Through a program so far labeled “SupplierPay,” the Wall Street Journal reports that President Obama is gearing up to strengthen contractors and small businesses that take care of the tasks that the larger companies chose to outsource. What we know of the program so far is that it entails that companies such as Coca-Cola and Apple have to for their invoices 15 days after they were invoiced. This will make sure that small business are getting the funds they need in a timely manner and reduces how much money they would otherwise have to borrow while waiting to be paid some 90 days under what is consider by many the a normal time frame.
Of course, this is just the gist of it all. The move by Obama will have deeply seeded benefits on the economy on the whole, but a move like this seems to be more political than economical for Apple. The reason I believe it to be a political move that boost Apple’s image to both the public and the government is because only 8 percent of Apple’s top 200 suppliers have factories that are contracted by Apple within the United States. If there was a larger percentage of manufacturers that produce for Apple in the United States, it’s very likely that Apple would have never opted into the program.
The reality here is that Apple can get away with ordering parts needed to produce the iPhone 6 without paying for those parts until, up to, 90 days after the order was made. Using the iPhone 6 rumors to illustrate a better picture, rumors suggest that the iPhone 6 will begin production in July and launch in September. This rumor aligns with Apple’s typical production and release time frames. Pre-SupplierPay, Apple could order all the parts it needed for the iPhone 6 in July, launch the iPhone 6 in September and then pay for the parts with the money it made from selling the iPhone 6.
While Apple isn’t necessarily gaining or losing money from this new program, it would be more convenient for Apple to stick to their usual ways, but considering that they would only have to change their payment schedule to accommodate just 8 of their top manufacture locations, it’s a very insignificant change for Apple. It’s going to be interesting to see whether or not Apple is willing to apply the SupplierPay program to all of their supplier locations across the board.
Here’re some raw numbers: According to a report released by Apple, Apple has a total of 813 manufacture locations who do not outsource their operations to other companies (they have just 10 manufacturers that do which range from NVIDIA to Qualcomm). Of those 813 manufacture locations, 66 of those are located within the United States. 66 is roughly 8 percent of 813.