Moto X Supply Chain

The articles “Building a flexible supply chain for uncertain times” and “Ten ways to improve inventory management”, emphasize the need for supply chain systems to take into account more than just forecasting demands to take into considering for effective inventory management. They propose making the supply chain more flexible by cutting across departments like marketing and sourcing. In this blog I am going to highlight companies which have successfully implemented them and which have had difficulty implementing it.

Mobile device manufacturing companies have had some difficulties implementing an agile supply chain. Microsoft’s Steve Balmer openly admitted that they made a huge mistake with over forecasting the demand of Surface tablets. They have cut the price by a 100$ and are yet having trouble selling it.  As an opposite example to this scenario, Nexus 4 devices flew off the shelves and its sales were under rated. There was a huge waiting time to procure the Nexus 4.

Motorolla, with its manufacturing plant in texas, has made added some variability to the supply chain process of manufacturing phones. With the launch of Moto X, they have made the phone external colors extremely customizable. While the skeleton of the phone remains the same, the external colors are highly customizable; in fact you can also engrave your name on the phone. The phone is assembled in Texas and can be made to order and delivered within 6 days on order.

Motorolla is the first company to assemble and distribute its phone in the US. It gets the cell phone processors from companies like the Qualcomm- which outsources its production to a Taiwan manufacturing company. It gets its memory from Samsung in Korea. Only 17% of the manufacturing is done in the US.

Google made a huge bet by buying a manufacturing plant in Texas- trying to assemble the phone in on a made to order basis. It’s a little more expensive for them to assemble the phone here but they have saved on the millions by avoiding wrong forecasting sales and possibly making loses it (like Microsoft did).

It’s probably too soon to say if it’s effective enough, since it has only been 2 months since the phone's release. Would this be the best supply chain model that mobile manufacturing companies could adopt?  

 

References:

http://www.bloomberg.com/news/2013-08-30/google-s-all-american-moto-x-phone-contains-few-u-s-made-parts.html

http://press.ihs.com/press-release/design-supply-chain/us-made-moto-xs-cost-comparable-asian-assembled-smartphones-ihs-te

http://www.pcmag.com/article2/0,2817,2424289,00.asp

http://www.bain.com/publications/articles/ten-ways-to-improve-your-inventory-management-wsj.aspx

http://www.mckinsey.com/insights/operations/building_a_flexible_supply_chain_for_uncertain_times