The Beer Game explains why Apple can’t build iPads in the US. It’s not labor costs, it’s the supply chain. Apple could build a factory to assemble devices in the U.S., but all the components come from China anyway.

In the end, we had lost hundreds of dollars in backorders and excess inventory and were cursing out our upstream or downstream vendors for being idiots.

The lessons of the Beer Game are pretty evident. Delay in the supply chain causes amplified downstream problems. The problem wasn’t that we were kids running beer supply, the problem was the structure of the chain itself. Small changes at the front end lead to massive mistakes down the line.

From the transcript of This American Life’s “Retraction” episode:

But labor is such an enormously small part of any electronic device, right? Compared to the cost of buying chips or making sure that you have a plant that can turn out thousands of these things a day or being able to get strengthened glass cut exactly right within, you know, two days of this thing being due, that’s what’s important. Labor is almost insignificant. What is really important are supply chains and flexibility of factories.