Tag Archives: Apple

Cost management in the supply chain pays dividends beyond the accountant’s office

We have all heard the statement – you can’t cost cut your way to profitability. Too often in business, CxOs and others forget the spirit of this saying. Cost cutting, or more precisely, cost management, is vital to running your business. In many businesses and their associated supply chains, however, this is achieved in disjointed and siloed departments. This disjointed approach to cost cutting can achieve the basic goal of saving money and therefore “improving” the bottom line. But it falls short of long-term benefits for the businesses. Savvy CxOs need to look at cost through a different lens.

  • Determine the way costs impact the holistic picture of your business. Yes, I know that companies have to produce balance sheets, cash flow and income statements. But these exercises are driven on a quarterly and annual basis. What about the daily activity? When it comes to your supply chain, decisions about cost are made at a much more rapid pace. And their impacts need to be understood at the speed of business, not an accountant’s timetable. CxOs need to strive to get visibility into their costs at this level – not the level that is asked for by their accountants.
  • Understand how becoming more cost-efficient creates opportunities for new business models. Oftentimes when we speak with customers about some of their cost-cutting efforts, they emphasize the savings achieved. A worthy goal indeed, however, most CxOs do not promote or focus on the next level – what are the new business opportunities these efforts have created? Where can assets and resources be shifted because of efficiencies gained? If you can be more efficient in one area, where can you reinvest in others?
  • Change the mentality of cost cutting to waste management. I realize that this might appear to be one and the same. The distinction exists around the notion that waste management is a mentality that distinguishes between bad costs and good costs. It’s similar to when you go to your annual physical, and your doctor looks at both the good and bad cholesterol. Both numbers must be evaluated together, not in isolation. Adding cost is part of doing business but it must be done efficiently – cut waste not just blindly cutting spending.

What does this change in mentality look like? Take for example the work SCA Technologies is doing with one of its customers, a fast-food giant. The Pittsburgh-based supply chain software firm has worked with this client to 048-512implement technology that provides a level of understanding of costs previously not achievable. The outputs have been to understand the nuances in the fluctuations of commodity cost – poultry, eggs, beef, and cheese, to name a few. As a result, the fast-food giant gains a full view of the impact these costs have on their final product – throughout the end-to-end supply chain. Margin impacts, in turn, drive decisions around new product introduction, pricing and promotions. In a business where margins are constantly under pressure, this insight has deep impacts on the day-to-day business.

For example, the fast-food giant was looking to introduce a limited-time offer into its menu, but after assessing cost upticks for specific commodities required for that product, it became apparent that shifting to a more favorable time of year for those commodities would improve profitability. This level of insight into cost structures, and more important, how they impact the entire supply chain, enabled a smarter—and more financially sound—decision to be made.

We have seen the same in the consumer electronics business. For example, Apple understands the strategic advantage inherent in looking at the cost of items such as flash drives and taking a forward position. When Apple looks forward to new product introductions, it also looks to buy future production and inventory of key items – this is a massive cost creation. However, the assurance of being able to capture market share by having the right inventory on hand is vital. The issue of absorbing and adding costs is not the concern – identifying a possible business opportunity is the priority. They can do this because they have a holistic view of how near-term cost can impact long-term market share.

The bottom line for CxOs is that cost isn’t bad! Of course incurring costs for employee sushi lunches and paying for all your employees’ cell phone bills might not lead to the greatest business outcomes. Unless you are Google when you use these “perks” to ensure your minions are kept in the mothership as many hours as possible. But focus on those areas where waste management can open up avenues otherwise neglected. Look to cost as the basis for short-term and long-term innovation and laying the groundwork for new product introduction and new business processes.

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Filed under Retail, Supply Chain

Apple Watch – it’s about time, not really.

This past week has been a buzz about watches. Remember those devices? Would sit on your wrist and tell you what time of the day it was, much better than carrying a sundial or an hourglass around. Unfortunately for watches, the emergence of the ubiquitous mobile phone has diminished the primary value of the watch – telling time. With most of us staring at our smart phones between 60 – 90 minutes a day, we can see what time it is with a simple glance to the top of our mobile phone screens. By some studies as many as 50% of mobile phone users have no longer a need to wear a watch. So why is Apple, and by some accounts from Mobile World Congress, so many other technology players coming out with watches? Click here for a good piece on MWC from a fellow Constellation Research member.

Here is why it makes sense – it isn’t about the “watch.” These technology players are all trying to get into this space because they want to make sure they get a piece of the real estate that is being battled over – the wrist. The reality is watch sales (non smart watches) has not gone away and is actually on an upswing.

No one is buying watches? Not so fast...

