3 ms·

Just in time: http://en.wikipedia.org/wiki/Just_in_time_%28business%29 http://en.wikipedia.org/wiki/Just_in_time_%28business%29 Inventories are buffers, in an

Just in time: http://en.wikipedia.org/wiki/Just_in_time_%28business%29 http://en.wikipedia.org/wiki/Just_in_time_%28business%29 Inventories are buffers, in an idealistic scenario(perfectly efficient) we don't need them. I order something, they make it and they give me instantly, no need to store it). In reality we need them, but Apple have very efficient logistics that make them minimal, compared with other companies, that can't control as much as the supply chain as Apple does, or can't use air planes to send their devices(so their products arrive weeks or months late, infuriating their customers). This is an oversimplification of course, there is way more about it, like demand-offer time lag problems, any operations research or logistic book will support you if you are interested.

cousin_it 15y ago
So to simplify even more, Apple doesn't have to maintain "large, profit-sapping inventories" because they can just force their suppliers to do that instead?
- AllenKids 15y ago
  Yes and no. Some of the inventories translate in to parts and bolts sat in the warehouses of Apple's suppliers. But more of the inventory reduction comes from precise demand prediction and great control of the whole chain from production to delivery. In short, Apple works with its upstream suppliers to secure the ability to manufacture and transport then dispatch tens of millions of gadgets from scratch(read: silicon and aluminum) in weeks and maintain the quality and price point. So many things could go wrong and Apple would be left with nothing to sell. for example iPad's channel inventory is only 4-6 weeks deep, and that's for the big box retailers, for Apple's own brick and mortar store it's even less. It works for Apple instead of disastrous through unexpected manufacturing difficulties and natural disasters or accidents because of Tim Cook's ironclad control.
- Game_Ender 15y ago
  No, you just have to work with your suppliers so they can produce at rates that match your anticipated demands. Toyota was one of the first companies to start this process decades ago: http://en.wikipedia.org/wiki/Toyota_Production_System http://en.wikipedia.org/wiki/Toyota_Production_System
- akeck 15y ago
  As is stated above, they harmonize their supply chain so that no part of it needs much inventory. For good discussions of this technique, read "Chasing the Rabbit" by Steven Spear and "Toyota Production System: Beyond Large-Scale Production" by Taiichi Ohno

cousin_it 15y ago

So to simplify even more, Apple doesn't have to maintain "large, profit-sapping inventories" because they can just force their suppliers to do that instead?

AllenKids 15y ago
Yes and no. Some of the inventories translate in to parts and bolts sat in the warehouses of Apple's suppliers. But more of the inventory reduction comes from precise demand prediction and great control of the whole chain from production to delivery. In short, Apple works with its upstream suppliers to secure the ability to manufacture and transport then dispatch tens of millions of gadgets from scratch(read: silicon and aluminum) in weeks and maintain the quality and price point. So many things could go wrong and Apple would be left with nothing to sell. for example iPad's channel inventory is only 4-6 weeks deep, and that's for the big box retailers, for Apple's own brick and mortar store it's even less. It works for Apple instead of disastrous through unexpected manufacturing difficulties and natural disasters or accidents because of Tim Cook's ironclad control.
Game_Ender 15y ago
No, you just have to work with your suppliers so they can produce at rates that match your anticipated demands. Toyota was one of the first companies to start this process decades ago: http://en.wikipedia.org/wiki/Toyota_Production_System http://en.wikipedia.org/wiki/Toyota_Production_System
akeck 15y ago
As is stated above, they harmonize their supply chain so that no part of it needs much inventory. For good discussions of this technique, read "Chasing the Rabbit" by Steven Spear and "Toyota Production System: Beyond Large-Scale Production" by Taiichi Ohno