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Tony Blevins, the Apple man in charge of reducing supplier costs

enero 27, 2020

The Wall Street Journal published an interesting profile of Tony Blevins, also known as ?Blevinator", The current Apple vice president of the company's supply chain. Its main task is to take advantage of Apple?s dominant position to enter into cheaper agreements with suppliers.

Blevins is described as a particularly clever, relentless and sometimes unforgiving negotiator. He is said to have done nothing to guarantee Apple a favorable deal.

Apple has long been appreciated for the management of its supply chain, a positive reputation especially when the current CEO, Tim Cook, was in charge of this task. Cook, considered by some to be an "operational genius," has enabled the company to better control its procurement process, outsource production, streamline line inventory and make smart long-term investments. Most importantly, it has brought together a large part of Apple's supplier network.

According to the Wall Street Journal, Blevins inherited Cook's business model and did his best, among other things, at a crucial time for Apple and the entire mobile market. A time when smartphone sales fell and suppliers were under pressure because they were almost exclusively linked to Apple's fortune and the success of the iPhone.

Attempting to get low prices from the supply chain is an essential strategy for maintaining high gross margins, especially in times of declining sales. Especially when Apple is focused on creating other profit areas like services.

It was Blevins who designed and executed a plan that ultimately robbed Qualcomm of about $ 8 billion in revenue that was to come from Apple. Nicknamed Project Antique, the initiative was launched in 2014 and was designed to lower the fees from Apple Qualcomm, possibly in terms of IP licenses. The report delves into all the details, but suggests that Apple's move to Intel modems was part of the strategy, as was the 2017 patent lawsuit.

Blevins invited contract manufacturers responsible for chip production to the Grand Hyatt Hotel in Taipei. On this occasion, the Apple executive informed suppliers that they were no longer required to pay Qualcomm licenses, payments that Apple would currently fully reimburse its partners. In April 2017, Qualcomm revealed that Apple?s contract manufacturers were holding back on royalty payments. Apple itself has refused to pay royalties totaling $ 7 billion, bringing Qualcomm to justice. Qualcomm then said it lost $ 8 billion due to these unpaid licenses. The two companies then agreed on a new partnership, which will lead to the supply of 5G modems for the next iPhone. To conclude this agreement, Apple would have paid an amount close to 6 billion dollars.

In another example of his ability to reach the most favorable deal possible, Blevins has saved the company hundreds of millions of dollars on the production of the huge windows in Apple Park. The executive organized a meeting at the Grand Hyatt in Hong Kong with all potential suppliers, each in a separate conference room and with common and very special negotiation tactics. Blevins went from room to room, forcing each bidder to go down until he could get an acceptable price.

The executive did the same with the suppliers of certain iPhone components, making them "play" against each other as phone sales soared. STMicroelectronics lost its supply position for the iPhone gyroscope in 2013 after trading broke down, for a loss of around $ 150 million.

Blevins also played a central role in the crisis of Imagination Technologies, a UK-based hardware graphics technology company from which Apple has licensed various IP addresses. After reflecting on a possible acquisition of the company, Apple began hiring Imagination workers in 2013, informing the supplier that it would create new GPU solutions in-house. After a few months, Imagination lost 70% of its market value in a single quarter.

Blevins is also responsible for enforcing Apple's nondisclosure agreements, for which penalties of up to $ 50 million are expected. In 2017, he reportedly torpedoed a Japan Display executive for allegedly violating Apple?s internal policies because he publicly disclosed the number of companies that placed orders for LCD screens. "Are you stupid? ?Was the first reaction from Blevins, who then asked for $ 5 million in damages which, apparently, were never released due to the financial crisis at Japan Display.