Pirates of the Specification

Buying ships shouldn't be such a big deal if you've a legacy of being one of the great naval nations of the world; you'd have had experience of buying ships to cope with the ice of the Antarctic and the dealing with the Pirates of the Caribbean. Therefore, for many it will have come as a surprise that £1bn of warships are breaking down in the Gulf since the water is too warm, leaving crews vulnerable!!!

The contractors claim the MOD didn't tell them about that particular potential usage, even though the UK has been engaged in flighting there since 1990, if I am correct, and in truth we could go back centuries. Have the MOD locked themselves into a strategy which requires a portfolio of ships which can only be used in restricted climates?  If that was the case, the old news stories of warships being redeployed from various parts of the globe to potential conflict areas will be no more, for the simple reason they wouldn't work.

Setting that aside, now it looks as if a refit of these particular Destroyers will be necessary.  

I assume the courts will have to decide who picks up the cost but already it looks as though the contractor is trying to escape liability by resorting to the technical specification set out by the MOD - in other words Rolls Royce complied with the letter of the specification so it's not their fault: 

Are the conditions experienced in the Gulf in line with that specification? No, they’re not. So the equipment is having to operate in far more arduous conditions than were initially required (Tomas Leahy of Rolls Royce).

I assume we will hear eventually if the MOD used a solely technical specification, but this must serve as a warning to all those who do that using a solely technical specification shifts the burden of functionality to the buyer. To me there will always be a basic need for technical specifications but they need to be accompanied with functional and performance specifications; and when a service is involved, outcome specifications.  It certainly looks, at face value, as if the MOD set aside the functional and performance aspects, and, if that is the case, why?

But there's another question here, what about all the talk of supplier partnerships and innovation transfer - was that a one-way street from the MOD to the market without reciprocation? The relationship between the MOD and its strategic partners now looks as if it has suffered a major set-back and will take some time to recover.

To me there is one lesson for all procurement professionals here: never resort solely to a tec spec.

When contract management meets prisons management.

In the face of an obvious procurement performance management crisis in UK prisons, the Prisons Minister has stated "We have robust processes in place to closely monitor and manage the performance of all contractors".  It therefore seems strange that a £200m maintenance contract has been able to take on the appearance of not being managed and it was only when prison officers refused to accept inmates, some repairs made within hours!

Robust contract management process need to be more than just a written procedure, they need to be embedded as a way of working.

To make that happen the contract needs to have explicit standards and a specification of what represents acceptable performance - it is agreement between the provider and client of what they are exchanging. Is that explicit in the prison's maintenance contract?  That statement should have been based on a risk assessment and understanding of the 'front line' - were front line staff involved in defining the standards?

There also needs to be a cascading of the contract documentation down to those who are in a position to know, on the ground, what acceptable performance means. There is little point in a contractor being criticised for poor delivery if they are actually matching what they were asked to price, that could include, for example, schedules of which repairs need to be completed within particular timescales - again risk based.  While Carillion, in this particular case, are being criticised, is the specification part of the contract actually robust?

A contract management structure needs to support the process which sets out who monitors what and the escalation approach. It also needs to have a process where and when client/contractor liaison meetings take place.  Either this was not in place or it has failed drastically for the Prisons Minister to now be meeting with Carillion's senior management to set out the improvements required.

But the Prisons Minister also needs more that a list of defaults to wave in front of Carillion, he needs to have a very clear plan of what he is going to do if Carillion don't make the improvements. Can he terminate the contract and find someone else, for example? If he makes a threat at this stage and then doesn't follow through, he'll be looking for his own 'get out of jail' card.

A Yule Blog: Disastrous procurement risk management could lead to untold grief

We have discussed Procurement Risk Management quite a bit in recent months and today, of all days, I would have hoped to have set that discussion aside. Unfortunately, although there seems to have been some flaws in the Mayan Calendar evaluation model the adverse impact of its predictions have now started to manifest themselves in the supply chain.

Personally, I was absolutely certain that predictions of the end of the world would prove wrong. I found it mildly amusing that shamans were casting spells on Friday to hold back the end of the world. Nevertheless, for some it will be reassuring that the intervention of the shaman business consultancy (SHAM & Co.) proved effective!

