“Apple Inc. has lost its supply chain mojo,” Tim Culpan writes for Bloomberg Gadfly. “First under Tim Cook, and now Jeff Williams, the current chief operating officer, Apple has shone as a beacon of how to discover and develop unique materials, coerce and cajole suppliers, and churn out millions of units all without owning any factories.”
“By now, everyone has heard about delays in the [iPhone] supply chain,” Culpan writes. “Analysts and investors seem to believe this is all just one minor hiccup and things will be fine. But the delayed production, caused by multiple component bottlenecks, has shown a gap in the armor.”
“I am concerned that it’s not a momentary lapse. The multiple failures in this year’s output make me wonder whether Apple has decision-making problems at its most senior levels,” Culpan writes. “When Cupertino decided to go with OLED [for iPhone X], it must have known that supply would be tight and the company would be relying on nemesis Samsung. Perhaps Cook and Williams were OK with this and figured Samsung would ramp up fast enough to ensure OLEDs for all, or maybe they thought alternative suppliers would come on stream. Clearly they were wrong.”
“If this truly is a single-cycle mistake, then it’s possible Apple will return to its former glory,” Culpan writes. “If the problems are a result of hubris then it indicates to me that Apple has lost its mojo.”
Read more in the full article here.
MacDailyNews Take: Apple CEO Tim Cook is heralded as an “operations genius” because he pulled Apple out of manufacturing and moved the company to contract manufacturers, mainly in China where labor is cheap, reducing Apple’s inventory from months to days.
Cook hates inventory. In fact he’s called it “fundamentally evil.”
The problem with just-in-time operations – the cows eat the grass, get milked, the milk gets packaged and delivered to the store – is that everything has to go perfectly (the grass had better grow, the milkers had better milk, the bottles, cartons and delivery trucks had better be there) or you’re shit out of luck, especially on launch day.
Further, relying on a cow that hates you and steals from you in serial fashion is just plain masochistic.
If we were Samsung, we’d make it a point to screw with iPhone X OLED production until the cows come home. 😉
With the iPhone X launch — as with new iPads, iMacs (AWOL for Christmas 2012), the original Apple Watch (a woeful launch supply disaster which killed enthusiasm about the product itself for a considerable period of time), AirPods, Apple Pencils, Apple Smart Keyboards, etc. (we won’t get into the current desktop Mac miasma in which we’re currently mired) — Apple, and Apple customers, are about to be shit out of luck yet again.
Cook’s brand of “operations genius” works wonderfully and profitably when the product is established, post launch, and he can see the demand and meticulously pump out the proper unit levels. He’s definitely not a “genius” when it comes to amassing inventory for new product launches. In fact, it’s routinely proven that he’s absolutely horrible at it.
Now, to be clear, this is because Apple pushes the envelope. 3D facial recognition is difficult and the components Apple requires are new. The iMacs in 2012 missed Christmas that year because friction stir welding was new to the fabricators. AirPods, Apple Pencils, etc. – all new products. So, Cook & Co. cannot be blamed for wanting to push technology forward. It’s very difficult (read: pretty much impossible) to get cutting-edge technology in established technology volume. This is the reason for Apple’s horrible supple-demand imbalances at new product launches.
If we want Apple to push the envelope, we have to bear waiting, sometimes for protracted periods of time, for new products to ship in quantities that begin to satisfy demand.
Good luck with your iPhone X preorders, everyone! We’re all going to need it.