Apple has done it again, they have created an entry level phone that outcompetes every Android phone in this price range, both in terms of performance and longevity. Key for this was the Purchasing Chessboard method D7, Design for Manufacture. Design for Manufacture is a systematic method for designing products so that they are easy and cheap to produce.
PROCUREMENT IN THE PARK EPISODE 36
One possible reason can be the classic procurement organizations at many companies, which mainly focus on traditional cost savings instead of innovative and strategic value creation.
I believe Chessboard Quadrants especially High Supply Power / Low Demand Power quadrant techniques have got immense application during Covid-led supply constrained scenario. Req Mr Christian to assess this and help us with his views please.
If all the best features (more or less) are available for SE , why some one should buy a premium product like I phone 11?
I am sure they must have thought this. but I am curious to understand the reason.
First of all I think, Apple is really good at strategising and well positioned to leverage the 4Ps (Product, Price, Promotion and Place) and strictly speaking from procurement, Apple's multi-sourcing strategy and the opportunity to exploit the suppliers technology shifts (S-Curves of suppliers) in comparison to its tech competitors.
1. Product: As we all have been seeing Apple starting from 2008 has successively been releasing new models with continous innovation upgrades in terms of Hardware and Software. This enables Apple to apply and use module/configuration product innovation strategy. By simply differentiating the models with: 3-4-5-6-7-8-X ….. – This enables one to relatively pick good technologies from available technology choices and name it (SE etc) at competitive costs by exploiting the suppliers technology shifts.
For example the latest display technology in supplier markets are the OLEDs. LCD technology has hit its maturing point on S-Curve, so demand for LCD starts to decline, resulting in under-utilised production capacities at suppliers. So Apple can leverage this situation by negotiating the supplier's under utilised production capacities at lower costs by driving demand for new model (SE) with latest processor but LCD display technology.
2.Price: The benefit of this strategy (1.reduced product development cost–> product configuration,2. procurement/production cost —> exploiting the suppliers technology shifts) can further be passed to consumers looking for entry level models with superior technology at lower prices.
3. Promotion: Cleverly promoting the technology of latest model i.e i-phone 11 and simultaneously releasing it with SE targeting both ends of consumer market (high end and low end )is like hitting two birds with single promotion thus saving marketing costs for SE.
4. Place: This strategy also enables saving on logistics and distribution.
Finally multi-sourcing strategy allows apple to leverage the suppliers innovations at component level. For ex. I assume android tech giants like Samsung/LG may build smart phones with their own cameras/displays where as Apple has the scope to build it with the best technologies from best suppliers. So Apple is well positioned to leverage the 4 Ps, the opportunity to exploit the suppliers technology shifts (S-Curves of suppliers)and multi-sourcing strategy and in comparison to its tech competitors.
Looking forward for your thoughts .