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Apple's Supply Chain Secret

businessweek.com

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Re: Apple's Supply Chain Secret

#4

Post by jacques_chester »

endlessvoid94 wrote: post #2

Interesting parallel to walmart.

I was thinking the same thing. Aggressive negotiation with suppliers is a feature of monopsonies.

Edit: I've thought about it some more. There are parallels but important differences.

The main one is products. Apple design the products themselves, have a very limited product range, and are more intimately involved in manufacturing than Walmart is.

Walmart has a much more complex supply chain problem. Thousands of products, with a changing mix based on seasons and perishability, taken from far more sources and distributed to far more locations.

Re: Apple's Supply Chain Secret

#5

Post by jacques_chester »

hswolff wrote: post #3
endlessvoid94 wrote: post #2

Interesting parallel to walmart.

What's Walmart's supply chain like?

They've often been considered one of the best supply chain operations in the world, and aggressively drive their suppliers to lower prices and increase volume.

One classic anecdote is that leading up to a hurricane, Walmart did some data mining and found that poptarts sold like crazy when hurricane watches were declared. Within hours they had dozens of trucks heading to the Florida coast filled with poptarts and they made a lot of money that way.

Unless you have a fast, flexible logistics system and the analytical smarts to back it up, you can't exploit changing circumstances like that.

Edit. Source of Walmart anecdote is here: http://www.nytimes.com/2004/11/14/business/yourmoney/14wal.h...

Re: Apple's Supply Chain Secret

#7

Post by DiabloD3 »

jacques_chester wrote: post #5
hswolff wrote: post #3

Earlier quoted context omitted.

What's Walmart's supply chain like?

They've often been considered one of the best supply chain operations in the world, and aggressively drive their suppliers to lower prices and increase volume. One classic anecdote is that leading up to a hurricane, Walmart did some data mining and found that poptarts sold like crazy when hurricane watches were declared. Within hours they had dozens of trucks heading to the Florida coast filled with poptarts and they…

I agree that exploit is the right word here, but probably not for the reason you chose it.

Re: Apple's Supply Chain Secret

#8

Post by notatoad »

hswolff wrote: post #3
endlessvoid94 wrote: post #2

Interesting parallel to walmart.

What's Walmart's supply chain like?

ruthless. they handle so much more volume than any other retailer that suppliers are willing to sign anything just to be a part of it. all losses are passed back to the suppliers, which enables wal-mart to take huge risks.

the sibling comment to mine references a huge volume of pop-tarts being shipped to florida in preparation for a hurricane. if during mid-shipment the weather changed, wal-mart would call up the supplier, cancel the order, and all the trucks would return the pop tarts to their suppliers at no cost to wal-mart. with pop tarts it isn't such a big deal because they don't spoil, but farmers who supply wal-mart will get shipments of spoiled produce returned to them if wal-mart decides they don't need quite as much volume that week. and they just have to deal with it, because they can make more money getting screwed by wal-mart than they can selling to ethical companies.

Re: Apple's Supply Chain Secret

#9

Post by kylewpppd »

hswolff wrote: post #3
endlessvoid94 wrote: post #2

Interesting parallel to walmart.

What's Walmart's supply chain like?

This is anecdotal evidence from them coming to speak at my college, but... Walmart controls almost all of it's logistics. Whereas its competitors use other shipping companies, and have inventory sit in 3rd party warehouses, Walmart builds huge distribution centers that service multiple Walmart stores.

The distribution centers mean they can purchase huge levels of inventory at discounted terms. Running their own logistics means that they can break up pallets into smaller shipments appropriate for each store. So stores need less space to carry inventory, and they can purchase and store huge amounts at lower cost per sq. ft.

The other thing the logistics does is gives them an advantage in transportation cost. Although (I've heard) the margins in ground transport are slim, running your own ground transport saves money, allowing for lower prices to the consumer.

Walmart's size also contributes to their "efficiency". They can buy in larger quantities than their competitors and try to exert downward pressure on suppliers' prices. They can also nab exclusives and put them on the shelves for less than competitors.

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