This is a follow-up posting to our previous Supply Chain Matters commentary concerning Apple’s 2014 Supplier Responsibility Report.
In addition to charting progress in social responsibility actions, Apple is one of very few manufacturers that will publically identify its suppliers. This effort first began in 2012 with the advent of Tim Cook as the company’s CEO and his goal to make the company’s supply chain, previously clouded in high secrecy, must more open and transparent. Even though this listing represents the top 200 suppliers for Apple, it does provide important pointers to how the company strategically and tactically manages its supply needs.
Readers can view the 2013 supplier listing at the following web link.
Scanning the full list, we share some of our observations relative to previous disclosures:
Once again, consider for a moment the scale required by a supplier to be able to support Apple’s production volume needs on a global basis, and at the same time, manage geographic supply risk. The complete listing remains small by high tech industry standards, reflecting Apple’s procurement strategy for concentrating influence on a select few strategic suppliers, yet tasking these same suppliers to manage scale, operational and supply chain disruption risk.
A sampling for matching select supplier names with individual supplier geographically based facilities reveals:
3M Company– 9 facilities
Intel Corporation– 14 facilities that span China, Costa Rica, Ireland, Israel, Malaysia, Mexico, Netherlands, United States and Vietnam
Maxim Integrated Products– 9 facilities
Micron Technology Inc. – 10 facilities that include Israel, China, Taiwan, Singapore and the United States
Molex Inc., (a Koch Industries company) – 10 facilities, only two of which are located in the United States
Murata Manufacturing Co. Ltd. – 12 facilities that span China, Indonesia, Japan. Malaysia, Singapore, Taiwan, Thailand and Vietnam
Panasonic Corporation– 31 facilities, 20 of which are located in Japan and 6 within China
Samsung Electronics Co. Ltd. (subsidiary of rival Samsung) – 9 facilities
TDK Epcos Corp. – 20 facilities
Texas Instruments Inc. – 21 facilities, 9 of which are located in the United States
Vishay Intertechnology Inc.- 25 facilities which include Belgium, China, Czech Republic, Israel, Germany, Hungary, Mexico, Malaysia, Philippines, Portugal, Taiwan and the United States
In 2011, the widespread floods that occurred across Thailand severely impacted what was estimated to be upwards of 30 percent of existing hard disk drive supply at the time. Two of Apple’s prime HDD suppliers remain listed as Seagate Technology and Western Digital. A review of plant facilities indicates that Seagate has but one plant listed in Thailand, with two listed within China. Western Digital is noted with a total of 5 facilities, two located in Thailand, 2 within China and one within Malaysia.
In previous Supply Chain Matters commentaries, we have observed how Apple has strategically sourced in LCD Display needs among a number of strategic suppliers. The 2013 supplier listing reinforces that existence of that strategy with the names of LG Display Co. Ltd. (7 facilities), Samsung Electronics (noted above), Sharp Corp. (9 facilities) and Japan Display (3 facilities).
Finally, a commentary on Apple suppliers is not complete without addressing contract manufacturers. Last year, Apple announced that it would expand its contract manufacturing presence beyond its prime provider Hon Hai Precision Industry Co. Ltd. (Foxconn).The 2013 listing includes 29 Foxconn facilities, 26 of which are located in China. Flextronics International Ltd. is listed with 4 facilities, two of which are located in China, the other two noted as Austin Texas and Sao Paulo Brazil. Apple’s newest contract manufacturer, Pegatron Corp. is listed as 8 production facilities, all located within Shanghai and Jiangsu China. By our count, these three CMS suppliers equates to 36 production facilities across China. That, ladies and gentlemen amounts to a lot of manufacturing-driven employment and provides further evidence of how Apple manages margins.
As a community we very seldom get the opportunity to review any company’s listing of suppliers, let alone the supply chain rated highest. Learn from this opportunity and share in praising Apple for its openness.
As in previous year’s commentaries related to the Apple supplier listing, readers are welcomed to share any additional observations and thoughts in the Comments section below this posting.