With Apple's new iPad, supply chain is the hero

With Apple's new iPad, supply chain is the hero

Summary: Apple will start selling its next-gen iPad March 16, but the supply chain may be the real hero.


Apple's new iPad will go on sale March 16 and sellouts are widely expected, but the real hero will be the company's supply chain. It's a juggernaut that can move 1 million units in a product launch without blinking.

Gene Munster, an analyst at Piper Jaffray, is already projecting that Apple will top 1 million new iPad units in a day. That first wave of product is hard to replicate by most vendors.

Indeed, Apple's supply chain is its secret weapon. After all, Apple was able to line up millions of new retina display panels and leapfrog rivals.

Here's a look at Apple's supply chain by the numbers.

1 million+: Number of units Apple is expected to sell when the new iPad launches March 16.

12: Countries that will sell the new iPad on March 16.

$7.1 billion: Amount expected to be spent in fiscal 2012 on "product tooling and manufacturing process equipment, and corporate facilities and infrastructure, including information systems hardware, software and enhancements."

$2.9 billion: Inventory component prepayments as of Dec. 31.

$13.4 billion: Outstanding off-balance sheet outsourced manufacturing and component purchase commitments as of Dec. 31.

156: Number of suppliers in Apple's supply chain.

97 percent: Portion those 156 suppliers represent in terms of Apple's procurement expenses.

229: Number of Apple supply chain audits performed in 2011. Of that sum, 188 were standard, 27 were process safety assessments and 14 were specialized environmental audits.

150 days: Time the typical purchase commitments cover the company's supply needs.

60: Maximum hours worked per person allowed under Apple's supply chain code.

1: Day of rest mandatory per seven days of work.

93 facilities: Number that had more than 50 percent of workers topping 60 hours at least 1 week of a 12 week sample.

39 percent: Portion of net sales in 2011 that came from customers in the U.S.

1 region: Asia is where the final assembly of all the company’s hardware products.

Two vendors: Two suppliers account for a significant portion of Apple's non-trade receivables.

2012-2022: Time frame where Apple's component agreements expire.

23.1 million: Metric tons of greenhouse gas emissions from Apple in 2011. 61 percent of that was manufacturing, 5 percent transportation, 30 percent product use, 2 percent recycling; and 2 percent facilities.

Sources: SEC filings, Apple supplier responsibility and environmental reports.

See also:

Topics: Apple, Enterprise Software, iPad, Mobility, Software

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  • The difference between great and greatest

    I think it's probable that Steve Jobs could have made Apple great again without Tim Cook's supply chain prowess. But with the one-two punch of Jobs' genius for innovation and Cook's seeming genius for logistics, Apple not only became great again, it became one of the greatest companies of our time.
    • Current Supply Chain

      Apple gets allot of credit for their current supply chain, but even back in the days after Jobs return, but prior to Apple's return to prominance (pre iPod, iPhone, iPad), Apple took their supply chain seriously. I read an article back in the 90's about how they would sit on 30 days of inventory during their dark days, but they reduced that to a few days, reducing warehouse costs, aged inventory, etc.

      Allot of the focus is on innovation, evolution, etc. of the technology itself, but Apple has proven to not just be successful with it's products, but in managing a business as efficiently as possible.

      They got allot of crap for FoxConn, but let's be realistic, if it's hardware, it's most likely being manufactured somewhere on the Pacific rim or in some other developing company where labor is cheap and labor laws are lax. Apple's taken steps that their peers and competitors haven't. Does anyone really think Samsung, HTC, Sony, LG, HP, Dell, Lenovo, Asus (it goes on and on) products aren't made in plants like FoxConn?
      • Actually they are!

        Not a big secret actually it's just that Apple is the most successful so it makes them the best target. Samsung, HTC, Sony, LG, HP, Dell, Lenovo, Asus, etc do indeed make their products in plants exactly like the FoxConn facility Apple uses. As a matter of fact I've heard that at least one of those vendors, Dell, uses the SAME facility. However only one of those vendors will guarantee news coverage: Apple.
  • WOAunto the

    Microsoft desperately needs to sign Samsung as a Windows 8 tablet OEM. Samsung is the only player that is going to be able to ship these very high resolution displays in any serious quantity for the better part of a year.
    Robert Hahn
    • W8 Resolution?

      But how will Metro / Windows 8 look on a hi res tablet? Does the OS scale things correctly like iOS, or will the UI elements just get really small with such high pixel density? I don't know the answer, but everything I have seen points to the fact that windows will treat a retina class display like it was a 24" monitor.
    • This is yet unknown

      Although Samsung has demonstrated 2560x1600 10" display one year ago, it is far from certain they can provide enough supply of these.

      Even if they are able, chances are that Apple already pre-ordered anything they could produce. So about the only chance that Samsung (or anyone else) can bring a product with such a display to the market is if there is extreme excess in manufacturing and the demand for the new iPad is not that high as to consume all supply.

      In half a year to one year, we may begin to see other products, as manufacturing ramps up and the new iPad eventually becomes "old".
  • How's that FAD coming Loverock?

    Microsoft couldn't dream of shipping any mobile device with that many units on opening day.