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Apple's Supply Chain Secret

businessweek.com

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Re: Apple's Supply Chain Secret

#131

Post by eli »

comedian wrote: post #130
AllenKids wrote: post #107

Earlier quoted context omitted.

Because under GAAP accounts payable (the money Apple owes its suppliers) is debt. Plain and simple.

Yeah this is very common and it's one of the reasons why Apple is so good at managing their cash. By delaying payments Apple can use the cash for other short-term investment opportunities. In Apple's case, their accounts payable is probably in the billions. As an example: If Apple has a $10 billion accounts payable and instead of paying it right away they waited for 3 months and invested that $10 billion on short-ter…

There are short-term securities that earn 10% in 3 months? How do I get in on that?

Re: Apple's Supply Chain Secret

#132

Post by comedian »

comedian wrote: post #130
AllenKids wrote: post #107

Earlier quoted context omitted.

Because under GAAP accounts payable (the money Apple owes its suppliers) is debt. Plain and simple.

Yeah this is very common and it's one of the reasons why Apple is so good at managing their cash. By delaying payments Apple can use the cash for other short-term investment opportunities. In Apple's case, their accounts payable is probably in the billions. As an example: If Apple has a $10 billion accounts payable and instead of paying it right away they waited for 3 months and invested that $10 billion on short-ter…

@eli "As an example"

Re: Apple's Supply Chain Secret

#133

Post by runako »

eli wrote: post #131
comedian wrote: post #130

Earlier quoted context omitted.

Yeah this is very common and it's one of the reasons why Apple is so good at managing their cash. By delaying payments Apple can use the cash for other short-term investment opportunities. In Apple's case, their accounts payable is probably in the billions. As an example: If Apple has a $10 billion accounts payable and instead of paying it right away they waited for 3 months and invested that $10 billion on short-ter…

There are short-term securities that earn 10% in 3 months? How do I get in on that?

I'll leave the search for 10% 3-month yield to the parent, but note that the math still works for much smaller yields. Rolling e.g. 12-month US treasuries will yield around .1%, which is roughly $40m annually on the hypothetical $10B. More or less risk free and with excellent margins. This is meaningful even to a company as large as Apple.

Re: Apple's Supply Chain Secret

#134

Post by pinwale »

CoffeeDregs wrote: post #97

These kinds of articles were novel 10 years ago when Apple was coming back and was doing so while beating Dell at supply chain optimization and that was, justifiably, a huge story. Ironically, I read them in BusinessWeek back then, too. Now, the ODM/OEMs have become brands and the folks who once were the main participants in Apple's supply chain are now directly competing with Apple. Breathless articles aside, are we…

>I also have a hard time seeing how $25M worth of lasers is a supply chain innovation; most other manufacturers would probably prefer to make the laptop for $6 (amortization) less

It looks like Apple's supply logistics chain is similar to WalMart's supply chain. WalMart has deep connections with their suppliers, requiring suppliers to hand over financial records, dictating factory processes, and demanding yearly cost reduction.

The difference (and it is the major difference) is that Apple focuses their relationships with suppliers on quality of process and availability by locking up supply years ahead of time. WalMart just focuses on cost reduction.

The innovation is that Apple willing to pay high upfront costs years in advance to design efficient manufacturing processes so that later it would be able to get both cheaper component rates and a guaranteed supply. Jonathan Ive has said that most of his time is spent designing processes rather than products. Check out this excerpt from the [Objectified](http://en.wikipedia.org/wiki/Objectified) documentary: [Youtube](http://www.youtube.com/watch?feature=player_detailpage&v...)

Re: Apple's Supply Chain Secret

#135

Post by lallysingh »

akg1 wrote: post #105
dangrossman wrote: post #31

Earlier quoted context omitted.

I read from the fingers of a farm owner about Wal-Mart regularly doing things like committing to buy all of a farm's output of some crop, setting a pickup date, then being days late and refusing to pay for what spoiled in the crates waiting for the truck that didn't come.

How can this be "regularly" happening? Wouldn't farmers stop selling to walmart if this happened even once? And if they "committed" to buying all the output, why weren't there repercussions from breaking that commitment?

It's not like huge customers for your crop are necessarily easy to get. And Walmart did buy all the non-spoiled output; they probably had the contract well-written to let them get away with what they did.

Re: Apple's Supply Chain Secret

#136

Post by padobson »

bunderbunder wrote: post #98
padobson wrote: post #62

I think Apple's supply chain management is a greater competitive advantage than their product design. There are many factors beyond the quality of product that go into a purchasing decision - things like hype, accessibility, and most importantly, price. Apple never had much a problem with great design or building hype, but the real reason for their success over the last 15 years has been their ability to provide cust…

The same ethos provides similar results on the customer service side. For example, letting users go to the website and schedule a 15-minute window of time in which Apple calls them is huge . Letting users go to the website and schedule an appointment to go talk to a real live human is huge . And making them walk all the way through a retail outlet full of your products to get there doesn't hurt, either. Every other c…

+1. This should become the standard in customer support. If it's cheaper to provide in addition to being a better user experience, everyone should be moving this way.

Re: Apple's Supply Chain Secret

#137

Post by fredoliveira »

I very highly recommend listening to a couple of episodes of Critical path if you care about Apple's supply chain strategy. I was amazed at the level of detail in which this was discussed (and going through this article I couldn't help but think that part of the information in it is due to the analysis on that podcast):

http://5by5.tv/criticalpath/10 and http://5by5.tv/criticalpath/11

Re: Apple's Supply Chain Secret

#138

Post by WiseWeasel »

MichaelApproved wrote: post #68
nailer wrote: post #17

> Most of Apple’s customers have probably never given that green light a second thought Most, I'm sure. But personally the first time I saw light shining through my metal laptop, I was amazed, a little delighted, and slightly confused about how they were doing it (because, as the article mentions, the holes are too small to see).

"Each machine typically goes for about $250,000. Apple convinced the seller to sign an exclusivity agreement and has since bought hundreds of them[...]" That's ~$25 million for just 100 of those lasers. If they bought hundreds of them, that means they paid tens of millions or even over $100 million just for that light effect.

Note the word "typically". It is likely Apple got a volume discount if they're buying in those quantities, and especially if they're paying up-front to cover the R&D for the modifications they needed.

Re: Apple's Supply Chain Secret

#139

Post by idspispopd »

idspispopd wrote: post #63
nailer wrote: post #17

> Most of Apple’s customers have probably never given that green light a second thought Most, I'm sure. But personally the first time I saw light shining through my metal laptop, I was amazed, a little delighted, and slightly confused about how they were doing it (because, as the article mentions, the holes are too small to see).

The first time I saw it I pulled out a triplet magnifier to see what was going on. I've got a few great shots of the laser pattern if anyone is interested.

Here is a recent shot: http://i.imgur.com/Rl35X.jpg

I'm still looking for the old shots (from around 08) which had a few nice shots of the unlit holes (the holes are much smaller than they appear here.)

Re: Apple's Supply Chain Secret

#140

Post by [deleted] »

dlss wrote: post #126
adamtmca wrote: post #124

Earlier quoted context omitted.

I never understand why people try to pass judgment on a transaction like this. Their suppliers are real businesses who are capable of modelling their cash flows and deciding whether or not this is profitable. No one ever stops and says, "wait.. it makes business sense to sell to Apple, but this is lame so let's not do it".

I think "no one" is a bit strong there. The article cites one company who walked away from a profitable $1B deal for a dressed up version of "but this is lame"

[deleted]
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