Inventory, Cook has said, is "fundamentally evil," and he has been known to observe that it declines in value by 1% to 2% a week in normal times, faster in tough times like the present.
"You kind of want to manage it like you're in the dairy business," he has said. "If it gets past its freshness date, you have a problem." This logistical discipline has given Apple inventory management comparable with Dell's, then as now the gold standard for computer-manufacturing efficiency.
We know what you're thinking: Why dwell on the back-room aspects of such a sexy company? Because that seemingly dull stuff is as important to Apple's success as the gorgeous designs and ultra-cool marketing. Forecasting demand, for example, and executing against that forecast, are critical in the computer industry, especially when new products quickly cannibalise the old.
As Apple's products' popularity exploded, the cautious side of this discipline manifested in periodic shortages and wait times for new products. But these hasn't seemed to make Apple's fans any less-excited about them. So in July, when Cook boasted on an earnings call that "We sold every iPad 2 we could make," he wasn't just expressing pleasure with demand or sales, but also that Apple didn't make or store a single iPad more than it could sell.
Some of Cook's operations and logistics innovations have become almost as famous in the industry as Jobs's keynotes are outside it. For instance, in 2005, with the iPad Nano, Apple began prepaying in volume for key components for its hot products like flash memory or screens, locking in prices and guaranteed production -- and not coincidentally, locking out imitators and competitors, who'd find that nobody could meet their orders.
But even if he has called himself the "Attila the Hun of Inventory," it'd be a mistake to treat Cook only as a whip-cracking numbers guy. He's tough, but by all accounts, he's the calm, kind, private counterpart to the moody, mercurial Jobs. More importantly, he knows products better than most operations wizards, and he knows how the two fit together.
This is a fundamental concept of managerial accounting...."Inventory is Evil". I am glad TC agrees. Look at MSFT's Surface Tablet for a case in point. You want to turn over inventory as quickly as possible and have all the old stock sold when the new stock arrives.