Apple sells all its inventory every 4.9 days

David Price
2 June, 2012
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Apple has again come top of Gartner’s annual Supply Chain Top 25 league table, beating Amazon, Dell, Intel and non-tech giants such as McDonalds and Coca-Cola to the title.

The Supply Chain Top 25 rates companies for their return on assets, their inventory turn metric (the average number of times per year that they turn over their inventory), revenue growth and votes by analysts and peers. Apple’s composite score across the various categories was more than 40 percent more than the second-placed company, Amazon.

According to analysis the Gartner report, Apple turns over its whole inventory every five days, only McDonalds turns around products faster than Apple (queue flipping burger joke).

Apple has maintained its number 1 position in the report due to a number of factors. Gartner said its “highest voting scores point to its combination of operational and innovation excellence” and noted that Apple has “a zealous focus on starting with the consumer experience and working back through the design of its supply network and mastery in orchestrating its end-to-end value network.”

Gartner also notes that Apple is “delivering total solutions to its customers through tightly integrated design of hardware components, firmware, a proprietary operating system and an ecosystem of applications that run on top of that platform.”

In second place in Gartner’s report was Amazon, followed by McDonalds and then IBM. Dell and Samsung also rank, turning over their inventory roughly once every 10 and 21 days respectively, according to Business Insider’s analysis of the Gartner report.

Business Insider arrived at its inventory turnover figures using the Gartner report’s “Inventory Turn” metric, which estimates the number of times each company’s inventory is sold in a given time period. Since Apple’s Inventory Turn is given as 74, Business Insider divided this by 365 to estimate the number of days of sales sitting in inventory (4.9).

As AppleInsider points out, a critical element in Apple’s supply-chain efficiency is the work of Tim Cook, who is now CEO but worked less publicly as vice-president of operations and chief operating officer for more than a decade beforehand.

After joining the company in 1998, Cook significantly reduced Apple’s inventory and factory commitments and helped to increase its efficiency and margins. Apple’s corporate profile states that Cook “played a key role in the continued development of strategic reseller and supplier relationships, ensuring flexibility in response to an increasingly demanding marketplace”.


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