Apple began innovating on the nitty-gritty details of supply-chain
management almost immediately upon Steve Jobs’s return in 1997.
At the time, most computer manufacturers transported products by
sea, a far cheaper option than air freight. To ensure that the
company’s new, translucent blue iMacs would be widely available
at Christmas the following year, Jobs paid $50 million to buy up
all the available holiday air freight space, says John Martin, a
logistics executive who worked with Jobs to arrange the flights.
The move handicapped rivals such as Compaq that later wanted to
book air transport. Similarly, when iPod sales took off in 2001,
Apple realized it could pack so many of the diminutive music
players on planes that it became economical to ship them directly
from Chinese factories to consumers’ doors. When an HP staffer
bought one and received it a few days later, tracking its progress
around the world through Apple’s website, “It was an ‘Oh
shit’ moment,” recalls Fawkes.
That mentality — spend exorbitantly wherever necessary, and reap
the benefits from greater volume in the long run — is
institutionalized throughout Apple’s supply chain, and begins at
the design stage.
Billion-dollar cash up-front deals for components. How many other companies can do that?