Today’s WSJ front page shares the important role of one of Apple’s top senior executives who runs much of the procurement and supply chain activity for Apple – Tony Blevins. Mr. Blevins studied industrial engineering at North Carolina State, and grew up near Jefferson, NC in the Blue Ridge Mountains. Early in his career he worked at IBM, and was invited to join Apple by Tim Cook in 2000.
Other NC State alum have also joined Apple’s supply chain team, including Gaurav Chhabra, and another notable alum, Jeff Williams, Apple’s Chief Operating Officer.
We were honored to host Mr. Blevins and members of his team at the Supply Chain Resource Cooperative in November last year, and discuss opportunities for Apple to increase its engagement with our supply chain center. At that meeting, we discussed the importance of individuals’ “learning agility”, as many who come to Apple have never before experienced anything like the rush of responsibility and quick decision-making that comes to them. We discussed how many of the project activities we engage in at the SCRC, where students are literally “dropped off the deep end”, when they jump into a supply chain project in an industry they know nothing about, facing a problem they have never seen before, makes them especially well-prepared to enter into roles at Apple. Apple has a culture that demands quick learning, and ability to adapt to unfamiliar situations.
The WSJ article goes on to mention how Mr. Blevins has adapted some shrewd negotiation approaches to challenging situations where cost savings were critical to preserve Apple’s margins in an increasingly competitive smart-phone environment. In some cases this involved having multiple manufacturers in the same hotel meetings to promote bidding wars, and threatening to “insource” manufacture of components by hiring away a supplier’s engineers. He was also tasked with negotiating over $1B of glass that went into Apple’s new headquarters that was built in 2012, and generated significant savings during the construction of this building. As head of procurement, he earned the moniker of the Blevinator, someone who could get the job done when it came to saving money and cutting costs.
In discussing these approaches with some of the other executives in my circle, there are mixed reviews about how effective this hardball approach will be in the long run with suppliers. One executive commented that
“I can bully with the best of them but it’s not the right strategy for long term success and quite the opposite of what we have done to be so wildly successful in working with our partners. Quicker, cheaper, better quality, better productivity every time and mostly all the same supply base over time is a better formula for success.”
Another executive I spoke with noted that
“I was once asked by my CEO and General Counsel to go back and ask a major supplier for $10M. It was extortion, and I was not going to do that. He wanted to weaponize procurement in a short-term way. I probably could have gotten $5M, but my reputation would have been shot. Those suppliers would have become ex-suppliers, or it would have been the last chance to get a savings from them.”
In general, continually going after low costs through these approaches is deemed to have long-term effects in terms of supplier relationships. We have conducted a number of workshops around improving relationships between buyers and sellers to find new ways of creating value, and believe these may have better long-run impacts. But there is no denying that Mr. Blevins has had a string of successes for Apple, and seems poised to continue to do so.
Written by: Robert Handfield Ph.D.