Samsung's Global Supply Chain Management: Coordination, R&D, Risks, And Technology Essay.

The global supply chain is more than direct ownership of production and distribution. It is also a network of relationships with both internal and external partners. It requires establishing relationships with organisations operating under completely different political, economic, and physical environments. Based on the above statement, you are asked to choose a large enterprise, which has become over the years the cornerstone of the supply chain (e.g., Nike, Tesco, IKEA, Samsung, Ford, Apple, P&G, Wal-Mart) and critically discuss:

(i) how it manages to establish close coordination across the globe (including any offshoring decisions and location-specific advantages),

(ii) how distinctive R&D investments helped the company to increase its revenues,

(iii) what are the supply chain risks and associated mitigation strategy

(iv) how advanced technology means (e.g., 3D Printing, Big Data analytics or Internet of Things) help to maintain the competitive advantage.

Supply chain management is a set of advancement, which makes the most of competently incorporate suppliers, storehouse, manufacturers and supplies. The merchandise is produced and circulated at the correct time, to the right destinations and in the right amount. (Christopher 2016).

Supply chain management includes all of the incorporated activities which take products to the competitive market and create satisfied customers.. Every single business fits into more than one supply chains and has a vital role in the field. To accomplish and sustain competitively, supply chain management play a significant role in any organization. It holds and links all the partners in the chain (Stadtler 2015). Supply chain umbrella consists of inventory control, warehousing, procurement, sourcing and more.

Samsung group is a Korean company, which is guided by chairman Lee Kun Hee. The head quarter is in Seoul. It has a number of subsidiaries and affiliated business all over the world. The company was founded in 1938 by Lee Byung Chul as one of the trading company of that time (Jeong and Kim 2012). Samsungs subsidiaries include Samsung electronics, Samsung Heavy industries, Samsung C&T and Samsung engineering. Samsung electronics is the world’s largest information technology company. Samsung heavy industries come second in the world’s largest shipbuilding. Apart from this, Samsung also has its own life insurance and it also operates the Everland which is the oldest theme park in Korea. Samsung has a strong influence on the economy of South Korea.

Samsung Electronics Company is improving its fundamental approach to product, procedure and individual development by using six sigma as a tool for innovation, effectiveness and quality. Samsung sold its first product in 1971, which was a television receiver. Samsung uses quality control, product data management, supply chain management, research management as a tool for innovation. The financial benefits are also possible because of the six sigma (Yang et al. 2014).

Global optimum

The strategic objective of six sigma is to create all the qualitative and quantitative growth and deliver the best to the shareholders. Samsung has focused in the four key areas of operations and innovation. Which consists of project discipline, sustaining the results, an establish HR framework and qualitative strength (Wisner et al. 2014).

Samsungs has researched the six sigma approaches at the General Electric, DuPont and Honeywell to get an idea an idea how the other companies are performing to comparable needs (Park 2013).

Design: The six sigma project usually focuses on the redesigning of the process and to improve the performance level of the accessible systems. Improvement is addressed through DMAEV (define, measure, analyze, enable and verify).

Samsungs innovation not only depends on the strength of the methodologies but it also measures the organizational factors of innovation.

DMAEV: DMAEV refers to define, measure, analyze, enable and verify. It is incorporated the five design of process, rule and policies of operation, roles and responsibility of the organization, measure of performance and system related to the value analysis process (Feo and Bar 2012).

Principles of design: Samsung believes the innovation not only depends on the strengths of the method but on the success of DMAEV methodology (John Gattorna 2015).

Global optimum: All the improved ideas should not only focus on the local goals but also look forward to the global goals. Improving a process using the six sigma, it is essential to monitor, calculate and improve the key indicators of performance. Two methods, a down flow tree of decisive quality and a bottom up confirmation of global optimization are utilized.

Streamline the performance: Samsung always look forward to its performance, as it believes that performance can attract the best and valuable consumers worldwide. The company progressively incorporates the merit-based system. It also allows exceptional performers to have the best career pathway.

Establish risk management system: Samsung Electronics has executed an inclusive risk management system and risk improvement tactics, which helps the company in, comprehend the risk.

Cross-functional team: Samsung uses a system named Voice of business, to bring the entire in-house department closer. The job of the system is to collect all the internal requirements and prepare an accomplishment plan based upon the collective pronouncement.

