Rather interesting supply chain related news came from Apple, Inc. circles this week.  According to the Wall Street Journal, (paid subscription may be required) Apple plans to begin producing a CDMA version of its widely popular iPhone later this year. This move would allow other carriers such as Verizon Wireless or Sprint Nextel Corp. to offer iPhones to their subscribers.  Currently, Apple offers only a GSM version with an exclusive distribution arrangement with AT&T.

According to this article, Apple is about to embark on a dual contract manufacturing strategy for the iPhone.  Sources close to Apple are indicating that production of the newer CDMA version will be sourced to Pegatron Technology Corp., the contract manufacturing arm of Taiwan based ASUTeK Computer Inc.  Apple also plans to upgrade the current GSM version being produced by contract manufacturer Hon Hai Precision Industry Co.  The Journal notes that sources that one person familiar with the situation indicates that Pegatron is scheduled to start volume production in September, but the schedule could change.  As is the usual practice, representatives from both contract manufacturers have declined to comment.

From my perspective, this new dual sourcing of contract manufacturing for the iPhone is a smart business decision for Apple in terms of risk management.  A second high volume manufacturer provides additional flexibility in capacity and volume ramp-up needs.  ASUSTeK Computer is a well known entity in notebook computer manufacturing for many different OEM’s, and is experienced in the understanding of social and supplier responsibility practices practiced by many of these global OEM’s.  This will add more flexibility in Apple’s social responsibility practices, which have come under some criticism of late in Internet circles. 

Bob Ferrari

The ongoing product recall and quality perception crisis regarding Toyota Motor Corp. took on some positive movement in the past few days.  Last week Toyota announced chief quality officer executive appointments within each major geography. 

Steve St. Angelo, executive vice president of Toyota’s U.S. manufacturing operations in Erlanger, Ky., was named the company’s chief quality officer in North America. St. Angelo will represent North America on the corporate quality review committee that will meet regularly with Toyota President Akio Toyoda.  St. Angelo’s new team will bring together top U.S. executives at Toyota and come up with plans to boost quality assurance and customer research. Other geography teams will similarly focus on specific quality needs in the respective region.

The special corporate-wide committee on quality consisting of 70 members held its first meeting on Tuesday of this week.  Several different press reports indicate that the initial output of that meeting was to authorize the forming of dedicated technology offices within each major region.  Technology offices will be increased from current one to seven within North America.  New technology offices will also be established in Europe, China and other regions. Toyota noted that the quality committee will issue its first report in June and will meet regularly to exchange insight and tackle safety issues.

According to a New York Times Featured Business article, under this new quality management structure, each region’s chief quality officer will co-participate with Toyota headquarters in Japan on consensus-driven action plans to address quality issues, including the need for recalls. Toyota also plans to have third party experts evaluate measures to improve quality and review steps adopted by the special committee.  The next special committee meeting is planned for September.

Meanwhile, U.S. Transportation Secretary Ray LaHood announced two major investigations designed to answer questions surrounding the issue of unintended vehicle acceleration. The U.S. government is calling on scientists from NASA and the National Academy of Sciences to further investigate potential causes of SUA in Toyota vehicles.

Time and events will tell if these new geographic regional quality teams will really have the corporate power to take proactive action on any future quality issues involving Toyota vehicles, but for now, these organizational and other product actions are a step in the right direction.

Bob Ferrari