Apple reportedly shaking up supply chain to preserve more profits

By , Nov 20, 2013

iPhone 5c (Manufacturing 001)

Apple has long been known for its supply chain prowess, mostly thanks to one man: Tim Cook. Before taking over the CEO position in 2011, Cook was the company’s chief operating officer and oversaw a number of successful product rollouts that garnered impressive profits.

But according to a new report, the iPad-maker isn’t resting on its laurels. Apple is apparently adjusting its supply chain model from having OEMs being responsible for both component procurement and production, to purely production, as it moves to raise its product margins…

Here’s DigiTimes (via AppleInsider) with the report:

“Apple has been adjusting its OEM operating model from OEMs being responsible for both component procurement and production, to purely production, according to Taiwan-based OEMs.

The new strategy is expected to impact Taiwan OEMs’ profitability in the long term since some of their profits are generated from their cooperation with upstream suppliers, the sources noted.

Since more suppliers are becoming capable of supplying components for Apple’s products, the US-based vendor has recently started adjusting its upstream partners in order to preserve more profits for its products.”

While it may not sound like this would sit well with Apple’s OEMs (original equipment manufacturers), it’s actually a good deal. The company has agreed to let them raise quotes to maintain their gross margins, and they no longer have to worry about component inventories.

As for what these changes mean for Apple, it’s tough to say. The company is constantly making behind-the-scenes moves in order to become more efficient and profitable. Last month, it was revealed that it spent $10.4 billion on supply chain robots and machinery we’ll never see.

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  • CollegiateLad

    I stopped reading at ‘Digitimes’.