Is Apple’s Supply Chain a Risk?
Through a relentless focus, Tim Cook quickly fixed the supply chain, eliminating lags from months to days, but can Apple's supply chain keep up with demand.
If the rumors are to be believed, Apple’s newest product, the iWatch, will be announced today at its San Francisco event but possibly won’t ship until 2015 because of supply chain issues.
This was originally reported by Apple analyst Ming-Chi Kuo, and subsequent memos have pushed back the launch date from October to early next year.
Kuo has a pretty good track record on these things. Based on a thorough analysis of Apple’s supply chain, he has been relatively accurate on delays.
In fact, he predicted Apple’s iPad Mini with Retina display delay in 2013. In addition, he predicts a delay in Apple’s larger-size version of its newest iteration—the iPhone 6, a 5.5-inch “phablet” model—pushing the release date for that unit back to 2015 as well.
So if two of Apple’s three products for this event are delayed, coupled with the iPad Mini Retina last year, does this mean Apple’s supply chain presents a risk of sorts to the company?
Supply Chains Are More Difficult Than They Appear
Most consumers are relatively unaware of supply chains, but let’s not understate their importance. Simply put, supply chain management is the process of logistics—how to create value by moving raw materials to finished products to customer delivery. And while it seems rather boring, and in some ways it is, supply chain management can add value or destroy it.
A slightly ironic point is that these issues seemed to crop up after Tim Cook took the reins. Widely considered a “supply chain maven” among the analyst crowd, Cook started his Apple career as a senior vice president for worldwide operations. Through a relentless focus, he quickly fixed the supply chain, eliminating lags from months to days. Cook was promoted to chief operating officer before becoming the company CEO in the wake of Steve Jobs’ declining health.
The Issue With Revolutionary Products
Compounding Apple’s supply chain problems is its visionary product line. That’s a constant issue with revolutionary products—nobody else has combined these products in the same way before, so the raw materials and work-in-progress inventory processes need to be updated.
It appears there is generally a similar sticking point when it comes to recent supply chain hiccups with displays, especially when combined with a new form factor and new technologies. Apple’s iPad Mini Retina combined a new, smaller form factor for its iPad line with the improved and updated Retina display. In addition, reports blame issues with the display/touch-panel interaction for the holdup with the larger, “phablet-like,” version of the iPhone 6 and its sapphire cover lens for the iWatch.
What to Expect?
So what can you expect? In a nutshell, two new iPhones, a 4.7-inch version and an outsized 5.5-inch “phablet” (that’s phone plus tablet, for the uninitiated). A smartwatch, possibly dubbed the iWatch, that will sync seamlessly with other Apple devices. Also a mobile payment service and greater integration of health and fitness services unveiled this year at the company’s developers’ conference. Play the video above for live updates.
Related: Is Apple’s Supply Chain Really the No. 1? A Case Study
