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I'm very impressed with Apple's ability to turn over inventory, it seems to be an extremely well oiled machine. But... I have to wonder if these optimizations
by bstar77 14y ago
I'm very impressed with Apple's ability to turn over inventory, it seems to be an extremely well oiled machine.
But... I have to wonder if these optimizations work against Apple if there is a sudden significant downturn in demand. Since Apple pumps so much money into the supply chain to keep it consistently rolling at a high level, would it hemorrhage cash at epic proportions if a significant drop in demand occurred?
If I draw a parallel to the 80's video game crash, the big players were the ones that seemed to take the biggest hit while the significantly smaller players did not have to shift their operations so drastically to survive. They were able to sustain themselves on crumbs. Right now we're seeing largish companies like Palm and Rim try to live off of crumbs and it's not going too well.
- gdubs 14y agoI'm pretty sure that fluctuations in demand are precisely what Apple is geared for. They discovered that unsold inventory, stuff sitting on the shelves, is what ends up weighing down companies.
- apike 14y agoThe whole point of having so little stockpiled inventory is that if there's a reduction in demand or a new product is released, the minimum amount of money is lost unloading the excess product. Back in the day, Apple would always be sitting on 10 weeks of inventory. When a downturn or new product would come out, it would force them to sell the backlog at a loss, which was very painful for them.
- littledreamer 14y agovery true.
- excuse-me 14y agoThere is a flip side to this. An earthquake in Japan has car factories in the USA sitting idle a year later because of a shortage of parts. A fire at a Foxcon factory in the run up to christmas would really hurt Apple.
- arkitaip 14y agoBut would it be worse than having billions in inventory?
- excuse-me 14y agoThey have got billions in inventory, it's just on Foxconn's books rather than Apple's. Having very lean stock levels in a retail business can have drawbacks.
- philwelch 14y agoIn lost revenues, yes. But that just means less profit. Having inventory on hand and having to sell it at a loss or bury it (like the Lisa, for instance) means actually taking a loss.