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Amazon Echo Photo courtesy of Amazon

Big Tech Has the Supply Chain Blues

Dec 21, 2016

Something is rotten in the state of the global supply chain.

The technology industry has spent years touting two great virtues: It makes amazing products, and it has mastered a feat of modern manufacturing unheard of in yesteryear. Companies like Apple and Amazon design products in California (and other West Coast locales) and then send the drawings to China, where prototypes quickly are refined, packaged, and shipped around the world to be sold.

And yet, even as the next U.S. President rails against outsourcing, offshoring, and other sins his own businesses have committed, that vaunted supply chain keeps coming up short.

Amazon has all but run out of its Echo speakers and bite-sized Echo Dot devices. All year Amazon has known the Echo would be its hottest Christmas gift. Heck, I know for a fact I facilitated the sale of 20 or so units in Aspen, Colo., this summer when attendees at Fortune’s Brainstorm Tech conference whipped out their phones during my interview with Dave Limp, head of Amazon’s device business, and made an order.

Amazon’s not alone. No company manages its supply chain more dominantly than Apple, a master at applying tremendous financial leverage to ensuring it gets what it wants when it wants. And yet, its mostly well-reviewed new wireless AirPod earbuds were unavailable until recently. Apple’s site showed a six-week wait on Tuesday. Instant gratification also is in short supply for Google’s high-end smartphone, the Pixel. A model I explored buying listed a three- to four-week delay before shipping.

All sorts of reasons might explain the shortages. Head-scratcher though it would be, Amazon might have badly underestimated Echo demand. Apple likely had trouble manufacturing enough AirPods to its satisfaction, a common problem for new Apple products. And Google seems to have been encouraging scarcity for a product that is meant more to demo than to be dominant.

Whatever the reasons, it’s a reminder that designing, making, marketing, selling, and delivering product is more art than science. The device companies did their best and came up short. Now it’s Santa’s turn.

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