Is the iPhone 5C failing? That’s one argument coming from the Wall Street Journal in response to the news that Apple has reportedly cut orders of the phone, while boosting production for the iPhone 5S.
But let’s not go jumping to conclusions. We know nothing about how many million iPhone 5Cs Apple has produced thus far, nor how many it’s actually sold. It could have produced a huge pile of them, and is now slowing production to a more sustainable and cash-efficient run rate, even as it tries to meet demand for the much-desired and, importantly, harder-to-manufacture iPhone 5S. This is just as likely a conclusion as “iPhone 5C not selling.” We’ll only find out when Apple reports the actual numbers–if it ever cares to.
This is also a good time to point out that supply chain management for apples, Apple, Coca Cola, or the folks who make the bricks for your home, is difficult, important, dynamic, and an art.
For the manufacture of complex, high-tech goods with thousands of components and sub-components from hundreds of suppliers, a very hands-on control of your supply chain is critical if you want to maximize profits. Smart firms also react to changing demand over time. The production rate of a product can be varied both up and down over time to balance how inventory of components is flowing through the system, how quickly assembler firms are putting components together, and how much material and cash the client company (in this case, Apple) is willing to tie up in stock that will sit unsold for a while.