However, on a more serious note, I have now discovered that there was a major industrial dispute, well hushed up, that is causing unpredicted chaos in supply chains. Apparently a previously highly productive team of workers, the Elves, downed tools some months ago and rather than singing "Whistle while you work", reverted to R.E.M'.s "It's the end of the world as we know it".  Rumours abound that production of toys has been frozen since this time last year in Lapland but there has been evidence of a displacement to the Amazon. Tonight was the delivery date scheduled for global despatch, but all that is up in the air now. No one was available to comment from either the UN or indeed a spokesperson representing the Elves. It is understood the Elves feel more than a little aggrieved too - their view being that they were told a major strategic risk had been identified (the end of the world) and being very risk averse considered it was inappropriate to invest more time in the fruitless task of toy-making. It was impossible to get a coherent answer from dyslexic CEO Santa who just kept muttering "oh, oh, oh, ..."

No one knows what will happen tonight but Bruce Springsteen has requested that no one play his hit "Santa Claus is coming to town".  

Here's hoping all goes well and the last minute mitigation plans all come together. Just in case, enjoy this message from Northern Ireland

The unprincipled Agent

On whose behalf does the agent work?

The procurement world is one immersed in the legal and economic world of Agents. The Chief Procurement Officer is an Agent of their organisation (the Principal) when they represent the organisation in negotiations. The CPO is required to act in the best interests of the organisation and not for their own personal benefit. Equally those dealing with the buyer can be expected to accept that the buyer has the authority to  make commitments on behalf of the buying organisation.

When the CPO lets a contract, as part of a recruitment process, for someone to run an assessment centre, who is the Principal and who is the Agent? To me the Principal is the buying organisation and the provider is the Agent. The provider will be paid by the buying organisation and not by the successful candidate - indeed the provider can expect payment whether or not a successful candidate is found.

When the organisation lets a contract though for intermediary services, say, Executive Search or interim placement services, who is that Principal and who is the Agent? 

Let's assume a headhunter contacts the CPO and asks if they would be interested in a potential new role, who is the Principal?  Is the Principal the CPO who will be represented by the headhunter or the organisation seeking the new CPO who will pay for the headhunter when a shortlist of potential candidates is provided? 

When the scenario is the placement of an interim CPO, who is the Principal and who is the Agent? The assumption of the buying organisation is that the 'interims' provided have been checked by the placement agency and that they have completed the relevant due diligence. Isn't it?

These questions were triggered by a report in today's Financial Times on Page Executive's approach. Page are alleged to be now taking a more cautious approach to the organisations they place candidates with. Not, it appears, to protect the buying organisation, the 'headhunted' or the interim. but to protect Page's financial investment should the buying organisation, which may be among those who, in Page's eyes "live week by week", default on Page!

If an organisation wants an interim CPO, perhaps because they realise they need a financial 'turnround', it implies Page will managing Page's risk exposure and not those who may have assumed they were the Principals, who have a lot of 'skin in the game'. Is this yet another change to the world of procurement as a result of the financial crisis?  Either way, it strikes me that before you jump to the conclusion that you are the Principal and the Agent is working on your behalf, perhaps reading the small print may prove advantageous and recalling: 'caveat emptor'. 

Effective contract management is consistent service delivery to standard

Supply chain management, Paralympics, IT, sponsorship, risk management, assessments, Glasgow 2014 Commonwealth Games, design, sponsorship, supply risk management, and contract management are within the interesting mix of tags I could have used for this blog. What's the link?

Blurred by media discussion on the DWP Work Programme and the Leveson Report, November also saw the release of the Harrington Report on Year 3 of the Work Capability Assessment. SCM features.

You may be familiar with the WCA and the furore over Atos sponsorship of both the Paralympics and Glasgow 2014. Atos are the public facing part of the DWP Work Capability Assessments. Atos are the perceived 'bad guys' who say whether disabled are fit to work and therefore should lose their benefits. Atos get the blame. It is on 'profits at the expense of disabled' cry that they are not deemed a suitable sponsor.

Therefore, Atos are a contractor who is 'perceived' to hold the power of 'yay' or 'nay' for benefits. To the claimant Atos are not only DWP's representative on earth, they may as well be the DWP. Perceived poor Atos performance reflects not only on DWP but on the Government's welfare reforms. That's where the supply chain meets the customer (in this case the claimant). But upstream are the actual decision makers. Atos are caught in the middle. Given that key role in a supply chain one would expect to see very tight contract management and client led performance management.

