Apple & reporting labor costs
I’m taking an Introduction to Operations Management class through Coursera because A. why not and B. I like to challenge my mind in funky new ways. And after an hour of listening to Professor Christian Terwiesch, I do love the unhinged feeling I get. After doing something foreign to your expertise, it does feel like you got a mildly uncomfortable massage. Yes it sucked to have your thighs basically bashed in, but man, afterwards you walked the world with a loser step and wider eyes.
Along with formulas for figuring out average labor utilization, I’m finding out things like shifts in how companies report labor costs in their profit and loss statements (P&L). For instance Apple employees 70,000 people, and its labor costs seem relatively small. What looks huge is how much it spends on supplier products. But as Prof T noted, labor cost still goes into all of the products Apple buys from its main supplier, Foxconn, which employs over a million people. So when you look at a P&L sheet from Apple or any other global company, it’s very intriguing to know that these graphs are telling one story of a company’s process. To get the full reality, you have to look at what’s off the graph.
I’m not sure what this relatively new P&L reporting style means, but now I know to look out for it. With companies like Foxconn (infamous for its worker suicides) my curiosity and concern is definitely piqued.