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The Trek of Smart Phone Tech

By the time a new smartphone lands in your hands, it has likely completed a journey around the globe that would make even the most well-traveled passports look skimpy.

Some estimate that, piece by piece and from start to finish, tracing back to the miners extracting the elements and the resources needed to sustain workers, an iPhone will travel upward of five hundred thousand miles during production and delivery—the equivalent of going to the moon and back.1

It’s all part of an intricate supply chain, or as some may see it, a supply web, considering that sometimes smartphone parts even backtrack to a previous assembly stop.

The iPhone home button, for example, starts in China with artificial sapphire crystal. Once bonded to a metal ring that came from another Chinese location a few hundred miles away, it is shipped to Taiwan and attached to two other parts that came from Shanghai and Germany. Two more pieces—one from Japan and the other from Shanghai—are added by a different manufacturer in Taiwan. The piece heads back to Japan for welding and then back to China for final assembly.2

And the home button is only one of the thirty-plus components of an iPhone 8.3

It would take thousands of steps—including stops from Boise to Britain, San Jose to South Korea—to map out the journey of an iPhone, but each move plays a part in getting the right items from the right suppliers in the right time to the right place.

Generally, people have no idea how complex most products actually are, especially something as complicated as a smartphone, says Scott Webb, BYU Marriott associate professor of global supply chain management. “The fact that you can walk into a grocery store year-round and buy bananas is a miracle of supply chain,” he notes.

The Minerals Inside

The iPhone journey begins, as many products do, with minerals—some quite rare. The natural minerals that go into a smartphone may remind you of studying the periodic table in chemistry class. You’ll recognize names such as tin, aluminum, and potassium, but praseodymium, neodymium, and boron may be less familiar.

Although smartphones do include a few precious metals, such as gold, platinum, and silver, it’s just a couple dollars’ worth4—not enough to be considered bling.

There are a handful of considerations that companies weigh as they choose suppliers for the sixty-two types of metals that go into the average phone,5 including decisions about avoiding conflict minerals in production. Conflict minerals come from areas of the world in which their extraction can be sold to finance fighting.

“Some companies have employees whose entire jobs are to ensure they’re not buying conflict minerals,” says Cindy Blair, BYU Marriott associate professor of global supply chain management. “They want to make sure they can trace back something so it doesn’t come from a conflict country. They don’t want their supply chain to be hurting anyone ethically or environmentally.”

Apple’s efforts to keep the iPhone responsibly sourced have made it the first company to map its supply chain for tin, tantalum, tungsten, cobalt, and gold (the main conflict minerals), as well as publish a list of the smelters in its supply chain.6 As a result, the Enough Project, a nonprofit that aims to end genocide and crimes against humanity, ranked Apple No. 1 for its efforts to develop conflict-free mineral supply chains in the Democratic Republic of Congo.7

There is only so much a company can control, however, when other political issues come into play. “Cobalt in the batteries comes from Congo,” Webb says. “If the government is unstable, that affects the reliability of a supply chain.”

And it’s not just internal conflicts that can cause headaches. Negotiating natural resources with governments can also turn into power plays. “It can be about who has control over the resources,” Blair explains. “If the people controlling those supplies refuse to make them available, you have to figure out another way to obtain them. That often means either paying more or forming some kind of alliance to get what you need.”

Another consideration is rare-earth minerals, which tend to live up to their label. For example, some estimate that in the next few decades dysprosium, a mineral that your phone relies on to vibrate, will run out.8

“The challenging part is that if there’s a mineral a company can’t get, their phones don’t work,” Blair says. “Rare minerals don’t make phones work better or make them look cooler, they make them work.”

When there is a shortage in a necessary material, she says, two things typically happen simultaneously:

(1) buyers work to lock up existing capacity through contracts and long-term relationships with existing suppliers or potential new suppliers, and (2) engineers work to redesign the product.

“I would guess both things are happening right now,” Blair says. “The biggest companies typically have the best access to supply because suppliers want their business—the biggest companies buy a lot and will be around for a long time. I doubt we need to worry about being able to buy the next-generation iPhone. But things like this do affect the cost and resulting price to the consumer.”

Another possible solution to a mineral shortage is that companies could figure out how to recycle the minerals from old phones to make new phones.

A Constant Trade-Off

Beyond the availability of the minerals, many companies are also looking at their ecological footprint.

While some argue that it’s impossible to make an environmentally friendly electronic device,9 Apple seems committed to ensuring its supply chain is as green as possible, Webb says.

