Thursday, November 10, 2011

Apple Cuts Back on iPhone 4s Production

With the idea of supply chain management and forecasting in the forefront of my mind this week, I stumbled across this article about Apple and the iPhone 4s. In it, they describe that Apple has cut their orders from suppliers by between 10-15% for the fourth quarter of the year.

This cutback could be due to two reasons. First is current turmoil in the world, including the flooding in Thailand. Small but necessary parts of the iPhone 4s are currently hard to come across. Therefore, Apple does not want to buy lots of parts for iPhones that will be missing an integral part.

Possibly more importantly, it seems that Apple may have overestimated the number of iPhones they would sell. With the huge presale numbers that they saw in the United States, they increased their projections of sales for the entire year. Once they began to see the decreased numbers of sales in the third quarter, they began to cut back on supplies for the fourth quarter. It’s not surprising that Apple overestimated based on pre-orders. Their pre-order stock was sold out in only 10 minutes in Hong Kong.

Some of these cuts in orders to suppliers and manufacturers may also be due to currently slow iPad sales. Many believe that the “short-term market saturation” on iPads and tablets in general has caused Apple to cut back on production.

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