How Apple’s Operations department works [Cook book outtakes]

This post was going to be part of my new book, Tim Cook: The Genius Who Took Apple to the Next Level, but was cut for length or continuity. Over the next week or so, we will be publishing several more sections that were cut, focusing mostly on geeky details of Apple’s manufacturing operations.

Apple is famous for design and marketing, but a large part of the company’s success is due to the incredibly complex and efficient manufacturing organization Tim Cook masterminded with Steve Jobs.

No matter how beautiful its products are, the company would go nowhere without a world-class manufacturing and distribution operation that can make millions of devices in the utmost secrecy, to the highest possible standards, and deliver them efficiently all over the globe.

It’s an operation unprecedented in the history of industry. When Jobs and Cook started in 1998, Apple was doing $6 billion in business annually. It now does that every 10 days.

Tim Cook’s manufacturing operation runs a vast computing system that has hooks stretching into the suppliers of the suppliers of the suppliers. It’s multiple levels down. Apple knows how many tiny screws are in the warehouses of the smallest button maker. Thanks to its omniscient vision, Apple is able to finely tune exactly how many products are made each hour of every day to exactly match the fluctuating demand it sees in its stores worldwide.

This is the machine that helped Cook and Jobs streamline Apple. Known as “the Attila the Hun of inventory” when he was recruited from Compaq in 1998, Tim Cook was a reluctant hire.

Apple was struggling at the time and he was nervous about joining the near-bankrupt company, but he found a connection with Jobs. Cook helped write down inventory and built a streamlined just-in-time manufacturing operation that made Apple the gold standard of the industry. It had a lot to do with saving Apple, and Cook has never received the proper credit.

Today, Apple’s giant manufacturing operation, which is shrouded in secrecy, is an insurmountable barrier to competitors. Few companies have the resources to rival it. Samsung’s exploding battery scandal is a good example of the corners rivals sometimes cut to keep up.

The scale of Apple’s operation beggars belief. Take Amazon, for example, which is routinely praised for its smart Alexa speaker, which is flying off shelves. Alexa is touted as the home computer of the future, and is estimated to have sold about 100 million units in the four years it’s been available. That’s peanuts. Apple sells the same number of iPhones about every six months. Apple’s scale is off the charts.

How Ops operates

Apple’s expertise in operations is widely undervalued, something the company does little to alleviate. The company keeps its manufacturing excellence very quiet, and few observers credit its expertise in the company’s success.

“I think it’s intentionally kept a secret because I don’t think Apple benefits from waving the flag about this stuff,” said Apple analyst Horace Dediu. “I think that they’re just happy to sort of rake money in.”

Take for example, the hardware efforts of rivals like Google and Amazon, which have had mixed success with making hardware. Amazon’s Fire phones were a bust; its tablets are a modest success, mostly because of their ultra-low prices; and the Echo devices are a bone fide hit, but they ship in tiny, tiny quantities compared to Apple’s. Amazon has sold an estimated 100 million Alexa-powered speakers over the four years they have been on the market. That’s equivalent to six months’ worth of iPhones.

“Apple’s work in operations doesn’t get credit but when those other companies try to do things at scale they realize just how hard it is,” said Dediu.

Google has had less success with anything its done in hardware. It’s purchase of Motorola and subsequent sale two years later yielded little for the company, as did its purchase of Nest.

Nintendo is another example. The Japanese games company has recently been celebrated for exceeding expectations with sales of its Switch gaming console, which is breaking records with sales of tens of millions of units. But again, it’s nowhere near Apple’s scale.

The only high-tech company that compares to Apple in terms of scale is Samsung.

How Ops works with Industrial Design and Product Design

Apple has a reputation for great design, but often overlooked is how well-designed the products are for manufacturing. It’s easy to miss, because it’s not apparent, but all of Apple’s products are carefully designed to be manufactured in their millions.

“The design and the manufacturing are very tightly connected,” said Dediu. “They won’t design something unless it’s designed for manufacturing.”

When it comes to manufacturing, Apple’s operations team works primarily with two other groups: Jony Ive’s Industrial Design team and a group of engineers called Product Design.

The industrial design team – headed up by Jony Ive – has the most power. The Industrial design team is where most of Apple’s products come from. They are Apple’s ideas factory. They design the user experience and the way the product works.

