Still More Apple Pwnage

[Pekka]

I'd also assume that the first batches are definitely done by air, simply because you could predict decent sales at the very beginning.

Kid, and unless you own a store with 9 units, you can't deliver within 24hours of the order. It is logistically not possible, unless they've been reserved for order first, which means that they were de facto ordered already earlier.

A job of a production planner is not to predict the future sales and the managers and sales teams actually might predict something, but that still doesn't realize the plan into PP, they do actual orders. That is, if you order today, you won't get it to you tomorrow, unless it's in the bulk inventory of Apple somewhere, which might be the case. But that means it's not a big order.

Apple is most likely doing bulk inventory, not a huge one, but enough to be able to keep the flow going on and it merely would serve as a buffer.

However, the reality of the situation is, they need to be manufactured first. The fact is, Apple manufactured what, 10 million units? So they HAVE to have some space for them. Or maybe it was 10 million the first batch, then more, but the point is, the days before the release, even if you take the pre-orders into account, you're bound to shoot over if you are expecting decent sales, and yes, AT&T didn't start ordering when the customers first showed up to their door.

It's rather a question of how much they ordered, we can't really know this. To assume that they ordered the perfect amount is ridiculous. Just as saying that Apple doesn't have inventory, which I don't say you're claiming, because of course they do.

[Pekka]

State of the art manufacturers, which Apple isn't at the moment, with extremely efficient processes and logistic delivers anywhere from under 50k or so within a week. But not even a batch of 1000 could be delivered within 24h. It can leave their premises, but it won't be on the shelves. Not a chance. Within a week I mean it can be guaranteed to pretty much anywhere in the world with quality.

[Kidlicious]

Originally posted by Asher

Quote it if I said it.

You don't want to even give a ball park estimate on how many you are talking about. Why the hell should we care, it could be 50,000 if you don't say.

...because they expected stronger demand resilience.

Whatever. It's not because there is an inventory problem or problem with credibility.

How many times do we need to explain this to you? There's no collusion or anything illegal going on. It's AT&T likely placing a huge order that they aren't selling through rapidly since people are buying at Apple Stores, not AT&T stores.

I give up. This is futile.

No collusion is required. The SEC will investigate if it looks like there is a possibility of channel stuffing. Since no one can tell their motives, and it's ridiculous to assume that they would be so stupid as to keep ordering inventory when the product isn't selling channel stuffing is the most likely scenerio. Assuming this huge stock of inventory exists it's more likely that it exists to inflate sales figures than it is do to incompentence. However, the stock certainly doesn't exist at all.

[Pekka]

Naturally these orders exists and are released when needed so they don't actually manufacture and keep large inventory, however, even if they would use the more expensive and fast ways to deliver... it'll take some time.

Besides, the difficult part of this is not to project the sales for the first week or two (so you can release more orders in time), the difficult part is to know how much YOU are going to sell, that is, can you have predicted the 7:1 sales as far as Apple stores goes?

I don't know how you would get a good prediction on that one. The argument that "they're so ****ing good" isn't very good one.

Of course the question is HOW MUCH off base they were. They can still be within the accepted limits, meaning that they have numbers where they can go and it's still fine. The managers where competent if they stayed within these limits. They were incompetent if they went over or under. How much that limit is, that's the question. We don't know that. They might have met their target.

[Asher]

Originally posted by Kidicious
You are comparing how long it took to deliver something to your door, to how long it takes to get a delivery to a store?

And 3 weeks is pretty long time even for that.

3 weeks since it left Shanghai and arrived in the USA. It was less than 24 hours after that to get to my door.

[Asher]

Originally posted by Kidicious
You don't think Apple has distribution centers in the US? Why would they deliver directly from China? That makes no sense. Your whole theory is ridiculous almost past the point of comprehension (it would be if this weren't poly).

Distribution centers are likely not for wholesale orders from their partners, which probably (and should) come straight from the factory.

[Asher]

Originally posted by Pekka
I'd also assume that the first batches are definitely done by air, simply because you could predict decent sales at the very beginning.

Kid, and unless you own a store with 9 units, you can't deliver within 24hours of the order. It is logistically not possible, unless they've been reserved for order first, which means that they were de facto ordered already earlier.

