High-Tech Shortages

September 28, 2017
High-Tech Shortages

Article Title: Why There Are Never Enough New iPhones

Author of Article: Christopher Mims

Date of article: September 17, 2017

Source URL: https://www.wsj.com/articles/why-there-are-never-enough-new-iphones-1505649600

This Wall Street Journal article debates why high tech companies, including Apple, continue to experience shortages and delays in new products. Although this practice seems to violate basic principles of customer service, it may well be deliberate. Or at the very least, a mix of planned marketing and risk management, mingled with unplanned yield issues, complicated by the complexity of managing global supply chains. The critical bottleneck for the iPhone X, according to the article, is its OLED screen. Whether the delays are planned or not, one benefit of delayed production is improved forecasting.

Discussion Questions
1.What are the risks of delaying the delivery of the iPhone X?

Guidance: Focus the discussion on shortage costs and service levels.

2. What are the ethical implications of making deals for huge quantities of NAND memory at the expense of smaller players? How does it affect consumers?

Guidance:  The production of iPhones is restricted by the limited global supply of scarce components such as NAND memory and OLED screens.  With its purchasing power, Apple can lock in supply of NAND and lock out smaller players, including potentially some competitors. There may be benefits and drawbacks for customers.

3. How do last-minute design changes affect the coordination among global supply chain partners’ operations?

Guidance: The production of millions of phones requires tight coordination among component manufacturers across the globe. Suppliers prefer to deliver on demand (just-in-time) to avoid being burdened by unsold inventories. Last minute design changes add complexity to managing inventory, capacity and logistics.


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