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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.

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36 months ago

Wow Apple way to stifle innovation for everyone else.


rofl android fan of course
Rating: 19 Votes
36 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: 17 Votes
36 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: 16 Votes
36 months ago

Now you know why Tim Cook is in charge


Tim is the man when it comes to supply chain mastery.
Rating: 16 Votes
36 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: 15 Votes
36 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
36 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: 13 Votes
36 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: 12 Votes
36 months ago
Now you know why Tim Cook is in charge
Rating: 11 Votes
36 months ago
With all their cash reserves, I honestly wish they would do more of this. From what I observe I feel like they haven't fully tapped out the available resources. If this article is really correct, wouldn't it be an incredible advantage for them to overproduce their devices by 5-10% and completely short-change their competition; instead of now where every quarter the story seems to be they couldn't build enough devices to meet demand?
Rating: 10 Votes

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