New in OS X: Get MacRumors Push Notifications on your Mac

Resubscribe Now Close

How Apple Uses its Supply Chain as a Strategic Weapon

Businessweek provides a very interesting look behind Apple's supply chain and how they have managed to fine tune their operations into a competitive advantage.
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.
Apple's well known to be a master at operations with much of that credit going to now CEO Tim Cook. Businessweek's profile gives many examples of how Apple has managed to stay ahead of the competition, with much of it being the ability to predict needs and also secure the necessary pieces by exercising their enormous $81 billion cash hoard.

Even as far back as the launch of the Bondi blue iMac in the late 90s, Apple's Steve Jobs paid $50 million to buy up all available holiday air freight space at a time when most of its competitors were shipping by sea. This reportedly handicapped rivals such as Compaq who later wanted to book air transport.

Similarly for both the iPhone 4 and iPad 2 launch, Apple bought up so many suppliers and machines needed for assembly, they squeezed out the competition who needed the same resources.
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.
Apple's level of efficiency and control extends into launch day where factories work for weeks building hundreds of thousands of devices. Electronic monitors are placed in part boxes to discourage leaks and completed products shipped in non-descript boxes to avoid detection. Even in their retail stores, they can monitor demand by the hour and make supply chain adjustments as necessary.

Top Rated Comments

(View all)

41 months ago

Wow Apple way to stifle innovation for everyone else.


rofl android fan of course
Rating: 18 Votes
41 months ago

Now you know why Tim Cook is in charge


Tim is the man when it comes to supply chain mastery.
Rating: 15 Votes
41 months ago
So Apple is buying all the stuff needed for their new ipads before their rivals even know what they need. I guess its a first come first serve kinda thing. gotta make the first move or be left in the dust.
Rating: 14 Votes
41 months ago
There is no denying that Apple run a very tight ship. From manufacturing to sales, I don't know of a more complete company.
Rating: 14 Votes
41 months ago
Being first has its advantages! Companies that follow along later could theoretically match Apple’s manufacturing capacity, if they had the cash; new plants could be built, after all. It’s not just not cost-effective to be that late to the game.

Being a follower has other advantages though: the game-changing concepts have already been done for you—and they’re the hard part. Just copy the big stuff, and innovate (or at least differ) in smaller ways :)

Wow Apple way to stifle innovation for everyone else.


:D Imagine what Android would look like without Apple moving first and fast :D As an Android fan, you should thank Apple for 90% of your (positive) Android experience, and be glad you don’t have to find out what might have been!

(But I do hate when companies succeed on their own merits. Unfair! Apple should give money and opportunities away to companies that are less well-run.)
Rating: 14 Votes
41 months ago
To be fair, Apple's competitors have to see what they are competing against, before they can place orders for their "innovative" products. ;)
Rating: 14 Votes
41 months ago

Wow Apple way to stifle innovation for everyone else.


Yes, because the innovators are those who need the parts first and the copycats are those who need it second, right?

Don't hate Apple for knowing what they need to build their machines and buying it before the others know what they need to build their similar-to-Apple-machines-that-totally-aren't-ripoffs-no-matter-what-several-judges-from-several-different-countries-and-continents-say machines.
Rating: 11 Votes
41 months ago

Now you know why Tim Cook is in charge


Steve Jobs was the mob boss. Tim Cook is the hitman the other mob families never see coming! ;)
Rating: 11 Votes
41 months ago

I have no idea. It also makes me wonder who keeps buying out all those crummy Android tablets from the local Big Lots.


Hey, it's cheaper than buying real shingles from the Home Depot.
Rating: 10 Votes
41 months ago

Well the generic Aveeno I get from there works just fine. A ~$70 tablet just does not do it for me after looking at the hardware specifications. I talked with the cashier and they keep selling out. Hell, they sold the last few while I was there!


Some folks are desperate for an iPad.

To some people, iPad is like Kleenex. The word is used to describe the entire class of product, rather than the actual individual product.

Some folks maybe thought they could fool others into thinking they had an iPad. I used to work as a phlebotomist in a plasma donation center, and had a donor who owned a small black netbook. After the first iPad was released, he put one of those white Apple stickers you get if you buy an Apple product right over the computer manufacturers logo on the top of the netbook.

I asked him why he did that and he said because "everyone has an Apple and my friends don't know the difference." I thought he was an ignorant @$$hole at first, but after a while, I started thinking he may be right.

Much of the general public is ill-informed about what is and what isn't an Apple product. My co-worker just called her Boost Mobile Android-powered phone an iPhone last weekend.

I have no idea if that adds anything to our discussion, since I've lost the point I was trying to get at and I'll be damned if I delete all this just because I can't remember.

I need sleep lol. :D
Rating: 10 Votes

[ Read All Comments ]