Lessons from Apple: Who is Keeping Watch Over Your Supply Chain? Part 1

Few companies have the ‘cool factor’ that can be claimed by Apple. But with a high profile comes high stakes, and their procurement and supply chain operations are not exempt. In order to remain competitive (or dominant in Apple’s case) in the consumer electronics industry, a high level of secrecy is usually required – both in the introduction of new products and the release of next generations of existing products. Historically, Apple has been a highly secretive company, driven in part by the management philosophy of former CEO Steve Jobs.

With the September 12th announcement of the iPhone 5, however, consumers and analysts alike were asking whether the culture of confidentiality at Apple is over. While the fanfare and launch theatrics rivaled that of previous product releases, there were no real surprises about the device itself. The majority of the changes: “a larger screen, a lighter body, a thinner frame, faster processor, new headphones, LTE support — had been predicted in advance earlier this year, despite Apple CEO Tim Cook’s earlier promise that the company would “double down on secrecy,” after several high-profile leaks.”1

Most of the leaks came from Apple’s supply chain, specifically from component manufacturers and suppliers in Asia. Enough evidence of the design specifications were available that iResq, an Internet based company that repairs Apple products, was able to assemble a fairly accurate mockup of the iPhone 5 a full three weeks before it was released to the market.2  There has apparently been a change in the relationships between Apple and their suppliers for so much information to be leaked in advance with so few repercussions.

This loosening of controls in the Apple supply chain is all the more surprising given current CEO Tim Cook’s own background. As has been discussed previously on the eSourcing Forum, Cook has a background in procurement and supply chain, and this was one of the reasons Steve Jobs chose him as his successor. ‘Tim Cook has been responsible for end-to-end management of Apple’s supply chain. Putting their supply chain guru in the top spot reflects a growing recognition of the importance of supply chain management and procurement to the overall business strategy.’3  No direct harm seems to have come to Apple from the lack of surprise at the September 12th launch, but Steve Jobs had an understanding of just how important the supply chain was to the success of his company.

Stay tuned for Part 2 of this series, which will take a deeper look Apple’s supply chain and iPhone 5 release.

Sources:

  1. Franzen, Carl. ‘Apple iPhone 5 Unveiled, No Major Surprises’ Idealab Talking Points Memo: 12 September 2012.
    http://idealab.talkingpointsmemo.com/2012/09/apple-iphone-5-unveiled-no-major-surprises.php
  2. ‘iPhone 5/The New iPhone Repair Parts Assembled!’ iResq: 20 August 2012. http://www.iresq.com/the-new-iphone-5-repair-parts.phtml
  3. Parent, Jami. ‘What Procurement Can Learn from Steve Jobs’ eSourcing Forum: 1 September 2011. http://www.esourcingforum.com/archives/2011/09/01/what-procurement-can-learn-from-steve-jobs/
  4. Apple’s Business Conduct Policy: July 2012. http://investor.apple.com/governance.cfm
  5. Smith, Chris. ‘How Samsung kept the secret on the Galaxy S3′s design and features’ Android Authority: 14 June 2012. http://www.androidauthority.com/galaxy-s3-design-features-secret-95077/

Still quiet here.sas

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