How Apple Uses its Supply Chain as a Strategic Weapon

223730 apple logoBusinessweek 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.

Popular Stories

iPhone 15 Pro Cameras

iPhone 17 Pro Max Will Be First Model to Feature Three 48MP Cameras

Thursday July 11, 2024 12:20 am PDT by
Next year's iPhone 17 Pro Max will feature an upgraded 48-megapixel Tetraprism camera for enhanced photo quality and zoom functionality, according to Apple analyst Ming-Chi Kuo. In his n-iphone-tetraprism-upgrade-ca62dd37e364">latest investor note published to Medium, Kuo said the key specification change would be a 1/2.6" 48MP CIS sensor, up from the 1/3.1" 12MP sensor expected to be used...
Beyond iPhone 13 Better Blue Face ID Single Camera Hole

10 Reasons to Wait for Next Year's iPhone 17

Monday July 8, 2024 5:00 am PDT by
Apple's iPhone development roadmap runs several years into the future and the company is continually working with suppliers on several successive iPhone models simultaneously, which is why we sometimes get rumored feature leaks so far ahead of launch. The iPhone 17 series is no different – already we have some idea of what to expect from Apple's 2025 smartphone lineup. If you plan to skip...
maxresdefault

Apple's AirPods Pro 2 vs. Samsung's Galaxy Buds3 Pro

Saturday July 13, 2024 8:00 am PDT by
Samsung this week introduced its latest earbuds, the Galaxy Buds3 Pro, which look quite a bit like Apple's AirPods Pro 2. Given the similarities, we thought we'd compare Samsung's new earbuds to the AirPods Pro. Subscribe to the MacRumors YouTube channel for more videos. Design wise, you could potentially mistake Samsung's Galaxy Buds3 Pro for the AirPods Pro. The Buds3 Pro have the same...
iPhone 16 Pro Sizes Feature

iPhone 16 Series Is Just Two Months Away: Everything We Know

Monday July 15, 2024 4:44 am PDT by
Apple typically releases its new iPhone series around mid-September, which means we are about two months out from the launch of the iPhone 16. Like the iPhone 15 series, this year's lineup is expected to stick with four models – iPhone 16, iPhone 16 Plus, iPhone 16 Pro, and iPhone 16 Pro Max – although there are plenty of design differences and new features to take into account. To bring ...
primeday2020 feature3

The Best Early Prime Day Deals on Apple Products

Saturday July 13, 2024 6:23 am PDT by
Amazon is soon to be back with its annual summertime Prime Day event, lasting for just two days from July 16-17. As it does every year, Prime Day offers shoppers a huge selection of deals across Amazon's storefront, and there are already many deals you can get on sale ahead of the event. Note: MacRumors is an affiliate partner with Amazon. When you click a link and make a purchase, we may...

Top Rated Comments

starvingartist8 Avatar
166 months ago
Wow Apple way to stifle innovation for everyone else.

rofl android fan of course
Score: 18 Votes (Like | Disagree)
ownamac Avatar
166 months ago
Now you know why Tim Cook is in charge

Tim is the man when it comes to supply chain mastery.
Score: 15 Votes (Like | Disagree)
FlameofAnor Avatar
166 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. ;)
Score: 14 Votes (Like | Disagree)
nagromme Avatar
166 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.)
Score: 14 Votes (Like | Disagree)
koobcamuk Avatar
166 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.
Score: 14 Votes (Like | Disagree)
MetalMoon Avatar
166 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.
Score: 14 Votes (Like | Disagree)