Another Bite Out of the Apple?

Recently, CNN ran an article indicating that the Next generation of iPods could be delayed, and the iPod nano and the video iPod in particular. The new iPod nano, originally expected this quarter, is likely going to be pushed back to December and the new video iPod may not appear until 2007.

The expected delay on the iPod nano is the result of Apple switching suppliers for an internal chip whereas the expected delay in the video iPod is due to the need to increase screen size and improve battery life. On the bright side, the capacity of the iPod nano is expected to double.

Could this result in yet another blow to Apple, which must be taking a bit of a beating since a recent newspaper article alleged that staff in some of its Chinese iPod factors work long hours for low pay and in “slave” conditions, as summarized in this article . After all, Apple sold one million iPod nano’s in the first 17 days of its release, leading an AMR analyst to determine it had a predatory supply chain, so any delay beyond the start of the holiday shopping season could be a major hit to the bottom line.

You’d think Apple would be more cautious, considering their recent switch to Intel last year caused them some supply chain problems. However, what surprises me is that despite the fact they seem to have their distribution down, using the global logistics powerhouse BAX Global, which was recently acquired by Deutsche Bahn AG, they appear to continually have difficulties getting products out on time.

I’d be curious to know what sort of development methodologies they use, and more importantly, when they involve procurement in the process. According to a recent Aberdeen report, When procurement is included in new product design (NPD) in the design stages, product development cost is typically decreased by 16 to 18%, overall product cost is typically decreased 15%, and revenue is typically increased by 19%. Furthermore, whereas the majority of companies are not able to consistently hit product development targets with respect to percentage of products meeting revenue targets, cost targets, launch date targets, quality targets, or product development cost targets, the majority of best-in-class companies that have incorporated procurement into the process at the design stages hit these targets over 80% of the time.

Moreover, as I indicate in my Purchasing Innovation series over at e-Sourcing Forum, I strongly believe that procurement needs to be involved in R&D and NPD from day one, as procurement should be the major source of innovation within an enterprise.