Competition in the tablet market is fiercer than ever and only weeks away from the release of the new “iPad 3”, anticipation has been building up on the new features the newest Mac tablet will include. As a consumer, is hard to believe that it has been only a few months since I purchased my iPad 2 when rumors are already surfacing about an iPad 3. This got me thinking about how incredibly efficient Mac’s sourcing capabilities must be so a significantly improved product can be released with such frequency.

As a sourcing professional, I believe that the leverage power Mac has of negotiating best quality services at the best prices must be tremendous. The iPad 3 release rumors alone have fueled Apple’s stock price to break the $500 mark ($513.70 as of 2/21) which represents over a 20% increase since the beginning of the year; such reputation, a market capitalization of almost $500 billion and a market share that is overtaking the entire PC market, confirm Mac as a company that continues to outperform the industry every year.

A company with such profile and the thirst of adding more complex features to its products (such as the highly speculated 2048 x 1536 retina display and a new processor for the iPad 3) allows Mac to build a portfolio of integrated circuit suppliers eager to work with them; and truth be told, who would want to be a Mac supplier? With a client like this, current suppliers have little to worry about; I mean, as long as they are industry compliant, I’m sure they will have steady business for quite some time.

However, not a lot of companies get to work with the tech giant. Behind Mac products there is a list of tight supplier selection standards that need to be met before setting up a supply deal with Apple. For the iPad 3 and other iDevices (iPod, iPhone, etc.), during 2011, Apple conducted over 229 auditing process along their production lines. These audits include issues that go from job safety to financial performance to waste disposal procedures. The goal is to provide technology products that are safe, clean and reputable from the conception of the idea to the hands of the final user.

These ambitious goals bring to mind the next question: How much does this cost, and how does this cost impact the final price of the product? In other words, what do these efforts represent to the consumer? Well, the answer rests in the sourcing strategy. The iPad 3 will be facing competition from tablets like the Amazon Kindle Fire and the Windows 8 tablets which may not present the impressive specs of the iPad 3 but affordability instead; this means that the iPad 3 must present a significant set of upgrades at even more competitive prices than its competitors to entice the market. However, it is highly unlikely that the iPad 3 be released with a lower price; and we also know Apple will not compromise quality either. So, what can Mac do retain its current market while competing with cheaper products? Well, some analysts are already speculating about the iPad Mini. The underlying strategy is simple: Offering an alternate product to its already popular selection of high end gadgets to compete with any device in the market. Whether the product will work or not is for the market to decide, but there is no question that the strategic approach makes sense.

However, despite Apple’s negotiating power, high quality standards and efficient strategic positioning, I believe there is far more fundamental reason of why any supplier would want to work with a company like this. The reality is that like other companies such as Google, YouTube or Facebook, Apple is one of today’s corporations defining the industrial market place of this generation, spawning superstar companies out of nowhere and redefining business models that for decades dominated our system. What these companies have in common is their ability to create and sustain partnerships effectively; switching strategic sourcing models from mere vendor selection to partnership management.

Seriously, who wouldn’t want to work with a client who makes you a reputable partner rather than just another supplier?
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Diego De la Garza

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