The company frequently audits its suppliers and works to help them find environmentally friendly ways of manufacturing and shipping component parts, he says. The company also touts that 100 percent of iPhone final-assembly facilities are zero-waste certified and publishes reports10 in an effort to be transparent. Other companies—especially larger ones—are following suit as consumers become increasingly aware of and sensitive to these issues.

“It’s a constant trade-off,” says Webb. “Companies have to ask at what point do they worry about the environmentally friendliness of something in relation to the cost. Companies have to make money, but showing their commitment to being environmentally friendly and politically aware can pay off too.”

And that’s not all. Our modern way of living is resource intensive, Webb points out. “Companies today have a lot of motivation to reduce waste as well,” he says. “But regardless of how aware of and committed companies are as they manufacture their products, there is always going to be an environmental cost.”

Life in the Real World

After minerals around the world come together to become smartphone parts—cameras, processors, circuit boards, and speakers, to name a few—they are shipped to a factory for final assembly.

The globetrotting smartphone pieces, provided by more than two hundred suppliers, land at a plant—such as the enormous Foxconn plant facility in Zhengzhou, China—where they’re constructed and packaged.11

Little is left to machines in the hands-on operation of creating an iPhone. Final assembly involves a four-hundred-step process, which includes soldering, drilling, and testing. With an estimated three hundred fifty thousand workers, the Zhengzhou facility can manufacture about three hundred fifty iPhones every minute.12

“Some of it can be automated, but if you’re in a country with low-cost labor, it’s better to have workers,” Blair explains. “A lot of the reasons to use labor instead of automation are cost related. When something changes in relation to technology, which it does so often, adjustments have to be made. It can be a huge expense if those things are automated, while it is relatively easy to teach people how to change things up.”

Once the smartphones are ready to experience life in the real world, the US–bound boxes are loaded on Boeing 747s, each of which can hold one hundred fifty thousand phones. The first stop for the planes is usually for fuel in Anchorage, Alaska, before they depart to other hubs to deliver their popular cargo into consumers’ hands.13

Both Webb and Blair are quick to point out that this manufacturing journey would not be possible if all the pieces of the puzzle didn’t come together at the right time. What makes a good company great, particularly in this Earth-traversing process, is hiring reliable suppliers. And in Apple’s case, the company’s strategy involves developing a supreme supply chain. “This creates end products that are of the highest quality,” Webb says. “It also creates vital supplier relationships.”

Interestingly, Samsung—a top iPhone competitor—is actually one of Apple’s two-hundred-plus suppliers, providing microchips for the iPhone. Blair speculates that this business relationship likely occurs because Samsung offers the best combination of quality for the price, which is often referred to as value.

Webb says he has a huge regard for Apple’s supply chain capabilities. “By picking the best suppliers in the world, Apple doesn’t have to worry so much,” he says. “They just have to manage and work closely with their suppliers.”

One of the miracles of the modern world we live in is reliable and inexpensive transportation. “We take logistics for granted,” Blair says. “We all like free shipping, but at some point, someone has to pay for the transportation. For example, most of the cost of a bottle of water is the transportation.”

Webb adds, “It’s all this tightly wound system—supplier base, transportation, inventory, and then assembly—and each piece has to work totally in sync. If not, you end up carrying too much inventory. Global supply chain is a fascinating field focused on being so organized that things arrive at just the right time so the factory floor is running on cadence.”

The End of the Road

A culture in which people upgrade their phones frequently can lead to headaches over the gently loved phones that still have some life—and the sunk environmental costs—left in them. Greenpeace estimates that more than seven billion smartphones have been manufactured since 2007.14


The disposal of smartphones is a big issue, Webb says, but fortunately for Apple, there is a huge secondary market for its products. Companies exist that buy dead phones and try to farm some of the precious minerals out of them, while other businesses, such as Gazelle and uSell, buy and resell old phones to developing countries.

“Sometimes the phones just need a new screen or something simple,” Webb says. “Samsung has a program where they’ll strip it back down so you don’t feel like you’re throwing it away.”

Apple does too. Through Apple GiveBack, people can find out if their old electronics have trade-in value. If so, the company will send owners a gift card; otherwise, Apple will recycle the phone for free.

