In today’s buzz, we talk about the logic behind Apple’s product management as well as explain how it works and what makes it so efficient.
Before we get to the story, perhaps a brief on Apple Inc, founded by Steve Jobs, Steve Wozniak, Ronald Waynesteve on 1 April 1976 in a Garage in Cupertino, California with the innovative thinking of Steve Jobs and computer expertise of Steve Wozniak they manage to build the world’s most innovative company but what you think, is only innovation the key to the apple’s success?
Apple alone sold more than 200 million iPhones in 2020 and do we know Apple works with suppliers in 43 countries and six continents to make its products. So how it works?
When Cook initially took over Apple’s supply chain, he cut down the number of component suppliers from 100 to 24, forcing companies to compete for Apple’s business, He also shut down 10 of the 19 Apple warehouses to limit overstocking, he Cut down the number of SKUs(stock-keeping unit ) to predict the demand more accurately and ensure lightning-fast Apple inventory turnover and by September of 1998 inventory [stock on hand] was down from a month to only six days, he worked on Maintaining long-term and strategic relationships with suppliers and Outsourced the manufacturing to China, thus reducing the manufacturing cycle time from 4 months to 2 months. Also, he Implemented renewable energy sources, making up to 87% of their energy used worldwide.
Apple’s inventory Management
Tim Cook believes that when it comes to technology such as smartphones, tablets and laptops, inventory deprecates very, very quickly, losing 1-2% of the value each week “inventory is fundamentally evil,” he says. “You kind of want to manage it like you’re in the dairy business. If it gets past its freshness date, you have a problem.”
Keeping as little inventory on hand as possible is very important. Why? Because of costs with warehouses. Technology manufacturers can’t afford to keep too many products in stock because a sudden announcement from a competitor or an innovation could change everything and suddenly bring down the value of products in inventory. Foreseeing sales levels accurately and not having excess inventory is crucial in the computer industry, especially when new products quickly cannibalize the old.
Why China for assembly?
Apple assembles their products in China because of low labour costs. The cost of labour is a fraction of the cost of the materials that make up the iPhone. Far more is spent on the custom chips, intricate cameras, and beautiful screens than on the labour required to assemble them· But the key to Foxconn’s (company in china where apple assemble its products) success isn’t cheap labour, It’s flexibility.
Foxconn has hundreds of thousands of workers living on-site, the company can be very flexible, assembling armies of workers overnight. Foxconn is also able to hire tens of thousands of extra workers very quickly and fire them just as quickly if they are not needed.
Foxconn demonstrated this flexibility during the production of the first iPhone, which underwent a major design change just a few weeks before it was scheduled to go on sale in 2007. At the last minute, Steve Jobs decided that the iPhone should have a glass screen instead of a plastic one. He’d been carrying a prototype iPhone in his pocket for weeks, and its plastic screen had been badly scratched by his keys. He knew this would be a problem when the phone got into customers’ hands, so he demanded a more durable glass screen.
A few weeks later, the new glass screens arrived at Foxconn in the middle of the night. More than eight thousand workers were roused from their beds, given a cup of tea and a biscuit, and started on a twelve-hour shift fitting the new screens to phones, according to the New York Times. Within a few days, the factory was outputting more than ten thousand iPhones a day.
Cook’s revolutionary outsourcing initiatives decreased the need for domestic factories and contributed hugely to Apple’s increased success. By outsourcing the majority of Apple’s operations and ramping up their partnership with Foxconn, Cook is doing something that had never been done before.
Interesting facts about Apple
- In 1986 apple also started a clothing line that failed.
- Steve jobs “invented “a mouse by stealing it from Xerox.
- The most expensive iPhone in the world costs 15 million USD
- Apple has more cash in hand than the US Treasury, if apple were to go on a shopping spree it could buy almost 80% of the top 500 companies in America.
With great blend of innovation and Management Apple came a long way from Start-up in a Garage to the world’s Largest company.