These past few days, Supply Chain Matters has been updating our readers regarding ongoing supply chain management developments involving specific companies. That includes Airbus, Boeing, Chipotle Mexican Grill, Pratt and Whitney and others. We have been somewhat remiss in not updating on developments involving one of global business’s most visible supply chain, that being Apple.

There are two somewhat significant developments to share.

Potential U.S. Manufacturing Presence

To begin, multiple published reports now indicate that prime contract manufacturer Foxconn, has confirmed that the CMS is in preliminary discussions to make investments to in-essence expand Apple’s manufacturing operations presence in the United States. One report indicates that this activity is underway despite the objections and wisdom of Foxconn chairman Terry Gau. A Bloomberg published report observes that the disclosure came hours after a joint announcement by U.S. President-elect Donald Trump and SoftBank Group Corp. to invest $50 billion in the U.S. and create 50,000 jobs.

As we have noted in prior commentary, during the heated U.S. Presidential campaign, Donald Trump specifically cited Apple for its tendencies to source thousands of manufacturing jobs in China while reaping the benefits of higher profits. As of now, Foxconn has provided little additional details to business media, no-doubt not wanting to steal Apple’s thunder in such an announcement. Other reports indicate that Apple has been approaching certain other suppliers to consider moving supply chain component manufacturing from China to the U.S.

In the past two weeks, President-elect Trump has publicly confronted Carrier, a Division of United Technologies and this week, Boeing over the projected costs of a new replacement for the Air Force One presidential aircraft.

For multiple years, this blog has challenged Apple to consider expanding some of volume manufacturing volume presence in the U.S. over and above the manufacture of certain Mac computer models. Being a rather savvy and public relations astute company, it may well be that Apple has quickly read a sea-change in the political discourse of the United States and now needs to be prepared to stay on the good side of the incoming administration.

We shall all see what headlines develop in the coming weeks.

 

iPhone Battery Failure Issues

Turning to the product front, Apple has publicly confirmed that a problem involving some batteries in the manufacturer’s iPhone 6S model is apparently become more widespread than initially revealed. The issue has become known from China’s product safety agency, and Apple reportedly quietly acknowledged the situation on a Chinese web site. China now represents one of the largest installed base markets for the iPhone 6S. The Chinese regulatory agency claims that the battery issue involves older iPhone models as well, including the iPhone6 and iPhone5S but Apple thus far is only acknowledging the small batch of iPhone 6S units.

Apple has stressed that the battery issue poses no safety risk for customers.

The problem manifests itself with the phone prematurely and unexpectedly shutting down to protect its electronic circuitry. Indications are that the cause may be a component within the battery that was contaminated by ambient air. The contamination was initially disclosed to involve phones sold in September and October 2015, but other reports indicate that the situation may be more widespread than just this production interval. Apple has instructed Chinese users to bring their phones to authorized repair centers or to an Apple store for a battery swap. The manufacturer further indicates that it will add a new diagnostic in its forthcoming IoS software update in hopes to mitigate any future problem by a software modification.

This iPhone battery issue is garnering wider visibility after Samsung’s recent crisis involving exploding batteries in the new Galaxy Note 7. Samsung obviously had a clumsy response to its battery issues, which were far more severe, including not informing or involving product safety regulatory agencies early in the process of discovery.

Apple is obviously a more brand marketing savvy customer and has been rather careful in the widespread sharing of the occurrence of product quality issues among its smartphone products. However, one similarity shared with Samsung would seem to be the suspected manufacturing defects involving batteries. Apple also shares a similar battery supplier, that being a component division of Samsung.

 

Two new developments, each with different connotations related to the brand, and directly involving the supply chain. Even the perceived best in class supply chain is not immune to externally focused developments.

 

Bob Ferrari

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