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One of our most favorite and dare I say most reader popular commentaries on the Supply Chain Matters blog is when we comment on Apple Computer‘s quarterly financial and operational results.   It seems that nothing gets in the way for Apple. For the Q1-2010 quarter that ended in December, Apple again impressed.

Apple continues to defy the economy and will surely maintain its number one ranking in everyone’s top supply chain capabilities listing.  The company reported revenues of $15.68 billion, and profits of $3.38 billion in the quarter.  An accounting change allowing Apple to recognize iPhone revenues earlier skewed these results, but nonetheless, the results are an envy of any global consumer electronics manufacturer.  A 58% quarter-to-quarter revenue and nearly doubled profit increase are extraordinary for these economic times.

Unit shipment volumes were again impressive and continue to reflect that Apple’s supply chain fulfillment capabilities stand out as a global benchmark.  Total quarter-to-quarter unit volumes increased over 60%, to over 33 million units shipped. Shipments were fueled by 21 million units of iPods, doubling the September period, and 8.7 million iPhones, a 17.5% from the September quarter.  No doubt, consumers seeking a new iPod or iPhone for the holidays helped to fuel this activity.

In our previous commentary, we noted that Apple was running at a Days Inventory Outstanding (DIO) calculation of 4.48 days and would likely have to gear-up to manage the coming surge in holiday shipments.  Apple indeed increased its overall inventory from $455 million in the September period to $576 million in December, but did so in a highly managed manner. My latest calculation of DIO is 3.36 days which is incredible. The company also generated $5.58 billion in cash during the latest quarter and increased gross margin to 40.9%, more than three points from a year ago.  Apple’s fulfillment capabilities have also expanded globally, and the company reports that 58% of sales are derived from international markets. Recent product teardown analysis also reflects that Apple has also been successful in lowering the material and production costs of both the iPod and the iPhone. With the recent announcement of the new iPad tablet computer, the company is now ramping-up production to begin shipping the unit by March.

In the coming months and years, business schools and supply chain academics will be seeking out business case studies reflecting which companies smartly managed their way through the global recession that began in 2008.  The name of Apple will surely be included in that collection, as one of the few companies that not only grew top-line revenues, but also extraordinarily and efficiently managed a totally outsourced supply chain. At this current rate of growth, Apple will double its revenues and nearly quadruple its profits from 2007 levels by the end of its current fiscal year.

It is no wonder that Apple remains secretive in telling the world about its supply chain business process and IT capabilities. The results speak for themselves.

Bob Ferrari

Disclosure: Kinaxis is one of other sponsors of the Supply Chain Matters blog, and as such provides financial consideration for having its product logo and product information linked to this blog.