"... You can't have one without the other": Responsible procurement & Supply Risk Management

Over the last few weeks I have devoted quite a few words to Supply Risk Management. However, SRM has a partner, responsible procurement or CSR (Corporate Social Responsibility) - the two go hand in hand, as the old song goes "you can't have one without the other".

The news that at least 112 factory workers have been killed in Pakistan is a terrible shame. However, it is also a terrible inditement on supply chain management if these workers lives were sacrificed as part of the quest of cost reduction. I discussed a few weeks ago the Health and Safety issues associated with an iPhone5 strategic supplier.  I hope those turning a blind eye to SCM worker safety will remember that procurement can be responsible for bringing about change, and potentially reducing the risk to workers lives who may not otherwise have had a voice.

Big Data, Fukushima and applied research to support procurement

There haven't been many procurement lessons learnt from the Japanese Fukushima disaster. It is also rare that we hear of any useful applied research in SCM and Procurement. So when both converge in a Financial Times report on the work of Manchester Business School with BMW my attention was grabbed.

The background report itself is an interesting story relating to Supply Risk Management and development of an innovative tool. Specifically, following the Fukushima disaster, one of BMW's tier one suppliers couldn't deliver due to a lower tier subcontractor being within the Fukushima fallout zone - as a result BMW identified a need for greater supply chain insight. That need seems to have led to the students developing a tool for analysing internet content (Big Data), which could help with supply risk management. The tools being tested at the present are reported to: "read, search, sort and select large amounts of information in a systematic way, building up real-time profiles of each supplier and sub-supplier". That strikes me as a clever tool.

Of the examples cited one identified a risk of a supplier being unable to pay wages through content found in a local newspaper, while another relates to identifying a new supplier in Mexico.

It is not clear whether MBS are developing a marketing plan for their solution, but hat's off to them and the potential to reduce their student debt.

Did procurement bring down BBC Director General?

I have been a devotee of Newsnight for many, many years - I would even go so far as to say it is my favourite viewing. So the debacle related to its handing of child abuse scandals is really disappointing - but was this a Supply Risk Management disaster waiting to happen?

Let's rewind. The BBC has been on a cost reduction strategy for some time; outsourcing programmes, contracting with its front-line 'names' as opposed to employing, and now it has all the appearance that it may have outsourced quite a bit of its investigative journalism to the Bureau of Investigative Journalism.  It was the BIJ who appear to have had the commission from Newsnight and led most of the investigation into the abuse claim and it was a BIJ journalist who sparked the Twitter flurry which has ultimately led to the resignation, last night, of the BBC's Director General.

Newsnight appear to have outsourced one of its strategic assets: investigative journalism. That may have been fine had they not also failed to quality assure the outputs and manage the contractor's opportunistic pursuit of glory through the posting of 'The Tweet that did it'. While we recognise that the DG appears to have had a remote approach to delegation, when you are managing such a strategic issue as the potential credibility of an innocent, high-profile politician, who must have been in the inner-circle of Conservative politics at the same time as the BBC Trust's Chairman, you are really putting yourself out on a limb.

I really hope Newsnight will not be sacrificed in the witch-hunt, but there is a procurement lesson here: be careful what you outsource/partner, identify and manage the risks, and always remember that a lack of Supply Risk Management can bring down even the top guy!

Apple in the PRM blender yet again

Regular readers will recognise that I have been following a Supply Risk Management train of thought for some weeks. Linked with that is a forthcoming debate piece in Public Money and Management - I hope you will find that interesting, particularly those in the public sector.

However, you will also recall that I have been considering the SRM implications for Apple and specifically the iPhone 5 (you can pick you the blog trail here and here). The SRM issues for Apple just don't seem to be going away - today we learn that the Chairman of Foxconn, a strategic supplier, has announced:

"We can't really fulfil Apple's requests. Our shipments are insufficient ... given the huge market demand"

 Shares in Apple have, not surprisingly, fallen!

Meanwhile what will happen with the supply chains and shares of Sony and Nokia?  Have they alternative sources of supply? Who, in the customer pecking order, will Foxconn favour in terms of customer preference?  How will the various buyers, who compete in the marketplace and supply chain, have positioned themselves as preferred customer?  Which of the competitors has best positioned themselves in terms of SRM? While some believe that Foxconn has excess capacity elsewhere, what due diligence was completed on the basis of potential aggregated demand?

