Supply chain delays could cost initial iPhone 8 sales up to $17M
- Apple's release of the iPhone 8 may be delayed by 3-4 weeks due to problems in the upstream supply chain, 9T05 Mac reported Wednesday.
- Analysts from Bank of America Merrill Lynch recently traveled to China to speak with suppliers, and found the company was "in a panic" securing the components needed for the device's Touch ID and 3-D facial recognition features.
- As a result of these delays, the analysts cut the company's profit expectations by $11 million and $6 million for the company's September and December quarters, respectively. Some analysts claim, however, Apple may choose to roll out the device without the features relying on an update to enable them later.
Apple's case is an example of how supply chain delays can ripple down to the bottom line and disrupt marketing plans for highly anticipated products.
The 9T05 Mac report is not the first claiming that Apple is struggling to meet its iPhone 8 timeline, however. In April, Bloomberg reported Apple hit a roadblock in producing the devices due to a shortage of organic light-emitting diode (OLED) screens, which are supplied by Samsung Display. The shortage was seemingly due to Samsung's production constraints, as it was receiving high orders from its own parent company.
The exact reason for the current delays are unknown, but the difficulties highlight two challenges faced by supply chain managers worldwide.
First, marketing-driven companies — like Nike and Adidas — often place significant pressure upon their factories to turn around their latest product in a tight timeline. This, in addition to lean manufacturing practices that have become the norm as cost-cutting strategies, leave companies vulnerable to simple supply disruptions.
Second, suppliers — and particularly contract manufacturers — are often faced with various competing demands from their buyers, which they must constantly prioritize. Companies must therefore pay a premium in terms of future commitments, exclusivity deals, or otherwise to ensure their product rises to the top of the production line at the time of greatest need.
In other words, continuing coverage of Apple's iPhone 8 struggles provide a useful case study for the various complications that can arise in managing global supply chains. Apple's CEO rose to the top as a supply chain manager, so it will be useful to see how the company ends up handling the various supply crises.