Even though there are recycling options, many consumers seem to be unaware of how to take advantage of them. One study estimated that less than 16 percent of e-waste is recycled and that 3 million metric tons of e-waste was produced in 2014 alone.15

Then there’s another option for outdated—but usable—phones: keep them in the family. “People often waterfall them down to their kids,” Blair says. “Phones tend to have life for some extra years after original owners are done with them.”

Even if it’s not used for making calls, a smartphone can still snap and store photos, run apps on Wi-Fi, and play music. They can entertain toddlers on road trips without making parents’ stomachs drop if a screen breaks after a fall from clumsy hands.

The Price We Pay

Squeezing out every ounce of usability makes sense now that new smartphones hover in the $1,000 range. But once you understand the process, technology, and miles that go into creating a mini-computer such as the iPhone, it makes more sense why the price tags are so high—even before significant markups.

“Companies don’t release what their margins are, but Apple’s are huge,” Webb says. “A lot of that is just brand.”

Phone companies have been strategic about how they price their phones. “Generally speaking, they’re not selling to the consumer but to cell-phone providers,” says Webb. “iPhone has gotten enough scale that the phones won’t get any cheaper because they’re already at a point where making a few more isn’t going to make them less expensive.”

Effective supply chains are what make the process and products even remotely affordable, Blair says. “It’s amazing we have the products we have for the price we pay for them,” she observes.

Blair points to $5 T-shirts sold at US chain stores as an example. “A lot of textiles come from Bangladesh,” she says. “Think about the labor from growing the cotton to turning it to cloth to getting it on a ship. That had to have happened for less than $5.”

The fact that countries can work between borders is the function of a mostly friendly political environment, Blair says. “We overcome a lot of language and cultural barriers, transport things from part of that world here, and make it to a price we can afford all due to good supply chain management,” she says.

Yossi Sheffi, an MIT professor, has said that anyone can reverse engineer a cell phone: pull it apart and see what the pieces are.16 “But the hard thing to reverse engineer is the supply chain—the relationships between the companies. Those have to be built over time,” Webb explains. “A lot of what you’re buying is that long-term relationship between the manufacturers and the suppliers.”

Most people tend to see business as very competitive, Webb observes, but what he likes about supply chain management is that it’s really about relationship building. “It’s a much more cooperative approach to business than the purely ‘How do we compete?’ mentality you normally see in business,” he says. “We’re kind of the science of business relationships.”

_

Written by Emily Edmonds
Illustrations by Bratislav Milenkovic


About the Author
Emily Edmonds is a former Marriott Alumni Magazine publications editor. She now works as a freelance writer—when not using her iPhone to snap pictures of her two little girls.

Notes

  1. Edward Humes, “Your iPhone’s 500,000-Mile Journey to Your Pocket,” Wired, 12 April 2016, wired.com/2016/04/iphones-500000-mile-journey-pocket.
  2. Humes.
  3. “iPhone 8,” AppleInsider, accessed 5 November 2018, appleinsider.com/futures/iphone-8.
  4. Humes, “Your iPhone’s 500,000-Mile Journey to Your Pocket.”
  5. Jeff Desjardins, “The Extraordinary Raw Materials in an iPhone 6s,” Visual Capitalist, 8 March 2016, visualcapitalist.com/extraordinary-raw-materials-iphone-6s.
  6. “Supplier Responsibility,” Apple website, accessed 5 November 2018, apple.com/supplier-responsibility.
  7. “Supplier Responsibility.”
  8. David Nield, “Our Smartphone Addiction Is Costing the Earth,” TechRadar, 4 August 2015, techradar.com/news/phone-and-communications/mobile-phones/our-smartphone-addiction-is-costing-the-earth-1299378.
  9. Jacob Passy, “Can Apple Make an iPhone That Isn’t Bad for the Environment?” MarketWatch, 8 October 2018, marketwatch.com/story/why-apples-new-iphone-is-bad-for-the-environment-2017-09-12.
  10. “Supplier Responsibility.”
  11. David Barboza, “An iPhone’s Journey, from the Factory Floor to the Retail Store,” Technology section, New York Times, 29 December 2016, nytimes.com/2016/12/29/technology/iphone-china-apple-stores.html.
  12. Barboza.
  13. Barboza.
  14. Passy, “Can Apple Make an iPhone That Isn’t Bad for the Environment?”
  15. Passy.
  16. Chuck Leddy, “Upcoming Conference Puts Supply Chain Management in Broad Context,” news.mit.edu/2014/upcoming-conference-puts-supply-chain-management-in-broad-context-0312w.

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