This is a fascinating saga which has implications right throughout the mobile technology world, but the lessons learnt should ring out for all CPOs.

When procurement strategy meets drugs war

I've discussed suppliers holding buyers to ransom as a result of the financial crisis (for example Comet and Lotus) but I never thought I would discuss pharmaceutical suppliers holding cancer victims within a country to ransom. Yet that is exactly what is happening as state run hospitals in Greece are deprived of bowel cancer drugs by German pharmaceutical company, Merck.  Of course Merck have a justification in that the pharmaceutical industry are owed £1.4bn by Greece and there is an hint of corruption about how the Greeks have resold previously supplied drugs.

On the other hand we also know that the pharmaceutical companies have a history of harvesting excessive profits and are not without questionable morals.

But will this lead to an increase in health tourism and Greek patients travelling to other EU countries for treatment?  Will that merely displace costs from one country to another and have a detrimental impact on the health delivery in those countries?  Equally, will the EU have to pick up additional costs as patients who may otherwise have been treated have require more expensive support?

The personal price to patients and families just couldn't be calculated and whole life costs take on a much more literal meaning.

This is really high-level European Procurement Strategy and a much more worthy topic of debate than whether or not Channel #5 is dangerous.  An innovative response is required and the leverage of all European country health budgets brought to bear before lives are lost unnecessarily.

Comet brought down by supply chain

If you are one of the 7,000 employees of Comet, the high-street electrical retailer, you could understandably not share the euphoria or even care that the UK has allegedly come out of recession. You may also feel that managing the economy is nothing more than rhetoric -  real-life makes you wonder what happens to you when Comet goes into administration next Thursday.

Just as alien will be the language of SRM, upstream management, and trade credit insurance but they are what is really behind the predicament.

As we have been discussing all too often in this blog, cash flow and the absence of credit are throttling businesses - Comet is just the latest high profile casualty. The banking crisis now has a different meaning!  Yet at the same time suppliers are considering the risk of whether their customers are a good credit risk.

This is another twist of the Lotus discussion, but this time the problem appears to be Comet's difficulty in obtaining trade credit insurance.  Trade credit insurance would provide protection to suppliers in the event of Comet's failure.  Ironically the risk of failure is increased as a result of a lack of suppliers confidence - it's a vicious circle.  This is calling for new procurement skills and strategies; the need to reassure the supply market that the buying organisation is a good risk.

Yet at the same time how much of a suppliers lack of confidence is coloured by a lack of buyer humility and benevolence having been shown to the supplier when performance was not as well as expected.  To a certain extent 'the ball is now on the other foot'.  But there's also a systemic risk - how can buyers convince their Accounts Payable of the need to accelerate payment.  Could this be the time for pCards to step in with the card issuers effectively providing the trade credit insurance? Could/should the government intervene?

I recently discussed Supply Chain Financing although that was from the perspective of the buyer supporting the supplier. This is different with suppliers potentially holding buyers to ransom - will they take the risk?  Will suppliers seek to renegotiate prices and terms in return?  It is clear that the aftershocks of the financial crisis are like an electrical current with shocks going up and down the supply chain but increasing in magnitude, velocity and frequency.

Can a $10 hinge be strategic?

I bet if I asked the average person that question they would look at me blankly. Even if I asked 'where would a hinge be positioned in a Kraljic matrix?', I suspect most would think it was on the lower end of risk.

But what if the hinge is on a laptop?  What if it was going to adversely impact on the new Windows 8?  Today's WSJ has a fascinating article 'Window 8 Success Hinges on $10 Part' which illustrates the importance of laptop hinges.

Strange thing is the number of times procurement people tell me that low value purchases are not where there attention should be focused.  My response could be something about the straw which breaks the camels back; now on reflection I think I will refer to the $10 hinge which moves the laptop's back. Aim for lowest price and a single source supplier and you may just have made a mistake!

Lesson learnt: strategic sourcing is about more than price.

Procurement responsibility, accountability and L'Aquila

I do not intend to address the procurement weaknesses associated with the 2009 earthquake which led to 308 dying. However, for those unaware of ongoing story, I want to touch on the consequential sentencing yesterday of six scientists and a senior government official.  They were members of Italy's 'Great Risks Commission' and they've now been sentenced to six years imprisonment.  The seven plan to appeal but, nevertheless, two judges decided the experts had downplayed the risks of a massive earthquake.  I have no way of knowing if that was a reasonable judgement, or whether the penalty is proportionate.

