Sourcing Analytics
Explore and Select Suppliers Globally
Apple Reinvented The Smart Phone

iPhone: 1st multi-touch screen phone
Sourcing Contributed Significantly to iPhone's Financial Success

Samsung Took Over Apple by Cost Advantage*

How can Apple continue the success?
* Raza Rafique, KwonGi Mun, Yao Zhao (2014). Apple vs. Samsung – Supply Chain Coopetition. Case study of Rutgers Business School.
It's Common for One Company to Invent Technologies but Suppliers to Take Over by Cost Advantage …
How to source globally to maximize benefits and minimize risks?

Benefits of Global Sourcing

Sourcing can significantly improve net income and thus stock market performance!
Source: https://www.scdata.ai/project/19934
Risks: Business Continuity, IP / Competition, Quality, …
Sourcing Analytics
Assessing Needs & Supplier Selection Criteria
Align supplier selection criteria with the firm’s strategic objectives
Assess Needs and Supplier Selection Criteria
CPU Supplier Selection Criteria
Technology, quality & supplying capability
1.Innovative & technological capability, quality
2.Production and supply chain capability
Cost savings
3.Pricing / profitability
4.Bargaining power
Risks
5.Financially health / robustness
6.Leaks & competition
...
Supplier Intelligence
Explore and identify potential suppliers globally
Supplier Intelligence
Market Concentration
Major players? Competitive or monopolized?
Potential Suppliers (CPU / Processor)
Bargaining Power Analysis
What is my leverage? Who has the bargaining power?
Leverage


Bargaining Power

If I buy 50% of your volume which is 5% of my spend, I over-power you
If I buy 5% of your volume which is 50% of my spend, you over-power me
Bargaining Power Index = buyer (my) leverage / supplier (your) leverage
BPI << 1, supplier has power, vice versa
BPI = My total spend / Your total sales
Example: Apple BPI with IC Suppliers 2022
|
Semiconductors |
Apple’s spend $M |
Suppliers’ Revenue $M |
BPI |
|
IC total |
67060 |
||
|
ADVANCED MICRO DEVICES (AMD) |
23601 |
2.84 |
|
|
GLOBALFOUNDRIES (GFS) |
8108 |
8.27 |
|
|
INTEL (INTC) |
63054 |
1.06 |
|
|
QUALCOMM (QCOM) |
44200 |
1.52 |
|
|
TEXAS INSTRUMENTS (TXN) |
20028 |
3.35 |
|
|
BROADCOM (AVGO) |
33203 |
2.02 |
|
|
TAIWAN SEMICONDUCTOR MANUFACTURING CO (TSM) |
73868.23 |
0.91 |
Apple has power over all suppliers except TSM
Supplier Benchmarking
Compare suppliers’ pricing, profitability, health and supplying capability
Supplier Benchmarking

Pricing / Profitability Analysis
Financial Health Analysis: Short-term sweets vs. Long-term crisis
For critical parts, you need the suppliers to have a rock-solid financial health.

Production & Supply Chain Capabilities
Does the supplier have sufficient production capacity: PPE?

Supply Chain Capability: World’s 1st EUV High NA Went to INTC
Semiconductors Supply Chain Bottlenecks
Intel Foundry Services (IFS)
Intel foundry (IFS) launched to advance to the 2nm by 2024.

Supplier Score Sheets
Best supplier(s) meeting the selection criteria
Summary Score Sheet

Selected Selected
Suggested Suppliers for Apple iPhone 2023

Sourcing Analytics
