The Genius of Apple’s Supply Chain

A massive competitive advantage for Apple is its operations function. Specifically, its supply chain operations. Apple has a regimented core business vision — built around their supply chain.

“They have a very unified strategy, and every part of their business is aligned around that strategy,” said Matthew Davis, a supply-chain analyst with Gartner (IT), who has ranked Apple as the world’s best supply chain for the last four years, as quoted by Bloomberg/BusinessWeek in a recent story on same.

It’s well known that recently Google paid $12 billion for Motorola’s cultivated, global supply chain. That fact, combined with observations about the genius of Apple’s supply chain — genius which is apparently 90% perspiration and 10% inspiration, by the way — make it clearer why a supply line could be worth so much money.

This is the world of manufacturing, procurement, and logistics in which the new chief executive officer, Tim Cook, excelled, earning him the trust of Steve Jobs. 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. Because of its volume—and its occasional ruthlessness—Apple gets big discounts on parts, manufacturing capacity, and air freight. — Adam Satariano and Peter Burrows, reporters for Bloomberg

The bottom line, according to Satariano and Burrows, is that Apple plans to double spending on its supply chain, to $7.1 billion — continuing its focus on streamlining and controlling manufacturing.

Relative to Google’s $12 billion to procure part of a new one, once again it seems to make financial sense to invest in current accounts rather than invest in new.

Excellent article on Apple’s supply chain can be found here.

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