Please, please don't get me wrong, I am not trivialising the L'Aquila tragedy. However, in the procurement world we have many academics, advisors and practitioners who are asked to future-gaze and make recommendations on what should be expected or providing reassurance. Sometimes the recommendations are implied predictions of savings to be achieved, sometimes of predictions of impact, sometimes predictions supply risk.  What would happen if, as procurement predictors, we were held more accountable for our predictions.  Personally, I would welcome this.  It would lead to more robust research, less over-selling, and greater focus on outcomes. It could weed out the snake oil salesmen and charlatans.

But it may also drive a better ownership of supply risk management - ownership which is clearly lacking, if we can accept KPMG's recent benchmarking report which implies that only 18% of organisations have risk management integrated into procurement for direct spend (8% for indirect spend).

Are we ready for greater accountability, or is that just one risk we are not prepared to accept?

PRM: stepping in where banks fear to tread

I've discussed SRM a lot lately - more often than not about the vulnerability of firms which do not take it seriously (you can pick up on the previous discussions here).  So learning of Rolls Royce and GlaxoSmithKline stepping in where banks have feared to tread, by providing supply chain financing, impressed me quite a bit.

Rolls Royce have stepped in to lend £500m to small suppliers as a result of banks failing to do so - prior to the Global Financial Crisis there had been no need to.  It's not clear how much GSK have lent. Honda haven't actually lent any money but they have spoken up on behalf of their suppliers so that they can obtain bank finance.

This has to be a strong demonstration of true partnership working.  I would like to hear the government had learnt from this and were going to do similar.  However, it may be more pragmatic if the government introduced an incentive for others to do likewise by under-writing some of the risk the buyers have taken on.  If that were the case, and the offer was extended to public authorities too, I could see this being just the type of initiative which could encourage SME investment and accelerate the UK recovery - let's wait and see if the Chancellor or Business Secretary think so too, mind you I'll not hold my breath.

Recalling PRM woes

No, I am not pursuing an interest in cars.  It's just that the automotive industry seems determined to usurp public sector procurement as 'could do better on Supply Risk Management' and SRM has been a recurring theme of recent blogs.  Toyota, you will recall were the birthplace of Systems Thinking and Lean Supply, yet are recalling vehicles once again. One recall by a manufacturer is perhaps to be expected,  but Toyota appear to becoming masters of it.

The lessons for procurement are: think about the risks of prolific standardisation of parts, processes and specifications.  Why? Well as Toyota now know to its cost, if you are following a 'globalised standardisation approach', and it goes wrong - it is multiplied globally.  That's a big risk and not necessarily cost reduction!

It's also very difficult to make a switch to an alternative source, particularly if you are reliant on the intellectual property or patients of your suppliers.

But 'recalls' have other adverse impacts: customers who experience repeated 'recalls' become less tolerant, brand loyalty evaporates, and stock market value deteriorates.

Were these basic risks considered, and if so what were the mitigation plans?

All this provides yet more justification of the need to ensure procurement risk management at the board room.

I hope that our friends in central government procurement, who appear to be aiming to put in place bigger and bigger, standardised contracts, give some thought to these potential risks too.   I hope they also recognise that the 'kings of lean thinking' don't always get it right.

PRM, supply resilience and the exponential Prisoner's Dilemma

Recently we've discussed supply risk management (SRM) and some of the issues which may be keeping Apple leadership awake at night. But SRM, or perhaps the lack of it, is becoming a fairly regular news item and even the once exemplars of procurement are not immune.  For example, there was a time when the procurement world looked to the automotive industry in awe - that was the model to be copied; the exemplar. A lot has changed. We now hear that the woes of Lotus cars could be added to, yes, by SRM or the lack of it!

The Lotus scenario is one of a 'multiple whammy': a number of the firms suppliers claim they are owed a total of £23m and are threatening legal action. The question of 'too big to fail' has re-emerged, with HMRC being asked to show some tolerance towards Lotus so that Lotus can maintain its cashflow. That's an interesting twist in itself - should HMRC agree in the hope of helping Lotus survive and look forward to a future revenue stream, or should HMRC demand their pound of flesh and risk being the straw which breaks the camel's back?

