Tim Cook Is The Signal That It’s Time

When Steve Jobs decided to leave due to his illness, this legend was replaced by %22Who would be the CEO?%22 In fact, it was very clear who would be the CEO of Apple. It came as no surprise that Tim Cook, the COO (Chief Operating Officer) who oversees Apple’s supply chain and logistics (briefly operations at this article), took over as CEO (August, 2011).

Steve Jobs “When I came to Apple (July, 1997) there were huge operational problems; held more inventory than any other technology company ($500 million and an average of 2 months); there were big problems with suppliers and 3PL companies,” he summarizes the situation in his book “Steve Jobs, Walter Isaacson”. In fact, when asked at a meeting in late 1997, “If you were Apple’s CEO, you would do it,” Michael Dell (Dell founder) said, “I would shut down Apple and pay the shareholders their stake with the money left in the vault because now the last chapter of the book is written.” he had replied.

In an interview with BusinessWeek magazine in 2004, Steve Jobs said, “When the COO resigned 3 months after he came, I tried to do the job of the COO, who resigned for 9 months because I couldn’t find anyone inside or outside the company who knew or knew as much as I knew. I finally found Tim Cook who agrees with me. “Once Tim started working, we rebuilt the operation of the PC business and within five years we started to outperform Dell, especially in terms of inventory metrics.” He was expressing the correctness of his decision to work with Tim Cook.

IBM’s personal computer (PC) distribution in North and Latin America from 1982 to 1994; Tim Cook, who managed operations processes at Intelligent Electronics from 1994 to 1997 and Compaq for 6 months in 1997 and joined Apple as Senior Vice President of Worldwide Operations (April 1998), is the world’s best selling computer Leaving his company, even though I knew I had a good future, and moving to Apple, which was in bad shape, was the most important decision in my life, despite my relatives saying ‘don’t go’, admitting that he embarked on an adventure.

Apple, which lost the PC market in 1995 because it could not meet the excessive demand for the Power Macs to be released at Christmas due to faulty inventory management and could not deliver the orders (about 1 Billion dollars orders), is the name given to Steve Jobs and Tim Cook’s slash inventory, shut warehouses, run Working with the mantra of “manufacturing close to the bone”, he started to gain operational losses (profit, market share).

Steve Jobs actually wanted to implement the JIT system that Dell implemented, and he chose Tim Cook because he believed he could do it with his operational knowledge and experience, and historical developments have shown that this decision was very correct.

Cook, who described himself as “Atilla the Hun of Inventory” while at Compaq and said that “inventory depreciating by 1-2% per week even when things are smooth, is the biggest evil for the company and that inventory should be managed like milk is consumed without losing its freshness changed Apple’s operational structure and practices in line with this idea.

As the popularity of Apple’s products increases; new Apple products; The importance of this strong operational structure and practices was felt more and more as they were offered to customers and competing products came to market.

Tim Cook, who sees the complexity of current operational processes; simplified the operation structure; It enabled a profit from a net loss of 1 Billion Dollars by saving costs in operations and improved its service level (order fulfillment) at a very high level. Tim Cook until 2001:

  • It reduced the number of key suppliers from 100 to 24 and improved relations with the remaining suppliers, allowing them to move closer to Apple’s facilities.
  • It continued to work with 9 warehouses, reducing the number of 19 warehouses worldwide.
  • He reduced the inventory holding period from 2 months to 1 month, then to 6 days in September 1998 and 2 days in September 1999.
  • It shortened the production cycle time from 4 months to 2 months.
  • It made it harder for competitors to ship air freight by prepaying $100 million in air freight for iMac shipments during the holiday season.
  • Apple restructured the operation of its stores to keep retail and inventory management separate, with the idea that “sales and retail, which cannot control inventory in the field or in-store, cannot manage inventory either.”
  • In 2005, during iPodNano production, it prevented its competitors from doing business with applications such as prepayment to suppliers.

Tim Cook placed the operations-oriented operating model at Apple.

