The Apple Store on Fifth Avenue in New York thrusts its 32-foot glass box toward the sky opposite the Plaza Hotel and New York’s famed horse-drawn buggies. The 21st century is thus dramatically placed beside the 19th century. The store operates 24/7, with customers flowing up and down its circular staircase in an endless double helix. Most go down empty-handed (except for cash, credit cards, and expectations), and then come out with a bag full of Apple merchandise.
The customers tend to range in age from teens to mid-30s. They are deeply involved, staring at every screen and device in the store as if their life depended upon it.
Without any interest in promoting Apple Computer, I can confidentially state that Apple practices intelligent supply chain sourcing, corporate planning, product design and engineering, product lifecycle management, manufacturing, sales and marketing, customer support, and distribution. The key to all these processes working well together is the proper flow of all the parts and their assembly, packaging, and shipping. Each Apple product is made from hundreds of parts; these parts are assembled in several places, and the final assembly usually occurs in one place. Most of the parts come from Asian sources (principally South Korea, China, and Taiwan), although the U.S. and other areas of the world contribute. Since Apple sells millions of units, worldwide tracking and scheduling is a major activity, and may in fact be the root of the company’s success and enduring presence.
On a more micro level, a single iPad costs Apple about $260 in parts, according to iSuppli. With estimated worldwide sales for the iPad pegged at 28 million for 2011, Apple will have to purchase, test, connect, and assemble more than $7 billion in parts for the iPad in just that year. If we add into the mix the iPod, the iMac, the Mac Pro, and all of Apple’s other products, $7 billion is just a down payment on the company’s corporate commitment.