Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Apple Inc. (AAPL) Spreading its Eggs into Many Baskets

As you know by now, the Apple Inc. (NASDAQ:AAPL) always seems to be going through some sort of change. We talked about this here, earlier in the week, and now we have more news that is sure to alter the future direction of the company.

According to a recent report by Digitimes, Apple is looking into the benefits of splitting orders to new suppliers. In other words, Cupertino is not going to put all its eggs in one basket. This is a smart move on a number of levels.

Here is what the article had to say:

“Apple is planning to split its upstream orders among 2-3 makers instead of relying on only 1-2 major makers, in an effort to avoid the risk of placing all its eggs in one basket. Electronics manufacturing service (EMS) providers will be the first to be impacted by the new strategy, according to sources from the upstream supply chain.”

By taking this step, Apple is able to avoid a lot of the risk associated with relying on only one or two suppliers. Imagine if something would go sour with one of these relationships. Cupertino would be faced with a giant problem.

Apple Inc. (AAPL) to be Added to Several WisdomTree ETFsWith both Wistron and Compal Communication expected to join forces with Apple Inc. (NASDAQ:AAPL) sooner rather than later, the company is changing its supply chain approach. Whether or not this has any positive impact upfront is yet to be seen, but it will definitely allow Cupertino to mitigate some of its risk.

This is not something that is going to take place right away, however. The article goes on to add the following:

“However, even if Apple decides to add new partners, these suppliers are unlikely to start delivering orders until 2014 or 2015 since Apple’s partners are all required to establish independent product lines specifically for the company, the sources said.”

As you can see, Apple is making changes to its supply chain but things take time to get up and running. It is going to be at least another year until these companies are able to jump into the action and take some of the burden off of Apple Inc. (NASDAQ:AAPL)’s other suppliers.

The article goes on to add that this strategy could help Apple start an operating model that leads to greater flexibility as well as increased profits. Two things Apple Inc. (NASDAQ:AAPL) would greatly enjoy.

How do you feel about this change to the Apply supply chain? Do you agree that it is a good move? We have covered similar stories in the past, and want to hear your opinion this time around as well.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.