  • Unlike other computer manufacturers, studies that will affect the pre-production operation by working with all suppliers were planned together, down to the last detail.
  • “We used to design; would provide purchasing; The operation did the logistics. With Tim Cook, the situation has changed.” As he said, every work done within Apple (R&D, purchasing, production, sales, marketing, etc.) began to be compatible with the operation.
  • When discussing a problem in China, Tim Cook said, “Someone in this room should be in China right now.” When he saw that no one was moving although he said, Why are you still here? Sabih went to China on the first plane after he got angry.
  • “We care about every employee in our global operation and will never turn a blind eye to problems here.” He emphasized that the operation will always be a priority.
  • He presented his team with the book Competing Against Time, which states that Operation is the most important competitive power of companies, allowing them to see the importance of the business. He emphasized the importance of inventory management and speed by saying no one wants to buy stale milk in any environment.

Cook’s practices impacted far more computer industries than Dell even though it implemented the JIT model 15 years ago, raising the bar for performance standards (demand forecasting, time to market, inventory metrics, order fulfillment..) in that industry, and Steve Jobs’ practices became so famous; Until products such as iPhone, iPod, iMac and MacBooks were ready for sale in stores, all processes were silently (secretly) managed smoothly and ultimately contributed to Apple being the most valuable brand in the world today (Forbes, 2018 and the last 10 years) and made it the company with the best operational management in the world (In the Gartner Top 25 Supply Chain Companies report, it is included in the “MASTERS” group, which consists of the top 5 companies continuously for at least 7 years in the last 10 years, together with P&G, Amazon, McDonals. Masters group, 2015 was created in the year and is excluded from the list of 25 companies).

While PALM suffered great losses by not being able to deliver its new PDA product to the market in 2001, and there were examples such as Apple’s Power Macs in 1995, Cook emphasized his success by saying, “We sold and delivered every iPad2 we produced”.

According to the classical understanding, for a company to achieve a large profit margin, either the product must be sold at a high price or the production costs must be kept very low. However, Apple managed to do both at the same time. With product design and marketing, consumers pay more, while Cook’s operational understanding has kept costs under control, making Apple both profitable and cash-generating, contributing to more R&D and increased sales.

Thanks to the Steve Jobs influence and Cook’s practices, as well as Apple’s distinctive and desirable products, Apple has been a highly profitable and consistently cash-based company compared to its competitors.

The rise of Tim Cook, who made the highest contribution to Apple after Steve Jobs, as a result of reducing inventory and operating costs by providing his company with operational power, is very natural and Tim Cook is the best example of a company’s rise from operation to the top position.

Today, sustainable growth has become the most important strategic goal for many companies. Especially in e-commerce companies and companies that produce conventional products with very similar functions, operation management has begun to affect the reputation and value of the company as important as the quality of the product.

Mary Barra (GM), Alan George Lafley (Procter & Gamble), Lee Scott (WalMart) Fabian Garcia (Revlon), John Hendrickson (Perrigo), Bali Padda (Lego) Jesper Brodin (IKEA), Mark Sutton (International Paper), Beth Ford (Land O’Lakes), Gerry Smith (Lenovo) and Carl Executives who are experts in supply chain and / or logistics processes in business life and responsible for these processes, such as Liebert (AutoNation), Brian Krzanich (Intel), Pier Luigi Sigismondi (Unilever), Sonia Syngal (Gap), Shekar Natarajan (Target), are only top-level managers of companies. not to the manager (C-Level) position, but also to the CEO position like Tim Cook.

Senior executives or CEO of companies, At the end of the 19th century and Engineers and production-based specialists in the early 20th century; Specialists with a marketing and sales background in the 1950s with the aim of generating more sales; Financial experts in order to manage the financial crises in the 1980s and 1990s, and the change in business models due to the change in customer expectations since the 2000s, and perhaps with the influence of Tim Cook, who now know the whole operation from the supplier to the customer, manage the operation, touch the operation, supply chain and/or logistics origin experts who interact and communicate with every stakeholder, experience the difficulties of the operation and solve the problems of the operation.