No one is buying watches? Not so fast…

The fact that mechanical types are growing rapidly would reinforce the notion that watches are not about telling time but about fashion, they are closer to Cartier than to Blackberry. The truth is the best watches for time keeping are the digital quartz watches you can purchase at CVS for $10. An automatic watch from Jaeger-LeCoultre probably doesn’t keep time as precisely as a digital Casio – but if you spend the thousands of dollars on a Jaeger-LeCoultre or an A. Lange & Söhne you aren’t doing it because you look at your wrist for the time. We should not think about Apple and the likes trying to compete in the same space as the Omegas, Baume & Merciers and Patek Philippes are in. Wearables are the next wave of connectivity for consumers and corporations. While we are not about to give up our smart phones, the real estate on our wrists has yet to be fully exploited. Of course we have items such as Fitbits that are already finding their way to our arms. Entertainment giants such as Disney are already leveraging the technology with their Magicband. But what is in play for Apple, Samsung, Motorola etc is getting their platform on us. What is done with that platform depends on where application providers’ imaginations can take us. Some use cases that make this more than a watch:

  • Wellness – think of a Fitbit or a Garmin Vivofit with beefed up computation power. Devices will be able to be even smarter with our health. It will not be just about how many steps we took but how has it impacted our glucose levels or our heart rate.
  • Mobile payment – the wallet is really under increased pressure. Payment can be done by the swipe of our wrist. Since we are wearing the device could we integrate some biometrics to validate that we are the actual user…sure beats remembering all those passwords.
  • Manufacturing efficiencies – Many companies are working with the likes of Google glass to bring a wearable the manufacturing floor. Having a device on the wrist that can be voice controlled opens up the door for an array of manufacturing applications. Adding some valuable functional possibilities in the supply chain.
  • Better pick n pack for warehouse and retailers – Warehouse operations are always seeking to find new labor efficiencies with how they find inventory, pick it and prepare it for shipment. This is also true in retail, especially when more retailers are starting to use their physical stores as distribution centers.

Of course we are still in the early stages of these types of wearables and their use cases. Adoption will be tied to the price, not sure if the $10,000 Apple Watch will be the driver for adoption (if I had that kind of disposable

I would take one of these with the $10k

I would take one of these with the $10k

income for a wrist device, it would be a real automatic watch!). The $349 price point for the Apple Sport Watch should be low enough to get some traction  with consumers.

For the business uses the price point will have to come down further. Much like tablets, when the iPad came out the $500 price tag was too high for much industrial adoption, it was only when Android tablets at lower price points did the tablet become more ubiquitous.

Apple once again has created a disruptive device. Question remains will it, like the iPod, iPhone and iPad, have the same level of adoption for both consumers and business usage? But let us not compare what Apple and others are putting out as a “watch.” It is the correct first letter but it is closer to an Apple Wearable. Just like the iPhone is really more than a phone. It became a canvass for application providers to express their creative services.

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Filed under Consumer Product Goods, Current Events, IoT, Wearables

The 800lb supply chain gorilla continues to disrupt with payment services

Amazon announced today it was going to jump right into the deep end when it comes to physical, in-store payment systems. They have unveiled a mobile payment service for brick and mortar stores. Taking direct aim at other mobile POS systems – Square, Paypal as well as Google and Apple. From the reports, Amazon will look to undercut other mobile payment systems – taking 2.5% of transactions versus 2.7% for the likes of Square – to grow their market presence. They are giving merchants an introductory rate under 2% to build that beachhead (feels like a credit card invitation – 0% APR and then only a slight bump to 33%).

In the online world, Amazon already knows how to handle and secure credit cards. They are also well versed when it comes to mobile payments as their iOS and

Coming to a brick and mortar store near you...

Coming to a brick and mortar store near you…

Android apps’ success has demonstrated. The natural progression was to push into the brick and mortar space – where 90% of retail transactions live. In the near term I am not sure that Amazon will do more than offer a secondary maybe even tertiary option. Brick and mortar retailers could view the Amazon system as letting the fox into the hen house. It would be understandable if these brick and mortar players do not flock to embracing Amazon and their payment systems. But I am sure that the favorable financial set up will force a large number of players to give it some serious consideration. Whether or not Amazon is widely successful with this venture is secondary to what the eCommerce 800lb gorilla is doing with regards to their overall supply chain disruption.

A quick look at what Amazon has been doing to become the 800 lb gorilla in supply chain:

  • Acquired Kiva Systems to add sophisticated robotics and automation to their massive distribution centers.
  • Gobbled up the likes of fabric.com, CDNow, Zappos, Pets.com to constantly expand their ability to offer a wide array of inventory.
  • Pushed out a tablet and now a mobile phone under the Fire umbrella. Both of which are really hand held sales terminals for Amazon to leverage.
  • Started pushing last mile grocery delivery in certain markets with their AmazonFresh offering.
  • Even leaking that they are thinking of delivering via drones.

