Two recent studies report varying performance levels in Apple’s supply chain. Bloomberg argue that it's lost its mojo, but Greenpeace rates the tech giant as a sustainability pioneer.
Few corporate supply chains are scrutinized quite like Apple’s. As the technology outsourced more of its production to tiers of Asian suppliers, a new profession has emerged in a supply chain analyst, where as industry analysts of the past previous scoured quarterly earnings, they now delve deep into the opaque world of supply chains.
However, the once untraceable web of privately owned China-based enterprises is beginning to grow more transparent. Analysts has taken advantage of recent legal changes in Taiwanese corporate law, which mandates large firms to produce monthly earning reports.
Bloomberg finds that, using such data, Apple’s supply chain has lost its 'mojo'. That is, its major suppliers are beginning to see their margins fray. Taiwan Semiconductor Manufacturing Company, Apple’s exclusive processor and Hon Hai Precision Industry Company, its assembler, both have seen their profits fall in recent months as bottlenecks emerge in Apple’s supplies.
To explain these issues, a consensus seems to have settled upon the decision to switch to organic light emitting diode screens (OLED). Unlike its rival Samsung, Apple came to OLED relatively late. This decision to opt for OLED for the new iPhone X placed an already lean supply chain under additional strain.
The switch resulted in the split launch of the iPhone 8 (old screen format) and the iPhone X (OLED). The iPhone 8 appears to be struggling and the iPhone X is arguably under-engineered, lacking in finger-print processing capabilities.
“With rival brands like Samsung and Huawei becoming increasingly adept at working with suppliers, Apple risks losing its hardware edge at a time when its iOS platform is also under fire,” writes Tim Culpan. “It simply can’t afford to make such a mistake again.”
However, praise for its supply chain has appeared from an unlikely source: Greenpeace.
The environmental charity awarded Apple a B- grade for its progress on sustainability issues. It ranked second among its peers in China.
The report criticises Samsung’s supply chain as lacking in renewal energies and Amazon’s for its opaqueness. Apple received further grades of A- for renewable energy and climate change and a B for the elimination of hazardous materials.
The authors praise its objective of creating a ‘closed-loop supply chain’, that is a production philosophy based on re-using consumed material:
Apple’s April 2017 goal to move toward a closed-loop supply chain for all its products established a new high bar for the whole sector to work towards. … Apple also reports to be using recovered aluminum from returned iPhone 6 devices in factory Mac minis. Apple is also working with a recycler to recover tin and other metals from iPhone 6 logic boards disassembled by Liam while also moving to recycled tin solder in the main logic board of iPhone 6s since April 2017.”
The reports also praises Apple for pioneering the elimination of the harmful chemicals polyvinyl chloride (PVC) plastic and brominated flame retardants (BFRs) from its production lines. Few other major electronics manufacturers have eradicated these materials.
These two reports reveal only partially the complexity of the supply chain. It would be naïve to conclude that Apple has sacrificed its efficiency for environmental reasons; the two factors are separate considerations for the corporation. But it shows that it is hard to get everything right in a complex international operation.
