Wrdplay Content Writing

The perils of putting all your eggs in one basket

supplier diversification

While researching for a client project, I came across a series of recent news articles about strikes in Apple’s main factory in China.

Apparently, this sprawling “campus” was well-known for attracting migrant workers from local countries — especially following a series of Covid-related staff shortages because of China’s harsh lockdowns. But in the most recent full lockdown, lots of these foreign workers said “F that” and left the area for home, with some even seen leaving with their belongings on foot.

To help ease the burden on those that stayed, the Taiwanese factory owner, Foxconn Technologies, promised to pay extra to attract and keep new workers. But it turned out they’d reneged on their promise and, obviously, the workers were pissed. So, they rioted — and I can’t say I blame them, to be honest!

In the meantime, Apple took a massive hit to its sales. Given that the period between Black Friday and Christmas is a huge money spinner, the lack of workers to assemble the tech firm’s new iPhone 14 phones meant they were missing out on about $1bn in revenue for each week of unrest at the factory. Ouch.

Only now has Apple started talking about moving its manufacturing base from China. But, surely there’s a lesson to be learned here about putting all your eggs in one basket… Why didn’t they spread the risk by having their bestsellers manufactured in more than one location?

Was it because of the cost?

Were there backhanded deals in closed meetings with Foxconn?

Was it because it was easier to manage security and protect IP leaks in one location?

Were they just lazy?

Whatever the reason, this cautionary tale serves as a reminder to keep an eye on your concentration risk, so you can avoid situations where all your eggs get smashed simultaneously.

In this increasingly globalised world, there’s really no excuse not to work toward supplier diversification in your value chain.

For Apple, this was a hard lesson to learn.

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Melody

I'm the Engineer of Calm® and the one in charge of the strategic wordsmithing at Wrdplay. I've worked with agencies and companies in the public, private, and non-profit sectors, and hold a personal grudge against waffling. Want to work with me? Email me to get started.

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