This is in addition to their deep experience in the online retail world. Taken together and you have the 800 lb gorilla that is disrupting the supply chain jungle. Add to this the news of them pushing into the payment space and you see Amazon gaining access to POS data from brick and mortar, coupled with all the data they have on consumer online buying. Amazon is quickly aggregating vital data sources on how consumers buy, where demand is being generated and how it impacts the retail supply chain.

So now Amazon is dabbling in last mile logistics, continually working on more efficient warehouse management, putting portable POS systems in consumers’ hands and now putting POS systems in the retailers’ hands.

That 800lb gorilla might have added another 50lbs of lean muscle.

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Filed under Current Events, Mobile payment, Retail, Supply Chain

iPhone 6 – a “cheaper” version of the iPhone? Is that really wise?

True to form Apple will release the iPhone 5s later this year, probably scoop up some of those iPhone 4 users who have not yet upgraded. Maybe Apple does not want to lose them to Android…nah no one would make that switch!! Anyways. What is interesting is the rumors that Apple plans to follow that release up with an iPhone 6…but it will not be a generation leap for the phone but more of an inexpensive model to go after emerging markets aka China and India. Wise move or sign that the Jobless company is still struggling to find their innovative fast ball? Going after the likes of China and India makes perfect sense – that is where much of the growth is happening.

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Apple needs to get a product into those markets that can compete with the less expensive Android versions as well as the likes of Nokia. Makes good business sense. However, this feels like a shift for our friends at Apple. Couple this with the iPad mini, which from a business stand point made sense – go after the tablet market that was being dominated by the Kindle. The iPad mini coupled with the iPhone 6 and it feels as if Apple is not longer looking to lead with innovation but instead focus on diversifying their existing product portfolio to compete in markets they otherwise ignored. Has the Apple innovation engine run out of steam? Maybe. Or is Apple looking to solidify some of its business, focus on some aspects that could be seen as weak spots in their business. Let us imagine the following:

  • Apple leverages the iPad mini to go directly after Amazon with their Kindle. One might argue that introducing the mini has already knocked out one competitor, albeit a weak one, the Nook from Barnes and Noble. While I do not think it will take out the Kindle, it is clearly offering a viable substitute product for those looking for a 7 inch tablet. Apple now has a product that can compete at all levels of the tablet market. Check.
  • The new iPhone 6, if it is what the rumors claim, gives Apple a device that can go head to head with the less expensive smart phones. This will give Apple a device that can compete with Nokia, who still has a large ownership of the emerging market. Really this is a play to try and fight off Microsoft and their OS that has, no surprise, been adopted by Nokia! Of course it will also allow for Apple to expand its portfolio to compete with Android.

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With Apple putting together some offerings that can get them into a more diverse market, they will then be able to refocus on bring us the “next” innovative device. The iWatch? Refocus on the Television? Enhance the iTunes experience?

Let us see what the next few months hold for Apple. For now I think that what we are seeing a business being run like a more “traditional’ business. It is too much to ask for any company to innovate at the pace they did at the end of the Steve Jobs era. Does this mean that Apple is done innovating? Let us hope not. But making sure your business is taken care of first will allow for Apple to one day be able to get back to giving us innovated consumer devices.

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Filed under Current Events, Smart Phone, Tablet, Technology, Wireless

Xbox One, weak name but strong move to controlling the entertainment hub

This seems to be the year that the big video game console manufacturers decide to release new consoles. Microsoft went first yesterday, Sony is expected to follow this Fall. Unlike other technologies – smart phones, tablets, laptops to name a few – video game consoles have appeared very slow with regards to new generation releases. It has been 8 years since the XBox 360 and 7 years since the PS3…wow…to put that in perspective, 2007 is when the first generation iPhone was released. So 2013 will give us the opportunity to have two major generation upgrades in the gaming console world.

The Xbox One

The Xbox One

The first console out of the gate – the Xbox One. From all reports it brings some new bells and whistles – voice activation, enhanced Kinect, centralized control of music/video/game etc. Of course it has some “negatives” such as no backward compatibility with video games…ugh. All expected evolutions for the console. What this is really about is the continued battle for control of the home entertainment hub. Microsoft said as much:

Indeed, Microsoft is totally explicit about Kinect (and Kinect-related IP) being the central part of its strategy in the console battle as well as in the wider war for the living room — far beyond other aspects of the hardware.

Microsoft, as does a host of other technology companies, sees the entertainment center as the next frontier a place where all their software, content and devices will converge. As much as we love our smartphones and tablets, the television still provides the powerhouse of displays. We still gather around the television and leverage it as the communal entertainment hub some even use it as their personal dance trainer. However no one has really taken the “lead” when it comes to this space. Cable companies are trying to leverage their control of the content to be their play. Microsoft and Sony both look to their gaming consoles as the conduit to the entertainment hub. Google has made forays into the actual hardware – Google TVs. Of course Google is also embedded with search and YouTube in many new smart TVs. While Apple TV has been around for a while but has yet to really get into the game – they do have a firm lock on the streaming content via iTunes. What about Amazon? They also have a massive library of content as well as a device – the Kindle – that can force their way into the conversation. Question for Amazon, do they make an investment in hardware to put themselves physically in the living room?

