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Supply Chain Guru at Apple’s Helm

While everyone has been wondering about the fate of {complink 379|Apple Inc.} and how it will continue its fast-paced growth, given the recent double-shot headline news about its CEO and its December-quarter results, I’ve got to say I’m feeling congratulatory — and even a bit smug. (See: Apple’s Jobs to take Medical Leave of Absence and Apple Posts Q1.)

I know many of you may already realize this, but I want to make sure we fully appreciate this important milestone: Timothy Cook, Apple's COO who will be heading up the company during Steve Jobs's medical leave of absence, is probably the first supply chain guy to lead one of the most successful tech companies in modern times. Shall I say it another way? The professional supply chain glass ceiling is disappearing, and it’s about time.

Those of us at EBN have long advocated the role supply chain and procurement professionals should play at the highest echelons of corporate governance. Their valuable supply-demand insight, creative problem-solving skills, financial business acumen, and responsibility for millions — or billions, in many cases — of dollars of critical materials and inventory should come with a C-level title. For the most part, we’ve seen this evolution occur. In the last decade, procurement, supply chain, and operational leaders have moved from low-ranking paper pushers, to senior vice presidents, chief procurement officers, and chief operating officers.

Now, with Cook essentially running all of Apple’s day-to-day operations, we could speculate that one day soon even more C-suite opportunities will open up for the whole profession. As widely reported in mainstream media and analysts’ commentary, scuttlebutt about Apple’s succession plans in light of Jobs's most recent medical leave seems to point to Cook as a logical choice for the top CEO slot. Yes, this may be some time coming as Jobs will continue to drive the company’s strategic direction, and there’s no definitive word on how long he will be on leave. But I’d put my money on Cook. Just look at his track record.

As Apple’s chief operating officer, a position he’s held since 2005, Cook (click here for his bio) oversees worldwide sales and operations, including end-to-end management of Apple’s supply chain, sales activities, and service and support in all markets and countries. He heads up the Macintosh division and helps develop strategic reseller and supplier relationships.

Previously, he was vice president of corporate materials for Compaq (remember them?), before the merger with {complink 2376|Hewlett-Packard Co.}, and was responsible for procuring and managing Compaq’s entire product inventory. He also was chief operating officer of Intelligent Electronics’ reseller division and put in 12 years at {complink 2470|IBM Corp.}, most recently as director of North American fulfillment where he led manufacturing and distribution functions for IBM’s Personal Computer business in North and Latin America.

Let us not forget that he has been in charge of Apple twice before when Jobs took leaves of absence for health reasons. And his leadership certainly did not disappoint Wall Street. According to Associated Press reports picked up by various media outlets, Cook’s last tenure, which ran from mid-January to the end of June 2009, brought the release of a new iPhone version, updated laptops delivered on schedule, and news that the iTunes app store hit 1 billion downloads in its nine-month existence. The AP reports that Apple's stock rose 62 percent during those six months.

Despite Apple’s remarkable quarterly revenue and profit gains, Cook and other executives on the recent earnings call with analysts acknowledged that there were supply issues to iron out, particularly with its iPhone4. The faster-than-expected inroads the company made in new markets and geographies and with new carriers and partners made it difficult to keep supply, demand, and production in sync, according to most accounts.

“Relative to iPhone 4, I also feel very, very good [with] what we've been able to do. However, it's not enough,” Cook said. “We do still have a significant backlog. We are working around-the-clock to build more. I feel great that the demand is so high, but at this point, I'm not going to predict when supply and demand will meet. We believe the reaction and results from the {complink 5928|Verizon Wireless} customers will be huge, and so I don't want to give a prediction right now when the supply and demand will crawl.”

(I had problems accessing the call replay on Apple's site, but I found the transcript here.)

The supply issues did grab some attention in the news and among analysts, but didn’t really dampen the rosy outlook for Apple. We’ll see how Cook and Apple’s supply chain partners solve this pickle in the next few quarters. Given his experience, I bet he’ll come up with something. Any thoughts?

14 comments on “Supply Chain Guru at Apple’s Helm

  1. t.alex
    January 21, 2011

    Apply has been tremendously changed the whole industries from bringing in new markets and indirectly affected the whole supply chain. With Cook moving on to take the leadership role, I am excited to see more creative moves that Apple will make. Different partnerships will bring in different surprises!

  2. Taimoor Zubar
    January 21, 2011

    I think it would be a challenge for Cook to perform in Steve Job's absence. The outcome of his performance may decide whether he is really able to step into Job's shoes on a permanent basis. If not, Apply may have to look for another successor to Steve Jobs.

    Apart from this, it may be interesting to see how Cook handles the added responsibility of managing the supply chain as well as day-to-day responsibilities as the acting CEO.

