Lessons from Apple: Who is Keeping Watch Over Your Supply Chain? Part 2

Click here to read Part 1 of this series.

Apple makes their suppliers sign Nondisclosure Agreements , and warns employees against disclosing anything beyond what is absolutely necessary, but clearly they have lost much of the control they were previously able to exert over their research & development and manufacturing processes. Their procurement and supply chain groups are clearly facing real challenges if they hope to bring non-publicly available information back inside the fold. While it is necessary to share an adequate amount of information with suppliers so they can manufacture and assemble components to meet precise specifications, the reliance on a global supply chain has introduced the need for additional precautions.

By contrast to the iPhone 5 release, Samsung recently released their Galaxy S III Android phone with relatively few leaks. To be fair, there was far less anticipation of this product release than an Apple product, but Samsung still took extraordinary steps to protect their design, “…people working on the handset were not allowed to take pictures of the Galaxy S3 prototypes they were working in order to share them with other Samsung engineers or even the company’s own Procurement department.”5  Imagine the complexity of putting together an RFP based solely on the technical specifications provided by R&D: no pictures, no diagrams, no visuals of any kind. But for Samsung, the complications of such an approach were weighed and determined worthwhile.

While we don’t all have the kind of attention focused on us as Apple’s procurement team does, it is an important reminder that all information shared outside the walls of the company – even for legitimate purposes such as an RFP – should be considered for its potential impact on business strategy. Any supplier worth doing business with is also likely to work with the competition, and in tight economic times, any information has the potential to represent a lost competitive advantage if it falls into the wrong hands.

Having suppliers sign an NDA, although standard practice, is not a guarantee of secrecy. Procurement has to know when a leak occurs, and more importantly, has to enforce the penalties spelled out in the agreement.

If you are one of the lucky people who will own an iPhone 5, take the time between pre-order and receipt (or the days you spend camping out in front of an Apple store) to think of the ways the information you possess represents a strategic advantage for your company and in the sourcing process.

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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