All these moves will be good for the consumer – allow for a host of choices. Of course the problem might arise if all these vendors go with a walled garden strategy. Where the choice we make in hardware is one we might have to live with for a long time or buy multiple platforms!

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Filed under Current Events, Game Console

Welcome back Google! Apple puts Google Maps back on the map.

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An Apple Map user walks into a bar, or is it a church, no wait it is an office, hold on it is a sporting venue….

One of the many jokes that were out there after the Apple maps debacle. As soon as the new mapping software came out, major issues started cropping up. And these were not “bugs” but fundamental and serious issues! Of course Apple had to scramble, refused to admit to the gravity of the error and to make things worse blocked Google Maps which had been the default map app on the iPhone up to that point. Of course everyone knew that Apple was trying to shut out one if their biggest competitors from the iPhone platform. Especially considering they are in a dog fight with that same company in the overall mobile space!

But today, all is well again in the world of mapping – Google maps is once again available on the iPhone. And yes, I downloaded it immediately. I actually tried to download it last night but wasn’t available until morning east coast time! By late morning, New York time, the word on the street was how much better and what a relief it was that the Google maps were back on the iPhone. There are even some rumors that it has vaulted to top of the down load list on for the AppStore.

So the question becomes, why did Apple embark on this adventure? Why did they challenge the incumbent. One that was much more versed in the map game (anyone remember when you didn’t see Google Earth when a news station shows you a location on the map of the world?) I realize the answer is simple – Apple could not allow one of their largest competitors own a major piece of real estate on the iPhone, just like YouTube which is no longer standard on the iPhone. They did what Microsoft did to Netscape. Unfortunately, they were not as successful…correction…it backfired. For now.

Apple wants to control what is on  your screen, what default apps we all use or at least think we have to use because it is the default. Similar to Microsoft that wanted you to use their web browser rather than the Netscape one that had been the default. So far so good. However, the difference is the following – during the browser wars we were limited in the applications we had. Whether writing, spreadsheets or presentations, there were not hundreds of options. Now we have, on average between 40 – 100, applications on our iPhones. So does owning the mapping application mean as much as Microsoft wanting to own the browser – no. Could Apple have conceded the mapping to Google, maybe provided their own Apple Map app, as an option? Sure. Why not test it, and make it robust so that the Statue of Liberty isn’t located miles from NYC. Then Apple could have slowly made the switch to their own mapping as the default.

I understand that in the long run, Apple needs to hold on to some core apps, needs to be able to data mine some of the information that goes through these apps. It just feels as if they went too fast. The public backlash and PR nightmare it created was not worth it for, what feels like, pushing through something that was not ready for prime time.

 

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Filed under Current Events, Location Based Applications, Smart Phone

Apple throws the guantlet down with new iPad…get ready to rumble!

As many of us are still digesting the new iPhone as well as being bombarded by a deluge of advertisements both for the iPhone and against the iPhone (feels very political!), Apple rolled out a new iPad. The mini iPad.

So what to make of this new iPad…one that I doubt would have ever been rolled out had Jobs still been alive. A couple of observations:

To me the whole strategy for this product was to go after the smaller and less expensive tablet market. Unfortunately the price of the device might have added a level of difficulty. The price, $329, is much higher than I thought it would be. Much more expense than the devices that it is suppose to compete with – the Kindle, Nook, Galaxy and Nexus. These are all priced more than $100 cheaper than the iPad mini. I am not sure if this is going to be sustainable for Apple. At this price point are they really a viable option for that market?

From what I can tell the form factor is just a smaller version of the iPad – no surprise there. So nothing in that makes it more appealing than the other tablets of that size.

The reality is, tablets are great devices because they are really just blank canvasses that allow access to content. They have to be portable, light, durable, have a good UI and have access to content you would want to carry around with you. For most I would argue the deciding factor is a combination of price, size and what content is accessible. If Apple is looking to attract clients of the other smaller tablets to come over to the iPad mini, I think the high price point will be a barrier too high. Is Apple looking to appeal to their install base with another shiny Apple device? Maybe. But that risks cannibalizing sales of the regular iPad.

It feels like Apple is riding two horses at the same time. That is never a good recipe for success. If Apple really wanted to go after the install base of Amazon and Google, then price appropriately. If Apple just wants Apple aficionados to added one more Apple device to their roster, I am not sure that will generate enough revenue.

As Rick Leighman said: “They just think they can slap an Apple logo on anything and people will buy it.”

That might no longer be true…

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Filed under Current Events, Tablet