Ive’s team spends a lot of time designing products, but even more time figuring out how to manufacture them.

Bob Brunner, the former head of the design team, said the group spends 90% of its time working out production processes. “Apple designers spend 10 percent of their time doing traditional industrial design: coming up with ideas, drawing, making models, brainstorming,” Brunner said. “They spend 90 percent of their time working with manufacturing, figuring out how to implement their ideas.”

The next most powerful group is operations, which must ensure the product is manufacturable on a massive scale. And lastly is engineering, which must figure out ways to make all the electronics fit inside the sleek designs dreamed up by the Industrial Design team.

Steve Jobs elevated Industrial Design, making it central

In the Apple of old, before Steve Jobs returned, it used to be other way around. The engineers had the most power. They would spec new products with the marketing department, often based on new technologies like faster chips or bigger hard drives. They design team would only be involved towards the end of the process, when they were called on to “skin” a new product; that is, add an outside skin that made it look good. It often resulted in bland, me-too products.

When Jobs returned, he formed a close working relationship with Jony Ive and slowly, over a period of more than a decade, the Industrial Design group became the primary source of new products at Apple.

“Industrial Design is the king of it all,” said Gautam Baksi, a former Apple Product Design engineer. “They are the overarching architects of the entire product. That’s mostly derived from an aesthetic point of view but Jony and his team’s direction is holistic throughout the product. They care about the size and shape of the circuit board, where screw holes are, what color wires are inside of it and how it was made and obsessive, obsessive qualities all over.”

A former executive in the Operations team who asked not to be identified, said the Industrial Design group show little regard for the challenges faced by the engineering or business sides of the process. The engineers can never say ‘no,’ and budget is never a consideration; it’s not even discussed.

“[Jony] Ive did not want any discussions of price or cost impact of the ID his group was developing so this did give them a somewhat pure creationism,” said the executive. “The poor Product Design group had no choice but to follow the strict ID and cram all of their shit inside with no hope of any concessions for growing or changing the product.”

The executive said it was hard on the engineers, but consistently creates beautiful products.

A good example of this is the placement of the heart-rate monitor in the Apple Watch. The obvious place to put the monitor would be on the inside of the wrist, where the skin is thinner and it’s easier for the sensor’s lasers to penetrate blood vessels.

The placement is rumored to have caused a big fight between Apple’s ID team and the engineers. The engineers wanted to put the sensor on the inside of the wrist, as part of a bulky strap, but the ID team insisted it would interfere with the way people wore the watch. The rumor is that the ID team forced the engineers to work out how to put the sensors on the top part of the wrist, which they managed to do, but not without a lot of struggle.

“They forced their engineers to figure out how to make a heart sensor that works reliably on the wrong side of the wrist,” Dediu said. “The engineers end up suffering because they were given impossible parameters.”

The role of Product Design and Operations

The Product Design group (PD), which includes Electrical Engineering (EE), Mechanical Engineering (ME) and the Device Software group, is responsible for figuring out the engineering: which components to use and how to put them together.

Operations figures out how to actually manufacture the products, and includes all the suppliers, officers in mass production scaling, cost, supply base engineering, and materials production.

The new product flow starts with ID and flows down to other groups. Here’s how it works:

1. New products are designed and prototyped by the Industrial Design group. The group works in a locked-down studio on Apple’s campus. The cavernous studio is home to about 20 designers and support staff, with a workshop full of prototyping machinery. During new product development, the designers work closely with teams from both Product Design and Ops.

2. After ID is happy with a prototype product, the project moves to Product Design. Mechanical Engineers and Electrical Engineers work to fit all the necessary components inside the design and often struggle to do it. It’s called “packing the suitcase.” Operations Group members get involved at this point to assess the impact on the supply chain and start planning for mass production.

The inclusion of operations at the earliest stages is very important. “They’re involved early on to make sure that as a product design engineer I don’t design something that’s not going to be manufacturable at volume,” said Anna-Katrina Shedletsky, a former-Apple product design engineer who spent almost six years at Apple working on four generations of the iPod, and then as a product design lead for the Apple watch.

