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2012-12-11 11:51:58
By Dave Lee Technology reporter, BBC News
In recent months, worries over Apple's future have been reflected in the
company's share price, which has begun to fall from the dizzying heights of
just over $700 ( 436) to around $500 today.
When chief executive Tim Cook took over at the helm of the world's biggest
computer company, people worried whether he could offer the same charisma,
appeal and passion of his predecessor, the late Steve Jobs.
But that's not why Mr Cook got the job.
Analysts say Apple's share price is falling not because people are beginning to
dislike its products, but actually because of the opposite - Apple is
struggling to make their products fast enough. As a supply chain guru, Mr Cook
is well-placed to tackle that challenge.
"They're in the fashion business," says Paul Gray, director of European TV
research at NPD Displaysearch.
"Time is money. You have to get in there and make your product very quickly
before it becomes stale."
Mr Gray's specialism is in screen technology - a vital component in any modern
device, particularly when it comes to sophisticated displays in use for
smartphones and tablets.
He says that all companies, not just Apple, are getting nervous about where
their supply chain weaknesses are.
That is, if one cog in the machine was to fall off or break, would the engine
be able to keep running?
"Everybody had an enormous wake up call last year after the Japan earthquake,"
Mr Gray says, recalling what has become the most globally expensive natural
disaster in history.
"People suddenly for the first time really started to consider risk properly."
Kate's dress
Above all else, it led many companies to consider their flexibility and
reaction speed.
Could they, if needs must, switch their source of manufacture overnight? If
1000 workers went on strike next week, would 1000 others be able to pick up
tools somewhere else?
An ability to change systems in an instant became crucial, be it for natural
disasters or other factors beyond their control, both good and bad.
Apple's Tim Cook Apple's Tim Cook is bringing more of his company's supply
chain back to the US
When the Duchess of Cambridge unexpectedly wore a highly affordable polka dot
dress, the high street chain she bought it from struggled to make the most of
its golden opportunity.
"That dress sold out in an instant," recalls Craig Sears Black, managing
director of Manhattan Associates, a firm that provides software to aid in
flexible supply chain management.
"The shop could have sold 30,000 of those garments - but it had no idea that
Kate Middleton would wear that dress.
The retailers and manufacturers who are smart at spotting those trends are the
ones that will have greater profitability."
The shop missed its chance, Mr Sears Black says, because its supply chain was
too inflexible. It was able to increase production, but by the time the product
would have worked its way through the supply chain, the moment would have been
lost.
Fashionistas would have already moved on.
"If they'd had at that point the ability to divert the manufacturing orders for
that dress to accelerate them and then divert them to where the hotspots were,
then they could have sold more."
Stable or declining
Though in different industries, technology companies face similar pressures as
the retailers of Kate's dress.
Last week, Apple's Mr Cook told NBC about his intention to shift assembly of
some of Apple's Mac computers to the USA. The move was part PR, but also part
necessity.
Continue reading the main story
Start Quote
Decisions need to be made in the next couple of days - maybe even the next
couple of hours
Tim Payne Gartner
"If you are making products where you have seen huge spikes in demand, being
able to suddenly turn the wick up and make things locally maybe saves you four,
five or six days, that suddenly gets important," Mr Gray says.
He argues that China's image as being a place of sprawling factories of cheap,
skilled labour is changing,
"What you're seeing in China is repeating history. You're seeing the growth of
a trade union movement that happened in Britain from 1910 onwards.
"The number of people in China who actually want to go and work in dormitories
is stable or declining. They're saying maybe it's not worth it anymore."
Prediction game
Faced with all these challenges, forward-thinking companies are using the
latest technological techniques to not only deal with the problem - but to see
it coming from afar.
Some companies, such as electrical supplier RS Components, monitor search
trends on their website to assess whether a certain type of component is
beginning to become more popular with small orders - normally a sign that
engineers may be working on prototypes which could lead to a big order down the
line.
Twitter Social media monitoring can be used to predict when product surges may
occur
Other firms, particularly in fashion, monitor social networks to gain a handle
on what is creating buzz - gaining early insight on products that may be about
to face the Kate Middleton-effect.
Crucial in surviving all of these unpredictable variables is the use of network
design tools - software suites that can simulate what happens at the point of
disaster.
"This helps when decisions need to be made in the next couple of days - maybe
even the next couple of hours," explains Tim Payne, research director for
Gartner analysts.
"The processing speed at which they can run through a plan or simulation can
take seconds - rather than having to run it over night."
It means companies can take a highly-educated guess at how their decisions will
immediately impact their supply chains - and their ability to meet their
customer's demands.
"There is a compromise here between the precision of the plan," explains Mr
Payne, "but you're doing it much much faster than before."
It means that should the Duchess of Cambridge's choice of dress turn a business
upside down, it will at least be able to make the most of the royal seal of
approval.