During the Covid crisis, Apple learned that putting the majority of its production in one nation weakened its supply chain. Since then, it has been working to fix that problem by encouraging partners to open up in new nations.
That’s a sensible response to supply-chain weakness, and while the Apple in India story is now well-known, the company is also putting resources into Vietnam, building out its iPad and Mac production lines in the nation.
Apple isn’t alone. Local reports tell us Nvidia CEO Jensen Huang also intends to open for business in Vietnam. And the presence of both Apple and Nvidia in Vietnam will likely encourage other consumer electronics firms to get more involved.
Apple’s business responds to shocks
While reporting on Apple suppliers almost always focuses on China, the company has partners worldwide, supplying components for final assembly. Traditionally, Apple’s supply chain has involved a combination of in-house R&D with manufacturing outsourced to trusted partners.
The top 200 companies on Apple’s published Supplier List together account for around 98% of its procurement. Apple is hard to work for, demanding, and drives tight deals, but has the mass production scale to make the effort worthwhile.
Over the years I’ve learned that relationships between the company and its key suppliers tend to be big on collaboration and make extensive use of Apple-developed manufacturing processes, with limited inventory and highly optimized ordering and production.
CEO Tim Cook’s work at streamlining Apple’s ops began in 1998 when he joined the company as Senior VP worldwide operations. Within a year he’d helped Apple turn a profit, and over his tenure built a just-in-time supply model for the company — the model he and his company are now tweaking for a different reality.
Today, as the production environment has become more complex, it’s of no surprise that Apple is developing a new approach. This could perhaps be seen as a more federated, more complex, yet still firmly internationalized model in which all the moving parts are orchestrated to prevent inventory build-up. (Cook at one point said, “Inventory is fundamentally evil,” adding, “You want to manage it like you’re in the dairy business.”)
Working toward business resilience
In Vietnam, Apple is working with a familiar Chinese partner, BYD. That relationship isn’t new, but what is new is that Apple isn’t just putting manufacturing in Vietnam, but also basing important parts of its iPad design and development resources in the nation. It means Apple and BYD will work on new products and new production processes to make those products.
In other words, Vietnam won’t just be making iPads, it will also be designing the manufacturing process used to make them, just as Apple has moved some iPhone manufacturing design to India.
While Apple watchers may be interested in all these minutiae, what matters most is that they prove Apple’s…
2023-12-15 21:00:03
Post from www.computerworld.com