Because of the critical importance of having a manager who can link the operation management to the company’s strategy and business plan, I think this trend will continue to accelerate and increase. Because:

  • Fluctuations in demand can be responded to quickly and effectively thanks to operation management in order to implement faster, more flexible and agile business models against the problem of increasing product diversity and products becoming obsolete tomorrow; order quantities and delivery frequency can be adjusted; Timely and accurate visibility into orders and inventory can be provided and risks can be managed properly.
  • For customer satisfaction, logistical benefits (to be able to own and use them whenever they want, where they want, with the features they want and as much as they want) become as important as the quality of the product, and even if these are not provided, they will have more devastating effects than the quality of the product.
  • Waste that causes losses and losses is mostly in the operation processes and the slightest improvement or development in these processes is too big for the company as a whole
  • Operational processes have too much impact on sustainable customer satisfaction and sustainable competitiveness, whether financial or marketing or sales wizardry
  • Very effective on the unit cost of the product, the operation and the dynamics of inventory management affected by the operation
  • Existing executives and CEOs, unfortunately, think that the operation is simply something like “goods arrived on time and at low cost and delivered to the customer on time and at low cost”.
  • At least 50% of the costs and the number of human resources of the companies are in the operation processes
  • Logistics flow, logistics competencies, logistics competencies and logistics discipline are especially important because the operation touches all the functions of the company (R&D, production, marketing, sales, finance, accounting, human resources) and is in constant communication with, directly affects and even is affected by them. win
  • Supply chain and logistics influence and even shape strategy while doing day-to-day work.
  • Bringing desk-based planning, strategies, tactics and decisions to life in supply chain and logistics
  • Supply chain and logistics movements and decisions directly affect financial metrics (profit, cash flow, trade receivables, trade debt, return on investment & ROI & ROA, IRR, working capital, stock market value, EVA, insurance, etc.) and inventory
  • The risks that affect the supply chain and logistics, have a very negative impact on companies
  • Making global trade (production and sales; import and export) possible through supply chain and logistics

In short, today and in the future, either supply chain and logistics origin experts, senior managers and CEOs should be, then the age of supply chain and logistics will really begin, or CEOs for the future of the company, sustainable profitability, sustainable competitiveness and sustainable customer satisfaction. should know the chain and logistics very well and ask “Is my supply chain and logistics ready for the future?” he should think.

Sources for this article:

  • http://fortune.com/2008/11/24/apple-the-genius-behind-steve/
  • http://www.everythingsupplychain.com/apple-ceo-tim-cook-supply-chain-guru/
  • https://money.cnn.com/2008/11/09/technology/cook_apple.fortune/index.htm
  • https://nomadiclearning.com/blog/2018/06/tim-cook-the-man-who-really-saved-apple
  • https://www.apple.com/newsroom/2005/10/14Tim-Cook-Named-COO-of-Apple/
  • https://www.biography.com/people/tim-cook-20967297
  • https://www.businessinsider.com/apple-ceo-tim-cook-speech-at-oxford-video-2017-10
  • https://www.cips.org/en-ME/supply-management/analysis/2016/february/tim-cook-the-cool-customer-behind-apples-supply-chain-success/
  • https://www.macobserver.com/news/tim-cook-fix-supply-chain/
  • https://www.quora.com/How-precisely-did-Tim-Cook-fix-Apple%E2%80%99s-broken-supply-chain
  • https://www.quora.com/If-Tim-Cook-was-known-as-the-Atilla-the-Hun-of-inventory-then-why-do-case-studies-cite-Dell-for-supply-chain-efficiency-instead-of-Apple-or-Compaq
  • https://www.wired.com/2011/08/why-tim-cook/
  • https://www.supplychainopz.com/2013/10/7-traits-great-supply-chain-leader.html