouse, and substitutes them with a unified software program divided into the old standalone systems and new software modules. ERP has become a corporate central repository of information at Apple Inc (Shields, 2001).
Another important aspect of ERP is that it has many elements for supporting organizational business. Similarly, ERP can improve quality and efficiency of the business by maintaining the smooth operation of the company's internal business processes. It can also help to bring better output that may benefit the company. Then, it can provide real-time view of the enterprise from top to bottom, this help in providing information to support decision-making to managers.
ERP can also improve the security of data, the consolidation of authority and security to a structure to enable organizations to ensure that the company does not compromise critical data. Similarly, it can shorten production delivery and delivery time, due to the various integration of business processes, which save time and costs (Monk & Wagner, 2008). It also ensures that information can be shared by all business functions and at all levels of management support business operation and management, and software have a single point of management process integration, standardization of hardware, software, and data can be easier to maintain. It can promote the business of learning among employees, authorization and establish a common vision. It provides a collaborative platform for employees to spend more time content of cooperation, rather than mastery learning curve to communicate across distributed systems in a variety of format (James, 2011).
Disadvantages of ERP
On the contrary, ERP also has some disadvantages; first, custom can be problematic, because it forces companies to find solutions to meet unique needs. Second, re-engineering business processes may result in loss of competitiveness or important activities attention. ERP integration costs more than lower or less comprehensive solutions and high switching costs can increase the vendor's negotiating power, which can increase others expenses in the firm. At the same time, it is too rigid and too difficult to adapt to the specific workflow and business of some companies processes. On the same note,[. very independent business integration may create unnecessary dependencies (Joanna, 2015).
Apple's management structure requires that it is necessary to optimize the use of ERP systems management and resources (idc.com, 2015). As such since the firm is multinational with many departments, personnel complex, which cannot be provide close collaboration. Therefore, ERP can help Apple's to provide multiple departments cooperation, including consolidated financial, marketing and sales, human resources, manufacturing and applications. These aspects greatly improve the utilization of corporate resources, and thus indirectly improve the efficiency and quality.
On that note, Apple needs such a system to enhance their competitiveness because they operate in the super-competitive smart phone market. Apple's industry is very competitive; the top leadership of the decision is likely to affect the efficiency of enterprises. Therefore, the company's ERP system can provide the fastest real-time information to decision-makers, and policy-makers with the data to make the right decisions. Further research shows that Apple's supply chain is one of the best supply chains in the world (Apple, 2015). Therefore, ERP systems can help the firm to integrate a number of processes, which include the delivery process and delivery times, thus saving time and costs.
The successful ERP implementation therefore would require a focused and dedicated to the project. It helps in the defination of the business process without emphasising on the corporate strategy but relying on the ERP software. However, this can also impede the achievement of measurable business benefits for any company. The businessess that define their organisation process before choosing the software often fail to get the big picture and fail to realise the benefits realisation as they recognise the important role that the business process plays in achieving corporate objectives and goals.
D Implementation of ERP
Leaders in Apple realize that the implementation of the ERP system should be divided into five areas. These include management of material, human, financial, informational, and resource software implementation (O’Leary, 2000). The organization can decide to implement ERP in these five systems in stages starting with the most important one first. For example, being a multinational enterprise with many employees, the organizations need to take care of employee well-being first before doing anything(Leon, 2008). The employees should be trained to equip them with skills, which will help in the innovation, production, and other activities within the firm. After taking care of the employees, the company can decide to take care of production procedures to ensure high-quality products and lean activities (Shield, 2001).
The enterprise resource planning (ERP) is important business management software that helps the organization to collect, store, interpreted and manage business data. This often includes production planning, purchasing, manufacturing, marketing, and sales, inventory, shipping and payment among other. ERP therefore provides the integrated view of the organization processes on a real time. Since most of the ERP systems usually incorporates the best practices, the software implementation would ensure that the vendors interprets the business processes in the best way(Leon, 2008). However, the systems vary in their application hence the client can modify it to suite the business. It is also suitable for an organization that has the best business practices as this would reduce the time consuming tasks such as testing ,training and configuration among other. In addition, the organizations that have the best practices also reduce the chance of risks compared to many other in the software implementatio (James, 2011).
