Samsung and Beyond: Can Suppliers Meet Apple’s Supply Chain Thirst? (Part 2)

Please click here for Part 1 of this post.

What can we learn from Apple's size and how it must simultaneously micromanage a supply chain that earns tens of billions of dollars a year while also turning to suppliers for innovation and competitive advantage (e.g., selling cutting edge technologies only to Apple for a period of time -- call it the iLock-up period if you will)? Over on Spend Matters PRO, we recently made a few observations, including the following:

For those in a position to wield the massive spends like Apple has --realize the dual edged nature -- the size of the pot is likely to attract attention from all sorts of greedy constituents who want a piece. You need to have strong spend analysis and supplier management insights to be able to proactively engage with information on your spend footprint with sensitive accounts, regions and even nations.

Moreover, in the same research brief, we also suggest the importance of "developing your suppliers before you outgrow them. Capacity is an issue for many suppliers, but when you are as dominant in an industry as Apple is, this needs a supplier development program all by itself -- likely lessons to learn from supplier diversity best practices, except at a much larger scale."

Some of these ideas are undoubtedly easier said than implemented. Supplier development, for one, especially when it involves working with suppliers to meet absolutely stratospheric levels of inventory turnover (fifty on an annualized basis in Apple's case) can become a massive undertaking. But understanding the potential for IP theft from contract manufacturers, suppliers and lower-tier suppliers and proactively developing supplier management programs and intelligence to identify potential leaks as quickly as possible plus those representing a high potential of risk before a leakage occurs is just as important.

Apple has obviously learned from its dealings with Samsung. For those who are close to Asian business and the declining trust within different countries, the greatest irony here of course is that if Apple cannot trust a key Korean supplier partner, where does that leave Chinese suppliers?

- Jason Busch

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