A job of a production planner is not to predict the future sales and the managers and sales teams actually might predict something, but that still doesn't realize the plan into PP, they do actual orders. That is, if you order today, you won't get it to you tomorrow, unless it's in the bulk inventory of Apple somewhere, which might be the case. But that means it's not a big order.

Apple is most likely doing bulk inventory, not a huge one, but enough to be able to keep the flow going on and it merely would serve as a buffer.

However, the reality of the situation is, they need to be manufactured first. The fact is, Apple manufactured what, 10 million units? So they HAVE to have some space for them. Or maybe it was 10 million the first batch, then more, but the point is, the days before the release, even if you take the pre-orders into account, you're bound to shoot over if you are expecting decent sales, and yes, AT&T didn't start ordering when the customers first showed up to their door.

It's rather a question of how much they ordered, we can't really know this. To assume that they ordered the perfect amount is ridiculous. Just as saying that Apple doesn't have inventory, which I don't say you're claiming, because of course they do.

Kid doesn't understand the basics. There's hundreds of components in the iPhone, each of which are ordered from suppliers beforehand. Then, Apple signs an agreement with a contract manufacturer to make X many units (I think the number so far is 10,000). So, even if demand does drop, they still contractually bought X many components for X many iPhones from suppliers, and they're being made.

Thus the speedy pricecut...supply was outpacing demand. Simple economics.

The first batches could very well have gone by air, but if you think the replenishment waves aren't coming from much-cheaper container ships on a regular schedule, you don't know jack about the industry.

[Kidlicious]

Originally posted by Pekka
I'd also assume that the first batches are definitely done by air, simply because you could predict decent sales at the very beginning.

Kid, and unless you own a store with 9 units, you can't deliver within 24hours of the order. It is logistically not possible, unless they've been reserved for order first, which means that they were de facto ordered already earlier.

If I remember right when I was a retail manager we ordered every week. That was a long time ago, and it was in Yosemite National Park. Orders everyday would have been impossible. I'm sure a store like Wal-Mart gets deliveries everyday. You have to plan ahead a couple days probably. But surely these phone stores order less than every week, maybe not everyday.

Apple is most likely doing bulk inventory, not a huge one, but enough to be able to keep the flow going on and it merely would serve as a buffer.

To stores? If they are delivering to ATT warehouses than maybe the orders will be a little big, but I see some duplicated costs there. Apple has to deliver to their own stores anyway. I don't know for sure though.

However, the reality of the situation is, they need to be manufactured first. The fact is, Apple manufactured what, 10 million units? So they HAVE to have some space for them. Or maybe it was 10 million the first batch, then more, but the point is, the days before the release, even if you take the pre-orders into account, you're bound to shoot over if you are expecting decent sales, and yes, AT&T didn't start ordering when the customers first showed up to their door.

I acknowledeg that they overshot, but not hundreds of thousands and not continually.

It's rather a question of how much they ordered, we can't really know this. To assume that they ordered the perfect amount is ridiculous. Just as saying that Apple doesn't have inventory, which I don't say you're claiming, because of course they do.

The question is about ATTs iphone inventory, not Apples.

[Agathon]

Originally posted by lord of the mark

Really? With the high value, even at wholesale, of these phones, and the fact that its a product launch (with natural uncertainty as to sales) i'd be surprised it wasn't by air. Although air rates are higher lately with fuel prices up.

I read somewhere that they were shipped by air. Can't remember where it was though. IIRC the notebooks are air freighted, but the desktops are a mix of air freight and cargo shipping.

This is hilarious though. Apparently AT&T is supposed to have a mountain of unsold iPhones, even though there is no evidence for such a claim. That's ****ing stupid even by Asher's low standards.

[Pekka]

Ashe, that's exactly what I mean by state of the art manufactring. Apple does not have it yet. It costs **** loads of money, and even Apple can't afford to just buy it all and start playing around, they need to gradually build, something I believe they can do in the future.

But as of now, what you point out is what is part of the logistical problem. It's not only your ability to deliver, the BIG problem for production planning is to have the components ready. These inventory is large and takes much more space than the actual products.

Everything that is included in the sales package comes from tons of different components.

What some manufacturers do, the state of the art ones, is that they have them in the same building. They have logistical company in the same building, that has the responsiblity of delivering the components on time. It's a huge freaking hassle and one of the biggest obstacles in meeting the deadlines.

