Saturday, September 13, 2014

Apple iPhone 6 experiences glitches in the supply chain?

Apple , Inc sent out invitations to journalists, critics , reviewers and members of the media to the special release of the iPhone 6 phones stating ‘Wish We Could Say More’ , building up the rumors and speculations about the product. Amidst the anticipated media glare, Tim Cook, the CEO successfully launched the iPhone 6 with 2 versions (iPhone 6 and a larger iPhone 6 Plus) in Cupertino. However, since the last month, Apple has been experiencing inventory management issues.

According to sources, the iPhone screen assembly had to be put on hold for part of June and July as the display panel production decided to alter the backlight that illuminates the screen. Apple wanted to manufacture the thinnest phone possible due to which they came up with the idea of single layer backlight film instead of the standard 2 layers that is incorporated in smartphones. However, the new configuration was dull and the backlight was sent back to the drawing board to fit in the extra layer. This resulted in cost escalation and temporarily idling some screen assembly operations in Japanese and South Korean factories. Apple’s suppliers are under lot of pressure and it is also evident how difficult it is to meet Apple’s tough expectations. These delays will have a wider impact on the suppliers, as they are heavily dependent on iPhone sales for revenues. Similar screen problems crippled supplies at last year’s launch of Apple’s high-resolution iPad Mini.

The new iPhone 6 goes on sale on September 19 but the online pre-orders on the company website have hit a new record. Verizon Wireless , AT&T and Sprint Corp announced shipment delays of upto 6 weeks on their websites. A number of customers were left frustrated on Friday as they could not place order on the website. The website was flooded with an overwhelming demand of orders owing to which credit cards were getting rejected. In addition, Apple is facing some compliance issues in China due to which they will be released probably in the year- end. This may affect their overall iPhone 6 sales compared to what was predicted.

It is evident that the 3 Inventory Strategy Metrics- 1) Inventory-Related Costs 2)Customer Service and 3) Operational Performance are always at odds and efforts to improves one results in the deterioration of the other. Effective inventory management involves finding the right balance and meeting the stated objectives of a business strategy. Apple has introduced the new ‘Reservation Pass’ system, which is a new digital queue system. This facilitates customers to come back at any point during the day to make their purchase. This new application can be seen as Apple’s effort to improve their customer service.Apple is the number 1 in supply chain management and especially the best in inventory management. Inventory management is something that cannot always be accurate. There should always be room for error and in-depth inventory planning is required.


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