Whether facing a major product launch or compiling standard monthly forecasts, the accuracy of demand forecasts are crucial. No one understands this as intimately as Apple who is fresh off of its much-anticipated iPhone X, 8, and 8 Plus product launches. Apple, despite its affinity for releasing limited amounts of its highly demanded new devices to further stoke demand, offers an interesting example of the complexities associated with forecasting.
The consumer electronic behemoth has mastered the art of delivering a high-profile, and highly anticipated, product launch. There are few product launches as massive and complex as Apple's. Even more impressive are the droves of customers that line up, sometimes days in advance, to get their hands on the gadgets the second they hit the shelves. With this overwhelming demand, it is mission-critical for Apple's demand forecasting, production, and delivery operations to go perfectly to avoid any detrimental delays, which inevitably take a large bite out of profits.
Photo courtesy: Apple
Personalization brings greater complexity
Essential to predicting iPhone demand is allowing customers to pre-order their device in the model and color they desire. While this alone is challenging, at best, to forecast, Apple is facing its biggest demand forecasting hurdle since the launch of the original iPhone, according to The Wall Street Journal. Given the heightened price point of iPhone X, Apple has no precedent to gauge demand for this device, therefore data from pre-orders will provide critical insights that will fuel ongoing production.
While Apple limits what customers can customize when pre-ordering a device to simplify the “last mile touch” piece of production, the process remains complicated. Once the hardware has been assembled, devices must have the proper software and language installed, while packaging must also match the recipient’s language before shipping to stores or directly to the consumer.
Driving efficiency among channels & partners
Further adding to the iPhone launch complexity is the variety of sales models and channels in play. With several different distribution points available to customers, including online orders, Apple stores, and partners such as Verizon and AT&T, Apple requires an integrated end-to-end supply chain. Luckily Apple has several advantages, most notably a sizable budget to address any issues that it might face and access to world-class vendors that manage every facet of their supply chain needs. Alternately, most brands are not as fortunate thus it becomes even more critical that they are working seamlessly and transparently across their various channels.
To do so, it is critical to share all relevant information with everyone involved in the supply chain, including partners, suppliers, and delivery companies as well as the stores expecting to stock a product. When all parties have insight and there is transparency, there are fewer surprises (overstock, understock, assembly delays, etc.) resulting in a smoother process of getting the product in the hands of consumers.