  3. Anand
    January 21, 2011

    “Their valuable supply-demand insight, creative problem-solving skills, financial business acumen, and responsibility for millions — or billions, in many cases — of dollars of critical materials and inventory should come with a C-level title”

    I totally agree with you on this. The existing skill sets give them extra insight and help them take a better decision. Most agree Cook is a better choice but the only question remains is, is he as good as Steve ?


  4. hwong
    January 22, 2011

    Cook and Jobs have different skill sets that complement each other very well. So it is hard to answer your question, “Will Cook be as good as Jobs?”

    Steve brings in his visionary thinking and his way of not taking no for an answer. When he believes in his own idea, he won't back down and insists that his employees stick it to his way. Cook oversses the internal operations and manage it very well to make sure that Steve's idea is executed at a timely and lower cost options.  So while Cook can manage that, we don't know if he has the capability to forsee the market demand for the future. What will be the next big thing that will provide Apple the revenue stream like the way it is now?

  5. Himanshugupta
    January 23, 2011

    i agree with hwong that Cook and Job are different as Job has shown his power as a tech visionary and has brought Apple to the number 1 position. I have no doubt in my mind about the managerial qualities of Cook as he has shown in the past that he can deliver in Job's abscence so there is no problem in short term for Apple.

    I think that its only time that will tell whether Cook can keep the growth engine of Apple running.

  6. Parser
    January 23, 2011

    Cook and Jobs work together and they have different skill set. Steve Jobs is on leave and will continue making top-level decisions. As a net result there might be no change in Apple ability to continue success. But if Jobs would have to stop his work it would change Apple totally. As I can see it Apple could remain at the top, but not as dynamic as under Jobs.

  7. Jennifer Baljko
    January 24, 2011

    Thanks, everyone, for your comments. Agreed, Cook is not Jobs, and Jobs is not Cook. And, I'll give a double nod to the fact that they each bring different, but complimentary, skills  to the table. But, the question “Will Cook be as good as Jobs?” isn't really what has my head spinning.

    Regardless of how well Apple fares or falters during whatever transitions come in the near future, the bigger questions are:

    – Are the skills being developed and nutured by supply chain professionals strong enough to lead Fortune 500 companies?

    – Will we be seeing more  Cook-like executives coming up the ranks in the next few years?

    – What specific supply chain skills would be most valuable in a CEO capacity (either here at Apple or anywhere in the high tech industry)?

    – Which skills are still missing?

    What do you think?

  8. Eldredge
    January 24, 2011

    Jennifer,

    I knew Mr. Cook had been at the helm of Apple during Jobs previous absence, but was not familiar with the rest of his background – thank you for providing the additional information. If he and Steve Jobs are as astute as I think, they have cultivated an evironment for innovation that encourages others within the company to step up and provide new ideas and technology.

     

  9. prabhakar_deosthali
    January 24, 2011

    In my opinion  the Supply Chain Professionals are the heart of an organization, who are in action 24 hours of the day and keep the pace with the everchanging demands and deadlines. But a technology company like Apple needs a stronger brain which keeps on planning new streategies, new innovations all the time while the companies production machine is run by the Supply Chain professionals. So maintaining status-quo is one thing and taking the company to another height is another!

  10. Parser
    January 24, 2011

    Jennifer thank you for clarification with specific questions. How one can assess skills needed to develop and nurture supply chain? Maybe we can look at the best examples in the industry and see what these people brought to the table. Why Steve Jobs is so good? Who else is there and what kind of style he/she has?  

  11. SP
    January 25, 2011

    A very good insight in the article. Someone with supply chain background is leading Apple is really extraordinary but when he has experience in senior positions of HP,COMPAQ and IBM, it becomes easy to understand. The supply chain responsibility looks very simple from far but I agree they are the ones or make or break it. Imagine everything is ready but critical part in BOM is not in store. I have always recognized and appreciated the efforts of good buyers and supply chain executives.

  12. Jennifer Baljko
    January 26, 2011

    @Parser: The questions you pose about how to assess skills, develop them beyond supply chain functions, and replicate/expand them throughout an organization or even the industry get right to the core of the matter. I know years ago a number of universities beefed up their cirriculum and began offering masters degrees in various supply chain areas, and organizations offered community outreach and continuing education classes and seminars. I'm not sure what's become of them, but I'd like hear how what the outcomes have been and how companies internally are identifying, nuturing and rewarding people with superior supply chain skills and business savvy.

  13. Parser
    January 26, 2011

    There is one thing that the supply chain at Apple could not do.

    The answer is the white iPhone 4. It was originally advertised, then postponed and nobody talks about anymore, even Verizon. 

     

  14. Ms. Daisy
    January 26, 2011

    Jennifer;

    I second your motion for Cook to lead Apple when Job leaves. His bio is remarkable and his track record is enviable!

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