We can clock the time it takes to manufacture a unit, we KNOW how much time it takes for all the stacking, assembling and so forth, however, the subcontractor is always a problem because well, force majoure.

And if you're going to order bunch of it just to be sure, you're doing the whole oversized inventory thing. And since the sales figures still are very modest comparing to these giants, they don't have the same kind of deals with the subcontractors. They might be commited to be in this thing together, however, they still are going to have to learn the way it's done fastest and most reliable. And it hasn't got much to do with incompetence, it has more to do with experience that they are now getting.

So for the in time manufacturing they need a solid flow of components from different subcontractors on top of their own processes.

We can throw all kinds of business jargon here but the fact is, it's NOT that simple and there are lots of places where **** ups occur even with the best of them. I can't imagine APple has God on their side and they kind of just wing it perfectly.

[Kidlicious]

Originally posted by Asher Distribution centers are likely not for wholesale orders from their partners, which probably (and should) come straight from the factory.

Why should they come from the factory? If I manage a store I want my orders coming from local warehouses.

[lord of the mark]

Originally posted by Asher

The first batches could very well have gone by air, but if you think the replenishment waves aren't coming from much-cheaper container ships on a regular schedule, you don't know jack about the industry.

I freely admit to knowing very little about the cellphone industry. I DO know that a principle driver of the air vs surface decision is the value/weight ratio. I would think the value weight ratio for an Iphone is a good bit higher than for at least, budget phones, and for many other electronic products. Thats alot of capital tied up in pipeline inventory, even if they know precisely what their sales are going to be.

[Kidlicious]

Originally posted by Asher


Kid doesn't understand the basics. There's hundreds of components in the iPhone, each of which are ordered from suppliers beforehand. Then, Apple signs an agreement with a contract manufacturer to make X many units (I think the number so far is 10,000). So, even if demand does drop, they still contractually bought X many components for X many iPhones from suppliers, and they're being made.

Thus the speedy pricecut...supply was outpacing demand. Simple economics.

The first batches could very well have gone by air, but if you think the replenishment waves aren't coming from much-cheaper container ships on a regular schedule, you don't know jack about the industry.

What the hell are you talking about? We are discussing what ATT does to get the phones in their stores, not Apple.

[Pekka]

Kid, well that's a different question, how often the retailers order. I'd suppose pretty often. Once a week seems realistic to me.

I'm not so much questioning if they get the right figures now, I'm wondering if they got it right for the release and few weeks after that. As far as the figures now, I don't think they have a large inventory (AT&T). Meaning today.

"
To stores? If they are delivering to ATT warehouses than maybe the orders will be a little big, but I see some duplicated costs there. Apple has to deliver to their own stores anyway. I don't know for sure though."

They're still going to have to have a buffer bulk. How large that bulk is, that's a different question. When they start dealing with others than AT&T, this becomes very much the challenge and reality. But by then of coruse they should be able to project more accurately and I would say if they would screw this up, THEN I would say some managers might be incompetent.

But for now, and for earlier, very very difficult to tell.

They're going to need that buffer for highly prioritized orders because not all goes perfectly in the factory. If they screw up in the manufacturing part, which happens all the time, usually daily (with the experienced ones too!), it means that they can't meet the deadline. But they can use the buffer. And then when they have time, they can fill that buffer again, so they definitely do have a buffer that is bigger than few thousand units.

"I acknowledeg that they overshot, but not hundreds of thousands and not continually."

Well I don't think they'lre overshooting as we speak . Hundreds of thousands too much, over the treshold? I don't know. That would be bad. I don't know how much though. Who knows. Could be, could not be. But if they did (AT&T), they're definitely paying the price for it, or did pay the price for it.

I don't know about this debate anymore. I don't know why AT&T inventory is important. As far as Apple goes, hey, it's AT&Ts problem if they still have too big of an inventory. Units are sold. I don't see what the point is, that the figures would be inflated or what, but Apple sold them already and ... if they are in the hands of an actual end user, to me it's not so important.

[Kidlicious]

Originally posted by Asher

3 weeks since it left Shanghai and arrived in the USA. It was less than 24 hours after that to get to my door.

3 weeks is no where near the norm. That is incredibly SLOW!