Anyway, £23m appears to be owed to suppliers at 90 days overdue, with a further £7m at 30-90 days.  If one or more of those suppliers feel they have no alternative but to sue the whole edifice could crumble - it's an exponential Prisoners Dilemma:

• HMRC have a payment risk; 
• Lotus are at risk from HMRC saying 'pay up now';
• Lotus' suppliers are at risk from the decision HMRC make;
• Lotus are at risk from one of their suppliers (as are HMRC);
• All Lotus' suppliers are at risk from the potential actions of one their peers.

Needless to say car production is suffering too!

SRM was once little more than a potential exam question; a hypothetical - that's no longer the case. If anything the Global Financial Crisis, has increased the likelihood of catastrophic impacts throughout supply chains.  I am now coming to the conclusion that SRM or supply resilience will replace cost reduction as the #1 priority for CPO's - is it your's?  

Grease was the word, now it's 'procurement'

Once upon a time, if you said you worked in procurement, no one really had a clue what that meant.  All that has changed: the Prime Minister, at the height of the political conference season, finds himself compelled to discuss procurement. Even the Undercover Economist has started to discuss bid evaluation.  I am not going to add to the rail franchise debacle debate, save my previous blog.  My concern with the franchise is not that mistakes were made but that reassurances were wrongly given to ministers that the procurement process was 'robust'  when it was not - that is inexcusable and, to me, does more damage to the profession than the making of the actual mistakes.  Of course this isn't an isolated mess, it comes hot on the heels of the Olympic security fiasco.

However, rather than let public sector procurement take all the flack, private sector procurement has thankfully shared the load and also managed to grab the headlines.  Once again Apple's iPhone 5 sole supplier is in the news.  I recently discussed the issue of supply chain risk and the dependency which Apple had on one supplier for the new iPhone.  In that blog I referred to riots which had taken place at the Foxconn factory and how that may have adversely impacted on share price and customer experience.  Today we learn that there are more problems at the factory - this time specification quality standards are at issue: fights between workers and quality controllers, contributed to a strike yesterday.  While Apple is a household name, synonymous with quality, their supply chain dependency is becoming a regular news item.  The behind the procurement story is one of the relative power the key supplier's workforce over the delivery of iPhones, and the negative impact on share price and customer experience. Supply chain risk management must now be a boardroom topic.

It is often said that there is 'no such thing as bad publicity'.  In spite of the negative headlines of the last few weeks, I believe some good may come out of this.  For too long there has been insufficient boardroom discussion on procurement strategy, insufficient robust challenge of award recommendations, and a lack of concern with supply chain risk management - expect that to change.  There has also been a tendency for procurement staff to be appointed in the absence of real scrutiny - expect that to change too.

For good or bad, the next time someone asks what you do for a living, and you reply, "procurement", expect an informed discussion as opposed to a blank stare.

Procurement risk management when the pips squeak

Achieve sales of 5m of launching iPhone 5. Share price reduced by 1/50^th. 5,000 police officers  called in for 10 hours, to supplement the existing 1,500 security guards, in order to quash a riot of 2,000 workers at your sole assembler's manufacturing plant. That’s quite a weekend. To make matters worse the riot was caused as a result of a dispute between one of the security guards and a worker – was it a contract security firm?  Sounds like an unbelievable case study exam question but that was last weekend!


Of  course the warning bells must have been ringing earlier when the supplier installed nets around its factory in an attempt to reduce employee suicides.
The volume of those ringing bells must have been deafening when it was learnt that the supplier’s new employees were being asked to sign a statement that they would not commit suicide. 


Foxconn, with a workforce of 78,000, is the world’s largest contract supplier of electronic goods – yes, they are the iPhone5 sole assembler, therefore Apple are strategically dependent on it for the manufacture of iPhones. The estimated cost of the components in the iPhone5 are estimated to cost $199 (for the 16GB model) while it sells for $650. Microsoft and Dell are also big customers. What happens in Taiwan does not stay in Taiwan.

This latest saga is not unique by far.  Fresh in the minds of readers will be the G4S Olympics debacle and hopefully my blog on not casting the first stone.  

Will Apple be scarred by this experience and punished by the market?  I doubt it.  However, what is clear is that supply risk management is not a well practiced theory.  Unfortunately, we can also expect supplier risk to increase in the current financial climate.