Apple Case
Apple make the impossible possible. Apple added a new function for the MacBook: a small dot of green light on the top of the screen, shining through the aluminum case of the computer to indicate when the computers camera was on. The problem is that it is physically impossible to shine light through metal. To deal with this problem, Apples manufacturing team tried to figure out how to make the impossible possible. Finally they found a U.S. manufacturing company could do the job. But it needed lots of lasers, and each laser costs about $250,000. Apple convinced the seller to sign an exclusivity contract and has bought hundreds of lasers to make holes for the green lights.
After Steve Jobs return in 1997, Apple started innovating on the nitty-gritty details of supply chain management. At that time, most computer manufacturers transported the products by sea, because of the cost is much lower than the air transport. In order to make sure that the new product iMacs would be widely available at the Christmas, Apple paid $50 million to buy up all the available space of holiday air transport. This act hindered the competitors such as Compaq that later wanted to book air freight.
The thinking is throughout the entire supply chain of Apple: Invest heavily when it is necessary, and it will bring the benefit of economies of scale in the long run. Apple design guru and its engineers sometimes spend several months living in hotel rooms as they want to close to the suppliers and manufacturers, helping to adjust the industrial processes that convert the prototype into mass production equipments.
Apple has more than $ 80 billion in cash and investments, and it will use the cash reserves when it is the time to do production. Apple plans to increase the capital expenditure of supply chain nearly doubled to $ 7.1 billion in the coming year, and also plans to provide $ 2.4 billion in advance payment to the key suppliers.