The ERP usually connect to the real time data and the transitions that take place in different ways. The system requires to be configured by the system integrators who usually bring unique knowledge on the vendor, equipment and process solutions. Therefore, the implementation process would require direct integration of the ERP system. This is because the ERP systems usually have connectivity, which is usually part of the product offering. In addition, database integration also connects to the plant floor data sources, which is done through the tag tables. The ERP implementation usually applies significant changes to the processes and practices in the business(James, 2011). In most of the implementations, there are three types of the changes that often occur which include the consulting, support and customization. This means that the implementations of the ERP usually depends on time, size of the business ,customization required , the scope, the number of modules and the readiness of the organization(Leon, 2008).
Steps for implementation
The ERP should be implemented first for the management of material resources in the firm(IGI, 2004). The leaders and employees should aim to use ERP to manage and distribute resources in the firm. This includes the using ERP for the manufacturing and production systems. While doing that, they should monitor all the success and failures while using the system (Langenwalter, 1999).
Secondly, the leaders should implement ERP by using it in human resource management. They should monitor the benefits of the actual use of this system in human resources data and information. The data includes all employee data, long-term labor demand, as well as tracking and staff holidays, sickness, skills, training. The HRM data is an important basis for leadership and management staff can monitor the situation in real-time situations and changes in capacity (Leon, 2008). Thirdly, the firm needs to implement ERP by using it for financial resource management, which includes the finance and accounting systems. At this point, the employees need to apply ERP for any financial activities such as purchases, cash flow evaluation, payment records, financial assets, investment management, banking, long term budgets, financial reports and other aspects of financial activities (Summer, 2005). It is worth noting that if installation failures or other negative information for a class appears for listed companies such as Apple during the use ERP system, it inevitably will affect their share prices (Roy, 2014).
Fourthly, the ERP should be used for information resources management, which should include the management of new and old information owned by the firm (Shields, 2001).
Fifthly, the leaders should implement ERP for material resource management by using it the implementation of the manufacturing and production systems at Apple. The company only supports the technical level of the production process. The suppliers do the majority of the productions and the ERP system vendor for more direct information exchange for the production time and the number of merchandise produced (Caiola & O’Sullivan, 2014). Therefore, Apple should implement the ERP to aid in production planning, generating work orders, and inventory levels with new steps to help them get more direct control. Similarly, Apple can use ERP to update the requirements for suppliers and even down to the yield, and can be supplied with inventory and logistics to do with the warehouse, to meet market demand, without increasing inventory (A Vision of Next Generation MRP II., 1990).
The ERP system should be in favor of Apple to regain market share and ensure the company's competitiveness (Roy, 2014). Therefore, the ERP system as a whole has more advantages to Apple's than the disadvantages. This is true especially for Apple's long-term consideration, the need for such a system to improve the utilization of corporate resources, control of the supply chain integrity and cost. This is also in line with the world trend of enterprise development, sustainable development, green enterprises (IGI, 2004).
Risks involved
Somme of the risks involved in implementing the ERP includes system failures. The ER might work for some systems but fail to work for other systems within the fir. Therefore, the leaders need to have effective methods of solutions I place to help deal with such systems failures. Alternatively, system failures may occur because of lack of compatibility. Another issue that might crop up during implementation relates to time factor. The fir might lack adequate time to implement the ERP system due to its busy nature. Finally the employees might not be willing to accept changes easily.
Solutions to the risks
Primarily, the firm should come up with appropriate timeline for implementing the ERP. For example, based on its busy nature, the firm needs to use a five months plan for implementing ERP. That is they need to use one month for each of the identified five areas. Secondly, system failures can be addressed using modern systems that are also compatible with the ERP system. The leaders and employees need to realize that the ERP has more benefits to the firm. Since they are more likely to reject the change from the use of old system to the ERP, the organizations needs to inform the employees of the intended changes in advance. They must follow this with a training aimed at equipping the employees with the right knowledge about the benefits of the ERP to every sector of the organization.
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