Product Design, however, keeps the product until there is a complete unit with all of the necessary components. “Product design engineer is kind of fancy way of saying mechanical engineer,” said Shedletsky, who has since left Apple and has used her hard-earned expertise to launch a machine learning startup called Instrumental. The startup uses AI technology to help companies find and fix problems on factory assembly lines.

“In my role I worked on three different iPods and then I lead system product design for Apple watch series one,” she said. “As a product design engineer I did a variety of things. Starts in the architecture phase where you are responsible for designing the CAD, the computer model of the new product for what I call ‘packing the suitcase’, which is getting all the parts to fit into that beautiful industrial design and negotiating that process with all of the stakeholders involved. Then, actually taking that design, selecting materials, doing validation on the part level, going to China very frequently, doing these engineering builds. This is all very standard process throughout the industry, but doing these engineering builds and essentially, my role as product design engineer was to validate that it was possible to build units at mass production yields, at mass production speeds on one line. Once we were able to validate that, we got to hand off our role to operations who would then scale up that to many lines and very high volume in mass production.”

At this point, the product prototype is approved for transition to Operations, also known as the manufacturing design team. Operations manages tooling, fixtures and process development. Operations treats the manufacturing process as a product that also needs to be designed. They design all parts of the manufacturing process, such as the specific tools for each step of the manufacturing process, and where the gates on injection molding tools will be, and so on. At each stage, they bring in Subject Matter Experts (SME’s) as needed. Each major compnonet of the product has a team of SME’s devoted to it. So there’s a battery team, a display team, a touch team, and so on.

3. If the ID has been finalized and operations has successfully managed tooling and process development, then PD is finished and moves to developing the next project. Operations takes over fully and begins to scale Manufacturing Processes (MP) with all suppliers worldwide and begins looking at cost reduction in every possible area.

There’s “a whole army of people who go over to the factories, set up everything, counterpoints, liaisons, buses, shuttles, hotels, they help with all of that stuff,” said a former Apple Product Design engineer who asked to remain anonymous.

Part of the new products team, the engineer spent most of his time in China. The workload was grueling. “I booked a flight, went out to South China somewhere, in to Hong Kong, or to Shenzhen, the Guangdon region. That’s where all the products are made at Foxconn. And I sat there in the factory for one, two, three weeks, finding out some bugs on a round of prototypes. Flew back home, tested, iterated, redesigned, worked with ID [Jony Ive’s Industrial Design group], went back a few months later, over and over and over throughout that 18 month process.”

A former operations executive, who asked to remain anonymous, said the whole process is complicated but that the company swears by it and deadlines are slavishly enforced. “Most products are C-Section at first with all parties in the ER and blood all over the floor,” he said. “There may be a few bodies floating in the creek but it eventually is done. The hard date in the sand was the announce date that only moves if a meteor hits the earth so everyone is traveling and working 20-hour days.”

The executive said that even though he was one of the people leading the manufacturing process, he never saw a budget. “We spent money like it was air. I’m sure if they do create budgets for projects they are eventually blown in manufacturing.”

The Product Design team

The Product Design team thinks far ahead about how to go about manufacturing a product. The PD engineer said they are in the same timeline as the Industrial Design group, which means product and engineering managers are often working on a product at least three years ahead of a product launch.

For example, when the design team was working on the prototype iPad in 2004, the Product Design team was already planning how to make it possible around that time as well. One key to getting it done and having a “clean launch” is having a well-defined process to ramp up into manufacturing production.

“You put on your firefighting suit on and jump into the fire and start pissing,” the former operations executive said. “The problem with invention of anything is that it takes time. While Samsung is keeping it fairly simple and adding more and more features in every model and they have three models out by the time Apple’s next model comes out. Apple can’t turn designs into mass production quick enough because they are all jewelry and fashion icons that require a gigantic effort to industrialize.”

Reliability and safety

Two other engineering groups are also involved very early on – reliability and safety.

“In the older days, they had teams that basically delivered products, they had a mechanical guy, an electrical guy and all the other disciplines. But during the time that I was there, it had already evolved into the reliability group and the safety group. Reliability would do all the reliability of all the products. The Safety group does all the safety features. And they would give it into the program manager of each of these different engineering disciplines to provide the final product.”

