Flurry of Updates and Exciting News

14 Dec

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Oh my goodness.  There have been so many things going on lately that I don’t even know where to start.

First, Apple announced last week that it’s going to “invest $100 million in producing some of its Mac computers in the United States, beyond the assembly work it already does in the United States.”  You can read the full New York Times article, but I wanted to add how much sense I think this makes for Apple.

Clearly, the $100 million that Apple is planning on investing in facilities, training, automation, etc isn’t trivial.  And the labor cost per manufactured unit will certainly be higher than continuing production in China.  But they’ll be saving a lot of money in some other ways.  Shipping costs on a computer are a lot greater than on smaller products like iPhones (Imagine how many more iPhones than iMacs you can fit in a shipping container and then think of the difference in dollars of goods transported per shipping container.  The end result is that when producing in China, Apple spends a lot more in transportation per dollar of revenue from iMacs than per dollar of revenue from iPhones).  Additionally, bringing production closer to the source of most of your demand decreases “lead times” (how fast it takes products to get from the factory to the store).  Decreasing these lead times decreases the amount of inventory that each Apple store has to carry which will then decrease other costs (interest on the investment in the inventories, storage costs, inventory or margin lost from obsolescence, etc).  And this effect will be greatest in the Apple products where the demand is the most unpredictable (usually items that sell in smaller quantities), which once again supports this change for iMacs compared to iPhones.

Altogether, these and other cost effects should mitigate (and maybe exceed) the increased labor costs.  And by doing this in a highly visible way, Apple might finally show the rest of the tech industry how onshoring might work on a large scale in dimensions other than just going for a “Made in America” stamp.  (Two quick notes: 1.  If anyone is interested I can make another post on the mechanics of how the inventory savings work.  2.  Shout out to Aki and the rest of my ops and supply chain friends who will probably read this and have a quick inside-joke chuckle.)

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Second, my wife and I went to The Merchandise Mart in Chicago last weekend to attend the 13th annual One of a Kind Show and Sale Chicago.  As the website puts it:

The show is “A refreshing alternative to traditional retail, the show is the ideal place to find one-of-a-kind gifts for everyone on your holiday list. More than 600 talented artists from across North America will bring their imaginative, handmade creations to this year’s show offering a wide range of media and categories.”

The best way to describe it is that the show is like Etsy, live and in person, where you can talk and interact directly with the artists and craftspeople.  All in all it was a great experience and I would highly recommend it.

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Third and last for today, we were invited to join the American Made Everything directory!  I don’t know when we’ll get posted, but you should definitely go check them out at www.americanmadeeverything.com.  They’re an amazing database for tons of US-made things.

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