Long queues were absent when Apple Inc. recently launched its smart watch, leading many to laud the company for its “no-wait” inventory strategy. No wait for watch at NYC flagship as Apple curbs long lines, thundered a report. That’s hogwash. Yes, a line was absent in front of the Apple store in New York but that’s because the company had shifted the “wait” elsewhere.
Instead of queuing up in front of a physical office store to buy the watch, Apple’s customers can order online or even in the store and then go home to twirl their fingers in a virtual wait for devices they’ve already purchased. Brilliant. Or foolish. Depending upon how many customers are willing to endure a prolonged wait should there emerge a gross mismatch between demand and supply in Apple’s forecast.
The most efficient electronics supply chains are supposed to avoid putting customers through this kind of “no-wait” waits – a sort of reverse illusion of waiting while being told you are not really waiting because the waiting is taking place at home. Confused? Me too. In the electronics industry, the Just-in-Time (JIT) inventory management system was designed to assure production efficiency, flexibility and timeliness while drastically reducing and possibly eliminating demand-supply mismatches and imbalances.
Of course, the electronics industry has dropped the ball many times in the past; product demands have outstripped supply, or vice versa, resulting in devastating downturns and unmanageable upturns. Over the last five years component distributors, especially, have been in the vanguard of cutting the viciousness of the industry’s boom-and-burst cycles by vigorously implementing JIT inventory systems and actively monitoring demand and supply conditions.
Distributors stock parts so customers don’t have to while implementing rapid delivery systems to guarantee delivery to OEM and contract manufacturing production facilities right on time. Many distributors often guarantee deliveries for between 24 hours and 48 hours after receiving orders. They have spent millions of dollars modernizing their warehouses to facilitate smooth order picking and packaging while developing a tighter collaborative relationship with logistics services providers.
Component suppliers, too, have learned to keep portions of their inventories in “work-in-process” status for easier transition as necessary to “finished goods” level, enhancing faster shipment to distributors and OEMs. The outcome of many of these actions is that the end-customer is hardly ever aware of the delicate inventory balancing actions that get finished products to them smoothly and generally when they want it.
That process remains hidden despite Apple’s latest move, which puts a new twist on order management. Apple is betting the lag time between when a product is paid for and when it is actually received by the customers won’t crimp sales of its smart watch. The projected shipment dates the company would give customers may vary widely depending upon the ability of the company’s supply chain to respond swiftly to the daily intake of new orders.
I couldn’t help thinking this emperor might just be naked. Somehow, Apple convinced its customers to patiently await delivery of the smart watch even if it takes the company weeks or months to get the device to them. “The days of waiting in line and crossing fingers for a product are over for our customers,” Angela Ahrendts, the head of Apple’s retail division who introduced the new system reportedly told employees in a leaked memo. “Tell your customers we have more availability online, and show them how easy it is to order.”
Yes, ordering online will be easier. Everything is easier online. Apple will get a better and probably more accurate insight into actual demand for its products. Of course, it may miss orders from customers who want the instant gratification that comes from getting the products when they want it rather than when the manufacturer think they should have it. Satisfying this type of customer will remain a challenge in the illusory “no-wait” world Apple has craftily created.
Bolaji Ojo is editor-in-chief and publisher of Electronics Purchasing Strategies. The views expressed in this blog are those of the author alone who promises to base his sometimes biased, possibly ignorant, occasionally irrelevant but absolutely stimulating thoughts on the subjective interpretation of verifiable facts alone. Any comments should be sent to the author at firstname.lastname@example.org.