Disruption," supplychain247.com, May 28, 2015; "Has Supply ChainStrain Become the New Norm?," supplychain247.com, May 1, 2015;R. Bowman, "Can Apple's Supply Chain Handle the Apple Watch?,"Supply Chain Brain, April 20, 2015; A. Cunningham, "WSJ: TapticEngine Component Responsible for Limited Apple Watch Supplies,"ArsTechnica, April 29, 2015; D. Wakabayashi and L. Luk, "Apple Watch:Faulty Taptic Engine Slows Rollout," Wall Street Journal, April 29,2015; www.apple.com; http://www.aactechnologies.com;http://www.nidec.com, accessed October 2, 2015.Questions1. Discuss the importance of forecasting demand for supplychain planning.2. Explain how a defective component can disrupt the flow ofmaterials through a supply chain and the impact that disrup-tion will have on various entities upstream and downstreamalong the supply chain. demand or its quality standards. The discovery of the faulty partscaused delays and other impacts on Apple's other suppliers as wellPOM Apple Deals with Supply Chain Strain andFaulty Partsas its customers. Apple reportedly threw out all of the defectiveWatches to avoid having to recall them.When Apple (www.apple.com) introduced the Apple Watch in April2015, industry analysts had a hard time predicting how consum-ers would react. Their estimates ranged from 5 million to 40 millionWatches sold in 2015. This huge range in a market forecast createshavoc in planning for a supply chain. In fact, industry experts call itsupply chain strain.So, how did Apple's supply chain gear up for such a high de-gree of sales uncertainty? First, the firm allowed a certain numberof Apple Watch preorders. Based on those preorders, Apple couldestimate the potential market demand and alter production ac-Apple then handed over production of the taptic engine toanother partner, Nidec Corporation (www.nidec.com) of Japan.Nidec manufactures parts for various industries including auto-motive, manufacturing, and consumer electronics. It took sometime for Nidec to begin making the taptic engines. While Nidecwas ramping up production, Apple came under considerablefire over the delayed Watch and extremely long-range shippingtimes.Once supply caught up with demand, Apple's supply chainfunctioned as planned. Apple then lifted its Web-only sales policycordingly. Second, even after releasing the Watch, Apple acceptedonly online orders for a few months. By controlling the orderingand shipping itself, Apple had accurate data regarding demand. Asa result, the company did not have to manage demand by stockinginventory on store shelves.The plan went off without ahas multiple partners in its supply chain, and it holds all of themto extremely high standards. For Apple's supply chain to meet thedemand for Watches, not to mention consumer expectations ofquality, all of its partners had to operate at peak efficiency. Withthe Watch, one of the suppliers was not up to standards. Produc-tion of the Watch was functioning well until the company discov-ered that one of the key components, produced by a supplier, wasfaulty. That component was the taptic engine, which imparts forcesor vibrations to the wearer to convey information.The taptic engine supplier was China-based AAC Technologies(AAC; www.aactechnologies.com), maker of several common com-ponents in mobile devices. AAC was unable to meet either Apple'sand allowed the Watch to be sold in Apple Stores and other retailoutlets. This shift is an indication that the firm is better able tomanage its demand forecast as well as the Apple Watch supplychain.itch, until it stubled. AppleOverall, Apple did an excellent job of creating a new productwith some completely new components, developing a sales andmarketing plan that would go hand-in-hand with its supply chain,recovering from a faulty component from a supply chain partner,and still getting their device to market with great consumer fanfare.Although not everyone will find a use for an Apple Watch, the onething you do not see is complaints about its quality. That, too, isproof of Apple's ability to maintain ultra-high-quality standards inthe face of unknown demand and supply chain strain.Sources: Compiled from G. Meyers, "Apple-A Supply Chain Model ofExcellence," Supply & Demand Chain Executive, June 4, 2015; "AppleWatch Shows Value of Strong Supply Chains, and Opportunity in

Name: Disruption," supplychain247.com, May 28, 2015; "Has Supply ChainStrai
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Description: Disruption," supplychain247.com, May 28, 2015; "Has Supply ChainStrain Become the New Norm?," supplychain247.com, May 1, 2015;R. Bowman, "Can Apple's Supply Chain Handle the Apple Watch?,"Supply Chain Brain, April 20, 2015; A. Cunningham, "WSJ: Tapt