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The Complex Orange and the Shiny Apple- Which Should Shine in the Limelight

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I pen this commentary on a Friday after a very long week involving extended travel and consulting services activity.  Knowing that I’m overdue for my weekly Supply Chain Expert Community commentary, I thought I would come up with something different, a fruit analogy related to supply chain capabilities.

Lately, many commentaries related to global supply chain business process capabilities focus on Apple, which often, and deservedly, lands on every supply chain analyst’s top ranking and many business media related articles.  Many in the supply chain expert community can point the finger at this author for often penning commentaries highlighting Apple, but I’m not alone in doing this.  Lately, much of Apple’s supply chain capabilities have come to light, both positive, and not so positive.

An analogy that can come to mind is that of the shiny apple, which distinctively sits in the fruit basket and can easily be identified in its familiar image and taste. This apple is very delicious, somewhat tart, but consistently delivers on taste. Some content of the apple is used to make or blended to make other delicious products such as pies, cakes or juices.  Because the apple is so shiny, and because the apple is loved by millions and millions of consumers, sometimes the apple gets attention that it does not necessarily desire.  Sometimes the apple can develop blemishes.

The apple also competes with other fruit for consumer tastes.

Let us turn our attention to another fruit, the orange.  It has a rather complex structure, there are actually embedded layers within the orange, each providing a piece of juicy, and yes, sometimes tart , but fairly enjoyable taste. The orange does not garner all the attention of the shiny apple, but the reality is that it is slightly bigger, and can serve multiple purposes.  You can eat the orange itself, either at breakfast, or as a daytime snack. The orange peel is utilized in baking recipes and sometimes the pulp can is used in other products or snacks.  The orange itself can be converted into delicious juice, a huge market seller. You see, the orange also serves as a multi-purpose fruit, but perhaps more behind the scenes.   Because its peel is pebble-like, its blemishes are more easily ignored.

Can you guess what our orange analogy equates to?

Our analogy points to Samsung.  A global giant, not only in smartphones and tablets, but also in major consumer electronics value-chain components such as semiconductor chips, high-resolution  LCD displays and memory components.  Last week, business media began recognizing Samsung as the global market leader in smartphone shipments.  According to market forecasting firm Strategy Analytics, Samsung shipped 44.5 million smartphones in the first quarter compared with Apple’s output of 35.1 million units.  Business media has been quick to declare Samsung the market leader, surpassing both Apple and Nokia.  Once more, according to the Financial Times, the company recorded record quarterly profits, with its mobile division accounting for 73 percent of that total operating profit.  Because Samsung is a major supplier to Apple and other brands, this vertically integrated producer also gains additional benefits in overall market unit volume sales.

While Apple seems to top many rankings in supply chain capabilities, Samsung does not. Its unit volumes, supply chain breadth and volume output shine above others with few glitches or supply disruptions. Global consumers have obviously embraced Samsung mobile devices as an alternative to Apple’s iPhone, by witness of these latest results. As our orange analogy notes, Samsung also can play a very influential role in the innovation of future products, since it is positioned as a major value-chain player.

The shiny apple does indeed get lots of visibility in the fruit bowl, but we had better pay attention to the orange as well. That includes ranking of global supply chain capabilities.

Bob Ferrari

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