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"We didn't understand our costs, so we underbid and now are blaming Apple." - Wistron

by mannyv 3y ago

kitsunesoba 3y ago
It does seem likely that this is a case of a bit of column A, a bit of column B. Apple very well may have unrealistic demands, but I believe it's also likely that Wistron may not have dealt with the level of QC, precision, and consistency that is expected of Apple products and based their estimates on experiences of working with more typical hardware companies.
- dfox 3y ago
  Wistron is large part of the reason why IBM/Lenovo ThinkPads are regarded as some kind of etalon of quality and repairability. I assume that most of the issue there is misunderstanding of how to run a factory in India and how is that different from both Far East and Europe.
jalk 3y ago
Or perhaps even more damning (as the article also mentions): "We expected to get away with paying our workers lower than the legal minimum"
s1mon 3y ago
Yes, that's certainly a valid reaction, and is likely partially true. It's also true that Apple is very well known for very hard negotiation and squeezing their suppliers until there's only a few percent margin. You'd have to be insanely good at controlling all of your costs to make money all the time under that constraint. If yields change or component/material prices fluctuate the wrong way any predicted profit could disappear. Apple also pays suppliers on net 90. With inflation the way it's been, any miscalculation there will sink things. Not all suppliers know how to be banks too. Considering how much cash Apple has, this is really reprehensible. As a supplier to Apple, the gross numbers are so seductive since they are larger than just about anything else, but the net numbers are orders of magnitude less.
- CharlesW 3y ago
  > It's also true that Apple is very well known for very hard negotiation… No successful company is over-paying suppliers.
  - Centigonal 3y ago
    There's a difference between over-paying suppliers and being literally the best in the world at squeezing suppliers, which Apple is IMO. You can argue (and I will argue) that Apple's skill at squeezing their suppliers while still maintaining reliable supply chains is a huge part of why they're the biggest company in the world (and also why Tim Cook and not Scott Forstall or Jony Ive succeeded Jobs). That squeezing has real human costs, which Apple is insulated from. They've outsourced the majority of their labor (and related liability) to a global cadre of high-volume, low margin suppliers, while capturing most of the value created by that labor by owning the Apple brand and maintaining tight control of information, resulting in an asymmetric risk/reward profile for Apple inc.
    - mistrial9 3y ago
      "those who do business with Dell, go out of business"
      - mistrial9 3y ago
        I fail to understand the negative votes (above), Dell did and does exactly what is attributed to Walmart and others in this thread. It is known among manufacturers but held in secrecy like so much in that business. Source: multiple years in used computer industry in California
  - throwaway09223 3y ago
    Successful companies overpay suppliers all the time - especially if they're growing very fast and are focused on scaling growth over cost efficiencies. Large companies who've already scaled up their products are more incentivized to focus on cost cutting.
bdidbdidhdidh 3y ago
you really think apple gives a detailed build instruction on the bid war moment? it probably is a room full of parts and to win you have to commit to the non present parts too. just like fashion production bids btw
draw_down 3y ago
[dead]

"We didn't understand our costs, so we underbid and now are blaming Apple." - Wistron

by mannyv 3y ago

"We didn't understand our costs, so we underbid and now are blaming Apple." - Wistron

It does seem likely that this is a case of a bit of column A, a bit of column B. Apple very well may have unrealistic demands, but I believe it's also likely that Wistron may not have dealt with the level of QC, precision, and consistency that is expected of Apple products and based their estimates on experiences of working with more typical hardware companies.

dfox 3y ago
Wistron is large part of the reason why IBM/Lenovo ThinkPads are regarded as some kind of etalon of quality and repairability. I assume that most of the issue there is misunderstanding of how to run a factory in India and how is that different from both Far East and Europe.

jalk 3y ago

Or perhaps even more damning (as the article also mentions): "We expected to get away with paying our workers lower than the legal minimum"

s1mon 3y ago

Yes, that's certainly a valid reaction, and is likely partially true. It's also true that Apple is very well known for very hard negotiation and squeezing their suppliers until there's only a few percent margin. You'd have to be insanely good at controlling all of your costs to make money all the time under that constraint. If yields change or component/material prices fluctuate the wrong way any predicted profit could disappear. Apple also pays suppliers on net 90. With inflation the way it's been, any miscalculation there will sink things. Not all suppliers know how to be banks too. Considering how much cash Apple has, this is really reprehensible. As a supplier to Apple, the gross numbers are so seductive since they are larger than just about anything else, but the net numbers are orders of magnitude less.

CharlesW 3y ago
> It's also true that Apple is very well known for very hard negotiation… No successful company is over-paying suppliers.
- Centigonal 3y ago
  There's a difference between over-paying suppliers and being literally the best in the world at squeezing suppliers, which Apple is IMO. You can argue (and I will argue) that Apple's skill at squeezing their suppliers while still maintaining reliable supply chains is a huge part of why they're the biggest company in the world (and also why Tim Cook and not Scott Forstall or Jony Ive succeeded Jobs). That squeezing has real human costs, which Apple is insulated from. They've outsourced the majority of their labor (and related liability) to a global cadre of high-volume, low margin suppliers, while capturing most of the value created by that labor by owning the Apple brand and maintaining tight control of information, resulting in an asymmetric risk/reward profile for Apple inc.
  - mistrial9 3y ago
    "those who do business with Dell, go out of business"
    - mistrial9 3y ago
      I fail to understand the negative votes (above), Dell did and does exactly what is attributed to Walmart and others in this thread. It is known among manufacturers but held in secrecy like so much in that business. Source: multiple years in used computer industry in California
- throwaway09223 3y ago
  Successful companies overpay suppliers all the time - especially if they're growing very fast and are focused on scaling growth over cost efficiencies. Large companies who've already scaled up their products are more incentivized to focus on cost cutting.

bdidbdidhdidh 3y ago

you really think apple gives a detailed build instruction on the bid war moment? it probably is a room full of parts and to win you have to commit to the non present parts too. just like fashion production bids btw

draw_down 3y ago

[dead]