Note: Based on the FedEx tracking of an online purchase of an iPad in July/August 2010.
Source: Apple Store and FedEx. The sequence was derived from a single observation and does not necessarily represent usual performance.
Order-Delivery Sequence of an Apple iPad
The iPad, a tablet-like computer, was released in the Spring of 2010 and became a popular consumer product. Like the majority of consumer goods, it can be directly purchased at a store or ordered online. If ordered online directly from its retailer, Apple, the product will originate from its final assembly plant in Shenzhen, China. The sequence, from the order to the final delivery at the consumer's address, involves two major parts that depicts well trade flows in the age of globalization and supply chain management for high value products.
The first sequence is order fulfillment (cycle time), which are all the steps related to have a product ready for delivery and that meets the customer's specifications:
  • Processing. Through a standard retailing web site, a customer order the product with selected specifications (mostly memory size) and provides delivery and payment information. This order is then processed, namely to verify if payment information is accepted and cross-verified at the manufacturing plant for the expected availability of the customized product. The customer then receives a notification that the order has been accepted and is also provided with a date where the product will be ready for delivery.
  • Manufacturing / customization. A complex electronic device, such as an iPad, contains thousands of parts (processor, tactile screen, memory, battery, circuit board, etc.) that are manufactured at several locations (each having its own supply chains). The final assembly and customization for this iPad was taking place at the Foxconn factory in Shenzhen, China, a complex that employs 250,000 workers. Foxconn, a subdiary of the Taiwanese electronics manufacturer Hon Hai Precision Industry Company, is the world largest contract electronic manufacturer; it assembles electronic products designed by other firms. All of Apple's iPhones, iPods and iPads at that time were manufactured at the Shenzhen factory. Foxconn also manufactures parts for Dell, Sony and Nintendo, which are well known consumer electronic companies. For the iPad, customization for consumers in various markets takes place in Shenzhen, namely memory specifications, software installation, default language, power supply, packaging, etc. The product is then packaged and the contracted freight forwarder is notified that the shipment is ready.
In all, the first stage took almost 13 days, which can be considered as the cycle time (time between an order being placed and its availability for delivery). It underlines that in this case the bottleneck was production (significant demand and difficulties to accommodate this demand in real time). Usually, the cycle time is much lower. The second stage concerns delivery (lead time), which in this case is done mostly by air:
  • Consolidation. Once the freight forwarder (FedEx in this case) is notified, a pick up is scheduled, often on a preset frequency. As the first consolidation step, the shipment is brought to a local distribution center where all other air freight shipments will be put in one batch (truckload) and forwarded to the airport freight hub. FedEx has a major freight hub at Hong Kong's Chek Lap Kok airport that services the Pearl River Delta, the world's most important manufacturing cluster. At the Hong Kong hub, the shipments are sorted by major destinations, with those bound to the United States mostly placed on flights to Anchorage. Both Hong Kong and Anchorage rank among the world's largest freight airports. Since an iPad weights about 4 pounds (device, box, charger, manuals), potentially 60,000 units could be carried by a 747 cargo plane. Comparatively, 450,000 iPhones can be transported in a 777 cargo plane.
  • Transfer. Anchorage is a major transpacific air freight hub for two important reasons. The first is that freight-only cargo planes have a lower range because they carry heavier loads. Transpacific cargo flights are thus refueled there. To capitalize on this technical necessity, Anchorage is also used as a hub. This implies that the cargo of the inbound transpacific flights receive customs clearance at Anchorage and are then sorted according to major North American destinations. The inbound transpacific flights are then heading back with cargo bound to Asia, which was brought by inbound North American flights (that now become outbound flights). Once the cargo has cleared customs, it is considered domestic cargo and can be flown anywhere in the United States. Since New York is a very large air freight market, there are regular connections from Anchorage to FedEx's hub at Newark. Otherwise, shipments bound to smaller destinations would likely have been flown to FedEx's mega-hub in Memphis to be sorted.
  • Deconsolidation. At the air freight hub closest to the final destination, Newark in this case, the shipments are deconsolidated. During the night and early morning hours, all the inbound freight shipments arriving from various origins, including Europe, are broken into loads bound to the local distribution center closest to the final destination. At the local distribution centers, the shipments will be placed into local delivery trucks. For this sequence, the shipment arrived at Newark around 2:20 AM and was delivered around 10:10 AM.
The delivery process, from the factory's door to the customer's address took a little more than 48 hours over a distance of about 13,700 km. The whole cycle process, from the online order to the final delivery, took a bit under 15 days. This transaction generated international trade since involved a product assembled in China to be shipped to the United States while transiting in Hong Kong.