This morning, business media is lamenting the caving of Apple’s stock. The stock plunged nearly 5.5 percent yesterday alone and has lost nearly $200 billion in market capitalization off its previous highs. Academics who concentrate on supply chain can often correlate bad news with sudden impacts in stock value. Yesterday, media was quick to correlate an earnings miss from Apple supplier Cirrus Logic along with leaks concerning product volume cutbacks among various other of Apple’s suppliers, and relate that information to beliefs that consumer demand for current Apple products is waning.
This author has set-up a number of Internet-driven alerts concerning news related to Apple and we are constantly amazed at how many equity analysts who have opinions regarding this company’s direction, both pro and con. More disturbing, at least from our lens, is that a lot of their intelligence seems to stem from information leaks scattered across Apple’s supply chain partners.
Put aside, for a moment, that financial headlines increasingly include senior Wall Street and financial executives dealing in “insider information”. The latest was a senior audit partner at KMPG being indicted, not to mention a number of private equity senior executives that have been either indicted or convicted. That alone is disturbing on its own merit, how perceived wealthy individuals demonstrate the greed to gain inside information, illegally. Increasingly, at least concerning the tracking of the globe’s most followed stock, insider information involves leaks in the supply chain.
Granted, Apple’s current challenges go beyond information leaks throughout its supply chain. Supply Chain Matters has opined on the high prices of Apple’s products which drive significantly large margins. In its most recent quarter, a reported gross margin of 38.6 percent seemed to disappoint, given Apple’s margins of 44.7 percent a year earlier. The recent market introduction of the iPad Mini with a $399 starting price was yet another example of leveraging margin. Investors are now quick to respond to leaks involving cutbacks in the Mini’s output plans. Rumors continue to speculate on the introduction of a smaller, cheaper iPhone targeting penetration of emerging markets, as well as contract manufacturer Foxconn now adding more workers to support an impending new product ramp-up schedule. Add to that information related to the pending introduction of new products such as an iWatch or Apple TV.
The purpose of this rant is yet another observation that too many individuals across Apple’s and other high profile supply chains are trading insider information. The leaking of pending production forecast information motivates OEM’s to restrict information sharing or not share at all until the last minute. It defeats the goals of information security and deeper supplier collaboration. It further defeats the benefits of advanced technology in demand sensing and supply planning across the extended supply chain.
If you are reading this commentary and feeling guilty about sharing too much information with probing outsiders, you should. Selling information for individual gain is a fool’s endeavor, since invariably the risks of finding the sources of information leaks is high. Candidly, social media has not helped in this area, spreading speculative information too quickly without corroboration, or for other eyeball gains.
The basis of effective and responsive supply chain planning and collaboration is the sharing of information related to product output plans. Compromising that information for individual gain can cost you your job and your career.