Last week’s decision by AT&T Wireless to suspend iPhone pre-orders is a big mistake in my opinion. Both Apple and AT&T already have significantly underestimated demand for the new device, which is not surprising given that the iPhone4 is arguably the biggest product launch in history. But by cancelling pre-orders they are introducing further entropy into the supply chain. Data from online e-commerce functions such as pre-order can analyzed to identify overall consumer demand patterns useful for supply chain forecasting. Without these pre-order signals, AT&T, Apple, Foxconn and others have far less information upon which to base forecasts for Thursday’s retail launch date.
One week ago, Apple’s new iPhone 4 became available for pre-order unleashing chaos in the mobile phone supply chain. Demand for the new device was ten times higher than expected resulting in a series of order management and inventory challenges for AT&T, Apple and its partners. Over 13M AT&T subscribers visited the company’s web site on the first day to assess whether they were eligible for an upgrade. In an official statement, Apple stated that on June 16th that
In my last post, I discussed the history of the Panama Canal, which is undergoing a major expansion project to add a third set of locks. One of the key drivers for the construction project is the inability of the canal to accomodate larger “Post-Panamax” vessels. Panamax is a term in the global ocean freight business to describe vessels whose dimenstions exceeds the height, width or depth of the current canal. Approximately, 37% of the world’s cargo capacity today cannot traverse the canal. These container ships either have 1) depths which exceed the shallowest point, 2) heights which exceeds the maximum clearance for the Bridge of Americas or 3) widths or lengths that exceed the existing lock chambers.
In an earlier post, I described the Shanzhai bandit phone manufacturers which have successfully beaten Apple to market with a fake version of its own product, the iPhone 4G. Shanzhai also managed to introduce an imitation iPad called the iPed simultaneously with Apple’s international launch. The Shanzhai enjoy tremendous advantages over traditional brands in the areas of time-to-market and cost-of-production. Many people are quick to dismiss the Shanzhai as a nuisance that should be suppressed through stricter enforcement of intellectual property rights legislation. But others such as Dr. Hau Lee of Stanford University have made a practice of studying the techniques of the Shanzhai. Why? Because the Shanzhai have achieved unparalleled levels of supply chain efficiency particularly in the areas of product design, development and distribution. Although, some of these efficiencies are achieved by circumventing established laws, there is value in understanding the techniques that enable the Shanzhai’s success.
For decades Western brand owners have been battling counterfeiting versions of their products in emerging markets such as China. Companies in industries from pharmaceuticals to home entertainment have shifted their product launch strategies to counter piracy threats. Some have pursued simultaneous worldwide launches as a strategy. By launching in emerging markets and developed economies, brand owners hoped to capture more sales in the first few months before counterfeit substitutes were introduced. However, in recent years the rate at which pirated versions of products reached the market continued to accelerate. This year we have reached a state in which counterfeits are now getting to market on the same day or before the official versions of product launch.