{"id":26971,"date":"2017-11-15T23:22:52","date_gmt":"2017-11-16T04:22:52","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/opportunities-for-digital-enhancements-to-googles-pixel-supply-chain\/"},"modified":"2017-11-15T23:23:29","modified_gmt":"2017-11-16T04:23:29","slug":"opportunities-for-digital-enhancements-to-googles-pixel-supply-chain","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/opportunities-for-digital-enhancements-to-googles-pixel-supply-chain\/","title":{"rendered":"Opportunities for digital enhancements to Google\u2019s Pixel supply chain"},"content":{"rendered":"

The rise of the smartphone is a global trend that\u2019s impossible to ignore.\u00a0 From 2010 to 2016, smartphone connections increased 7.5x ending 2016 at 3.3 billion connections worldwide \u2013 a number expected to increase by 2.6 billion by 2020[1]<\/a>.\u00a0 On October 20, 2016, Google, the leader in the smartphone operating system market with 87.5% of the global smartphone OS market[2]<\/a>, launched their iPhone competitor, the Google-branded Pixel smartphone, in an attempt seen by many to capture an even larger part of the mobile ecosystem.\u00a0 As the first public launch by Rick Osterloh, former Motorola president who now heads Google\u2019s new hardware group, the Pixel is Google\u2019s first foray into producing smartphone hardware as a company traditionally specializing in mobile software.\u00a0 Could Google reap the benefits of owning the supply chain and getting visibility into each step?<\/p>\n

In order to compete with the success of Apple\u2019s iPhone, Google decided to \u201cown\u201d the production of the Pixel, effectively purchasing the HTC team that initially worked on the Pixel in a $1.1B deal[3]<\/a>. \u00a0Through this sale, Google theoretically had visibility into all stages of the supply chain, from parts manufacturing, to warehousing, to shipments.\u00a0 The Pixel launched to critical acclaim, and consumer demand spiked.\u00a0 However, it quickly became apparent that Google was not prepared to handle the consumer demand.\u00a0 As people hit the Google store website, they were greeted with \u201cout of stock\u201d messages \u2013 for over a year.\u00a0 Predictably, this enraged consumers; as Stan Shroeder from Mashable wrote, \u201cNo matter how much you love Google’s Assistant, the stock Android experience or the Pixels’ subdued design, simply\u00a0not being able to order one<\/a>, or having to wait many weeks to get one, is a deal breaker.[4]<\/a>\u201d How could a company that had visibility into its entire supply chain be unable to fulfill orders for months, damaging their brand, enraging potential customers, and losing a revenue opportunity with a good product?<\/p>\n

While we do not have details nor visibility into the inner workings of the Google Pixel team, it is immediately apparent from attempting the purchase flow that basic information about consumer demand was not being collected nor sent to the manufacturing team, at all.\u00a0 Whereas Apple allows people to pre-order the iPhone, Google did not have an option to do so \u2013 you could simply enter your email to be notified when phones were in stock.\u00a0 Here, Google missed an opportunity to implement digitization into their supply chain to better capture, predict, and eventually execute on demand.\u00a0 They addressed that the following year with the Pixel 2, whereby users were able to pre-order phones, but it is likely many who were going to make a big ticket purchase of the Pixel have already bought another phone.<\/p>\n

Google is not the only smartphone company to experience problems with their supply chain. Apple, long-lauded as an extremely savvy controller of their iPhone supply chain, is also currently suffering a shortage of their new iPhone 8 devices due to a global shortage of organic light emitting diode screens (OLED)[5]<\/a>. \u00a0This shortage led to a \u201cseries of pile-ups along the supply chain\u201d which starved other parts in the manufacturing process.\u00a0 An analyst at Credit Suisse commented on Taiwan-based Hon Hai \u00a0Precision Industry, the company assembling Apple\u2019s latest iPhone, saying: \u201cWe knew there was going to be idle capacity, we just didn\u2019t\u2019 know it was going to be this size.[6]<\/a>\u201d\u00a0 While we don\u2019t have exact visibility into where in Google\u2019s manufacturing process the problems arose, from looking into Apple\u2019s production of the iPhone, it is quite clear how sensitive the smartphone manufacturing flow is to component availability and inventory.\u00a0 Companies like Google and Apple need to ensure their manufacturing teams are well stocked with a supply of parts, enough to satiate any level of consumer demand, lest risk losing revenue from people who cannot purchase phones when they want.\u00a0 Digitization, in the form of real-time inventory reporting, could help reduce the time it takes to fix bottlenecks in the process. \u00a0Google should implement a digital inventory tracking and measurement system to ensure parts are well stocked at every step of the supply chain, to avoid this problem.<\/p>\n

While Google has not revealed their long-term plans to digitize their supply chain, one would hope their implementation of a pre-order function for their new Pixel 2 is an encouraging sign they are looking towards some improvements in the short-term.\u00a0 With large players like Apple and Samsung vying for the same consumers and components, it is critical that Google collect and use every advantage they can get.<\/p>\n

(765 words)<\/p>\n

 <\/p>\n

[1]<\/a>\u00a0The Mobile Economy 2016<\/em> (GSMA, 2016),\u00a0https:\/\/www.gsmaintelligence.com\/research\/?file=97928efe09cdba2864cdcf1ad1a2f58c&download<\/a><\/p>\n

[2]<\/a>\u00a0Kharpal Arjun,\u00a0“Google Android hits market share record with nearly 9 in every 10 smartphones using it,” https:\/\/www.cnbc.com\/2016\/11\/03\/google-android-hits-market-share-record-with-nearly-9-in-every-10-smartphones-using-it.html<\/p>\n

[3]<\/a>\u00a0Savov Vlad, “Google sets its sights on the iPhone with HTC deal,” https:\/\/www.theverge.com\/2017\/9\/21\/16343342\/google-htc-deal-apple-iphone-war<\/p>\n

[4]<\/a>\u00a0Schroeder Stan, “The most important Pixel 2 upgrade is hopefully, availability,” http:\/\/mashable.com\/2017\/10\/05\/google-pixel-2-availability\/#i_Wycq88AOqR<\/p>\n

[5]<\/a>\u00a0Culpan Tim, “Apple swallowed a fly,” https:\/\/www.bloomberg.com\/gadfly\/articles\/2017-10-23\/apple-losing-its-supply-chain-mojo-is-a-major-threat<\/p>\n

[6]<\/a>\u00a0White Edward, “Foxconn profits tumble on iPhone X supply chain challenges,” https:\/\/www.ft.com\/content\/a7421056-c9d4-11e7-ab18-7a9fb7d6163e<\/p>\n","protected":false},"excerpt":{"rendered":"

Can mobile OS giant Google manage its supply chain to become a smartphone hardware leader, too?<\/p>\n","protected":false},"author":9986,"featured_media":26972,"comment_status":"open","ping_status":"closed","template":"","categories":[],"class_list":["post-26971","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","hck-taxonomy-organization-google","hck-taxonomy-industry-electronics","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"\nOpportunities for digital enhancements to Google\u2019s Pixel supply chain - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/opportunities-for-digital-enhancements-to-googles-pixel-supply-chain\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Opportunities for digital enhancements to Google\u2019s Pixel supply chain - 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