The reliability group conducts exhaustive tests of prototype products to see if they will last under a range of often extreme conditions. They test everything, from drops to extremes of heat and humidity. AirPods, for example, are dunked in synthetic sweat to see if they’ll hold up in the gym.

“The Reliability team at Apple [called the ‘Rel’ team inside] has perfected real-life, strife consumer electronic goods testing,” he said. “From simple drop fixtures to shock and vibe and humidity chambers, they have everything you can possibly imagine to stress products before launch. What will happen if you drop your Macbook on concrete while running to class? What happens to an iPhone if you drop it in a urinal? How hot does a Magic Mouse get sitting in a cargo container at a port in Hong Kong in July? What if you take that same mouse up in an airplane cargo hold? If you spill a coke on your keyboard is it going to work? Does it need to work, or is the expectation on such an accident that it is ok for the device to fail? Rel faces these questions and [figures out] key metrics and tests to investigate all aspects of product use (and misuse).”

If problems were found, the most important thing is to have a solution – or at least a proposed one.

“We would never go into a management meeting without knowing what the proposed solution is going to be,” the former operations executive said. “We had to do our homework. Those were the challenges. If you had a problem, you had to go and find a solution before we presented and asked for more time and more money or something like that from executives, to make that happen.”

The process is long and arduous, with multiple groups involved. There are weekly meetings, which become more frequent when problems crop up.

“Managing is always challenging, of course,” the executive said. “We had anywhere on the system level between 12 and 20 different people coming in to the weekly meetings. When things were not going very well, we would have additional meetings to review the status. The issues in keeping track of the cost and the schedule is always challenging. Anything that was out of whack would go back and be presented to management with the status and with the solution.”

ID drives manufacturing — hard

Such is the power of the Industrial Design team, they never worry about budgets. It’s up to the operations team to figure out how to manage costs.

The former operations executive said Jony Ive’s outlook on the cost of R&D and development work was simple. His team, he often said, should not ever worry about it. He told the operations executive: “’I do not want any of my guys thinking about cost. They should not even care about the cost because that is not their job.’ He was right. It was our job and ID didn’t give a shit about it.”

When the former executive was talking to Apple’s component suppliers, he told them the budget was basically unlimited. He would tell them: “Imagine I have a bucket of money in my hand. I will let you pull out as much as you want to make this happen.”

The executive cautioned that this was only early in the process, and only with suppliers that had unique technology or know-how. “Work through the night, through Chinese New Year, build a mold that is very high risk of failure, create a ridiculous manufacturing process.”

He said discussions between Jony’s ID group and PD and Operations went in one direction, from the designers to production. But the fact IDg imposed their vision upon product development was expected – it worked. One example is Jony’s obsession over parting lines, the section of a plastic part where the two halves of the plastic injection mold meet. Parting lines ruin the illusion of a seamless part.

“ID rules Apple,” he said. “I joined several meetings with the ID team with various SME’s mainly talking about materials, tooling and parting lines. If you look at a plastic part you can see these lines and there is little you can do about it so you need to plan carefully where they are on the part. This was a huge concern of the ID group with plastic and always generated heated discussions of what was possible and what was reality. They did not want any sharp edges or visible marks from any manufacturing process. I believe this was part of the move to fully CNC machined aluminum.”

The executive recalled one occasion in the dingy offices of a plant in Asia that was making the mold for the Titanium PowerBook.

[One time] I was working late at night — (12:30am or so — in a Taiwan tooling/molding factory where they were making a plastic part for the Ti Powerbook that had a series of vent holes. This tool had been welded so many times by the supplier in an effort to get the vent holes correct and other engineering changes finalized. We had a large slide [a big piece of steel with part geometry on it] on the conference room table and the ID guy was staring at for what seemed to be an hour. There were about four other Apple guys seated at the table with us. All of the Taiwan management team were standing around us by the walls. There were about 15 of them waiting for the final decision. They were all smoking and the room had no windows. The ID guy finally looked up and said “This steel looks unhappy. This steel is pissed off.” It was funny. He stood up and told us to start over and rebuild the entire piece of steel and then left the room. So at 1AM the whole tool shop was back in motion making this tooling component all over again. They worked day and night for four days and we were all back for the tooling trial. This was a common theme.”