Apple relooking at outsourcing strategy

January 13, 2012: Apple is planning to revamp its outsourcing strategy it has adopted for long for tablet and smart phone manufacturing. This information appeared in DigiTimes, a website which has its base in Taiwan, citing supply chain sources.

It is reported that Pegatron Technology will cater to the outsourcing orders placed for production of future generation of iPads. Foxconn, the long time partner of Apple, will concentrate on iPhone. 

The website says that Apple has already placed orders with Pegatron for a small volume for iPad3. It is expected that this will released in March 2012. The website also reports that Apple iPad 4 is expected to be launched in October this year. It observes that the role of Pegatron is expected to rise during the production months for Apple’s fourth generation tablet computer.

According to John Gruber of Daring Fireball, the rumor about the iPad 4 is a completely cooked up nonsense and is considered as a little farfetched to pin point anything at this stage.

Towards the end of last year, Pegatron came under serious criticism for an explosion that occurred at a subsidiary in shanghai. In the accident 61 employees suffered injuries. Foxconn too had problems with safety in the workplace, which might drive orders for iPad to Pegatron.

Foxconn Electronics which was engaged primarily in catering to iPad orders till now, will receive more orders for iPhone from now on. It is said that its role in the manufacturing of iPad expected to reduce gradually.

The main objective in the change in strategy is to reduce risk and to enhance the quality of the products. The website says that officials from Apple has already visited Pegatron’s plants located in China in many occasions in the recent times to make sure that the shipment process is smooth.

Apple is famous for reducing risk by switching several vendors and contract manufactures against each other and allocating orders among them. Such a dynamic supply chain management is a contribution of Apple’s new management. They have put in place major deals with vendors throughout the supply chain and are likely to adopt outsourcing more in their supply chain. This strategy would prove to be crucial in the years to come and would attain significance during the company’s handling of flood situation in Taiwan, when most of the computer suppliers could not meet the demand requirement while Apple’s manufacturing machine continued to move ahead as if nothing had happened.

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