Zero Inventory as Theological Doctrine

“Foxconn’s system could handle other tweaks to the configuration as well, such as different processor speeds and memory upgrades, so regardless of what the customer ordered, Foxconn could put it together without delay. The production lines Foxconn built were just for Apple, and around each assembly line, it formed a hub of sites to build everything else that was needed: the molding factory, plus production lines for the logic boards, keyboards, mice, and language kits. “The whole supply chain was built around the assembly line,” says an Apple employee who worked on setting it up. “Only when the order is triggered [would Foxconn] start to pull all the different components from the hub out and into the assembly line.” And once an iMac was assembled, it went immediately into Apple’s sales division. The system was designed so that Apple’s inventory was virtually zero—as soon as Foxconn delivered a finished iMac to Apple, it was placed en route to a customer. If there was no order, there was no inventory. Of course, Foxconn had to buy the necessary components in advance, but that was its problem, not Apple’s.”

“Tim Cook had once described inventory as “fundamentally evil,” likening electronics to dairy products that might spoil. Another time he said, “I’d prefer to be able to talk inventories in terms of hours, not days.” The results showed this was not a mere aspiration. Apple had 2.5 times better inventory turns than Nokia or Tesco, a grocer lauded for its efficiency, and it was 12 times better than Coca-Cola.”