Advertisement

Blog

Apple Elevates Supply Chain Under Cook

As {complink 379|Apple Inc.} holds its 23rd annual WorldWide Developers Conference this week, the iFaithful may be watching for signs of change under CEO Tim Cook. While I haven't seen or heard any big surprises from WWDC so far (although the week is young), even before the big event some observers were already noting subtle but important differences since Cook took over the CEO role in August 2011.

It seems inevitable that Apple will change under Cook's leadership. Indeed, he has said publicly that Jobs did not want the company always wondering, “What would Steve do?” Rather, he says, Jobs told him, “Just do what's right.”

But Cook is a supply chain guy. (He served as Apple's chief operating officer, managing Apple's worldwide supply chain, since 2005. Before that, he was vice president of materials for Compaq.) His idea of “what's right” is bound to be different than that of Jobs, who was a design guy.

In a recent article in Fortune, “How Tim Cook is changing Apple,” Adam Lashinsky points to several signs that supply chain issues have moved up in importance. “Tim Cook's stewardship of Apple is beginning to come into focus,” he writes. While Cook is maintaining much of Apple's culture, “shifts of behavior and tone are absolutely apparent.” Among them:

  • Cook has tackled public criticism regarding working conditions and possible environmental problems at Chinese suppliers. Rather than trying to dismiss them, as Jobs did, Cook is working to address the problems. He personally visited the {complink 2125|Foxconn Electronics Inc.} factory. And Apple has finally joined the Fair Labor Association, which monitors the factories.
  • Cook appears to be beefing up Apple's supply chain dramatically, perhaps in preparation for an Apple TV. The company has disclosed the value of its Chinese assets ($2.6 billion), and Lashinsky speculates that most of that is material and equipment Apple bought for its contract manufacturers. The company is “financing massive upgrades in its manufacturing capabilities in Asia,” he writes. The article quotes David Eiswert, a portfolio manager at T. Rowe Price, noting Apple's deep pockets and manufacturing prowess. “The Apple supply chain is doing things no one else can,” says Eiswert.
  • Cook is making sure supply chain management is involved at the highest levels of corporate strategy. The article quotes a former Apple engineering vice president. “I've been told that any meeting of significance is now always populated by project management and global-supply management… When I was there, engineering decided what we wanted, and it was the job of product management and supply management to go get it. It shows a shift in priority.”

Meanwhile, one of Apple's chief competitors — Google — may be getting supply-chain religion. A recent article in Business Insider notes that Google recently hired Mark Randall, a supply chain expert who developed and managed procurement for the Amazon Kindle and Kindle Fire. As Google moves into building hardware, such as phones, its supply chain will be critical to its strategy.

7 comments on “Apple Elevates Supply Chain Under Cook

  1. Barbara Jorgensen
    June 12, 2012

    Of particular interest is the third bullet, which mentions supply chain management is involved in high-level Apple meetings. The biggest risk there, as always, is the disclosure and leak of Apple's design and/or strategy. I believe the company has already survived this once or twice, though. If suppliers value Apple's business–and it would be silly not to–there will be no loose lips. It can only benefit suppliers, and Apple, to have a close relationship. Having an inside track on product development roadmaps works for both parties.

  2. Nemos
    June 12, 2012

    ” He personally visited the Foxconn Electronics Inc. factory. And Apple has finally joined the Fair Labor Association, which monitors the factories.” Only for that reason I think he did already a lot. It was something that Apple didn't have; a “human face” and Cook seem that he cares about it.

  3. _hm
    June 12, 2012

    Supply chain management will be very challenging for Apple TV. I eagerly await Apple TV.

     

  4. FLYINGSCOT
    June 13, 2012

    I can understand why supply chain is so important for a company the size of Apple but I hope Cook's thrust does not detract from the creativity in Apple products.  Remember that is what made the company.

  5. Ariella
    June 13, 2012

    @Barbara That really caught my attention, too. 

    The article quotes a former Apple engineering vice president. “I've been told that any meeting of significance is now always populated by project management and global-supply management… When I was there, engineering decided what we wanted, and it was the job of product management and supply management to go get it. It shows a shift in priority.”

    That sounds very critical of the new direction.

  6. Barbara Jorgensen
    June 13, 2012

    @Ariella: That sounds like a classic complaint from engineering, actually. The wall between “we design it; you buy it” and a more integrated appraoch — where purchasing and engineering actually confer — is still pretty solid. But now that considerations such as environmental compliance have to be designed into a product, engineering and purchasing really need to cooperate. Maybe Apple isn't as advanced as everyone thinks it is–as least as far as this issue is concerned 🙂

  7. mfbertozzi
    June 18, 2012

    According to your post, I agree with the fact one of the company's key point has been the creativity, especially from the former CTO. But the point is, how a big company as Apple could still hold its position in the market? Supply chain is important, but maybe is a block at the end of chain, people are more attracted by creativity.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.