Lessons from Apple's Supply Chain

One area that many don't think of when they consider the success of Apple is their excellence in operations and most importantly, supply chain. All of those iPhones, iPods, and Macbooks have to make their way to Apple fanboys somehow. New CEO Tim Cook excels in this area and many consider him to be one of the architects of the efficient supply chain machine at Apple. According to a recent article in Bloomberg Businessweek, Apple excels at communicating their full spend potential to suppliers and utilizing this leverage to dictate supplier pricing, even ruthlessly if the situation calls for it. In one case, Apple needed a specialized laser to cut through the casing metal on the Macbook Air and other products. Apple convinced a US-based supplier for these special lasers to sign an exclusivity agreement to provide this product solely to Apple. Significant cost concessions were made by the supplier and the company could focus their quality and production efforts on servicing Apple. It also ensures that no company trying to copy the method this laser supports can purchase the laser. Apple has already bought hundreds of lasers under this agreement.

While most organizations do not have the spend and market influence of Apple, the lesson here is that your existing suppliers may not realize that there are products or services that your company purchases from other suppliers that they can provide. Conversely, it is important to evaluate with your suppliers what your position is in their customer spectrum. Are you a drop in the bucket, or their most valuable customer?

Procurement service providers like Source One can evaluate the structure of your supply chain to help your organization exert leverage that may be available by ensuring each of your suppliers understands your full spend volume potential. If you have a fragmented supply chain or procurement that doesn't take advantage of your total spend, our strategic sourcing services can help.