Apple’s Supply Chain Secrets

A recurring piece of information throughout this year has been how Apple’s supply chain is so integral to their success in recent years. Bloomberg Businessweek’s article from yesterday is just the latest this year and it chronicles a few stories of Apple’s impressive control over their supply chain and gives some interesting insight to how it works.

Apple has built a closed ecosystem where it exerts control over nearly every piece of the supply chain, from design to retail store. Because of its volume—and its occasional ruthlessness—Apple gets big discounts on parts, manufacturing capacity, and air freight. “Operations expertise is as big an asset for Apple as product innovation or marketing,” says Mike Fawkes, the former supply-chain chief at Hewlett-Packard (HPQ) and now a venture capitalist with VantagePoint Capital Partners. “They’ve taken operational excellence to a level never seen before.”

Included in the article are some fascinating stories from the supply chain - whether it be the hoarding of lasers so that that iSight’s green LED indicator light could be ‘invisible’ when off, to Apple buying up all the available air freight over Christmas of 1998 so it could ship their new translucent blue iMacs and to how Apple keeps its new products secret ahead of a launch.

At least once, the company shipped products in tomato boxes to avoid detection, says the consultant who has worked with Apple. When the iPad 2 debuted, the finished devices were packed in plain boxes and Apple employees monitored every handoff point—loading dock, airport, truck depot, and distribution center—to make sure each unit was accounted for.