For Moto X, Customer Choice Trumps Cost of Sourcing

The Motorola X, AKA Moto X smartphone is the first mobile device designed under the Google-owned version of Motorola Mobility, and it’s expected to be available to consumers in the next few weeks.  The phone is going to be assembled in Ft. Worth, Texas, and that has supply chain significance because it will be a 2,200-employee case of re-shoring.
In a podcast interview with Chris Versace, Mark Randall, Motorola Mobility’s senior vice president of Supply Chain and Operations says the sourcing decision was essentially driven by a marketing decision, not cost. In the hyper-competitive smartphone market, Randall said Motorola wanted to give consumers the ability to customize their phones as they ordered online and still receive them within a few days. He said the only way they could reasonably do that was to build them in the U.S. for American purchasers.
By choosing various color combinations for buttons and the case, as well as memory, Randall said there could be as many as 2,000 variations of the phone.
Motorola’s decision to re-shore is interesting for several reasons. First, it shows how tightly integrated sourcing and sales can be. It’s an example of mass-produced combined with made-to-order. Second, it raises great questions about managing the supply of the various colored buttons and cases to meet an aggressive order-to-delivery timeline.
Third, the cost differential between assembly in the U.S. and assembly offshore had to be small because the premium Motorola can charge for offering customization cannot be that large. The smartphone market is too competitive.
And finally, this is a “build regionally” decision, not a “build in the U.S.A.” decision. To offer the same speed from order to delivery to consumers in Asia or South America, Motorola will assemble Moto Xs in China and Brazil.

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