Since starting the business in Korea in 1969, Samsung has extended its products in more than two hundred countries worldwide. Samsung feature much of its accomplishment to the global network of the employees, the creativity and the improvement of the engine for its growth. Samsungs regional headquarter makes sure that the employee can perform according to the perspective not only locally but also around the world. The commitment to every region provides a lot of opportunity to develop exclusive localization strategies and imaginative global implementation. Samsung has always tried to design its product according to the country. Such as, USA has a increasing demand of sparkling water. Keeping that in mind the company has launched a refrigerator that dispenses the carbonate water with just touch of a single button.

Streamline the performance

Location specific advantages of SamsungAfrica uses more solar energy than normal electricity; the poverty rate is also high in the country. Samsung has built a satellite enabled free TV service for the remote areas where cable connection could not reach yet. It has also introduced refrigerators, which can keep the foods fresh during the long power cuts up to eight hours.

In Turkey, the rooms are very small. So the company has made 20% smaller fridges to fit the space available in the rooms.

For the China and Korea, the company develops a sleek and slim design which fulfills the desire of the growing consumers (Ling li 2014).

In the recent years, Samsung has spent billions of dollars on the research and development. According to the latest audit report the company has spent almost fourteen billion on the research and development; this is the highest amount that Samsung has ever paid for the R&D (Zedtwitz and Gassmann 2013).

Samsung has always tried to be innovative from its competitors. As new technologies are being constantly hitting the digital market, speed is essential to remain in this aggressive market and new markets have to lead the way constantly (Harper et al. 2013).

People: The strongest part of Samsung is the team. The people who works for the company, which consists of talented engineers and researches. More than fifty thousand brilliant people work on the research and development every day. Samsung offers forty two research facilities all over the world, this team’s work together on the strategic technologies for the upcoming days. The technology which has been designed by this people already forges the new market trends and set a standard for brilliance.

Organization: Samsung’s Research and development is built with three layers. SAIT, The Samsung Advanced Institute of Technology identifies the growth engines for the future. It also manages the security and the management of technology. All the centers are totally focused on the innovative technology which is projected to deliver the most promising future result. The job of the division product development is to commercializing the products which are scheduled to strike the market within few years.

Investment: Investment is another way that the company responds to the extremely indecisive business environment and a aggressive market through the promise to the research and development. Every year Samsung invest at least a ten percent of the sales revenues in the activities of research and development. Samsung is dedicated to primary technology standardization and securing intellectual property rights.

Establish risk management system

Global network: Samsung is always recognized for its global innovations. The research and development network has six centers in Korea and eighteen more in nine other countries worldwide including Japan, Africa, Israel, United States, Russia, India and more (Humpleman 2012). This development centers are always busy looking for the best local talents. It also investigates the latest technology treads in the market and brings life to the technologies that are filled with benefits.

The consumer electronic marketplace is aware of the aspects of the supply chain management and the risks related to it. Samsung has a unpredictable consumers with different taste and demands (Chae 2014). Supplier or distribution related delays are the main problems of the supply chain management. Samsung electronics belongs to one of those companies that spend the highest on the R&D expenditure as a proportion of the revenue within the industry. There are different kinds of risks mainly with supply, demand, environmental and so on (Julian et al. 2015).

Supply related risks

This kind of risks can be related with unpredictable disturbance. This kind of risks can be relatively damaging (Cai et al. 2013).

Political risks in the home country: It is difficult for Samsung to change the home country or lower the involvement with it. There is always a change of shutting down the production and distribution. During the early 1990s, Korea faced a political instability and unstable labor market. Most of the electronics company had to shut down their plants.

The perfect way to deal with this situation is to have more plants and suppliers in different countries. Fortunately, Samsung never had to go through such bad situation as it has profit sharing and stock ownership schemes. This has helped to keep up a good relationship with the workers (Mark Millar 2015).

Merging and Acquisition: There is always a threat from the competitor that they might acquire the supplier. There is also a potentiality of the increased price of the competitors. This is a strategic risk. Samsung has a very good relation with its suppliers, which helps the company in financial and technological needs. Samsungs suppliers use the same ERP network as the company. The special bonding with the suppliers makes the supply chain more efficient by dropping the possibility of miscommunication about any orders (Wisner et al. 2014).

Act of god or man: Act of god or man can not only interrupt the production of the plants but also interrupt the distribution and transportation. Act of god is very common in earthquake prone areas such as Japan, China and more. The company needs to think in a strategic way about these risks.  Act of man is related to terrorism, war and many more. It can happen any time in any country. Consumer electronic industries are not protected by these acts. Sometimes the combine force of man and god can damage an organization. In 2001, Attacks such as 9/11 terror attack and a sequence of typhoon has interrupted the air transportation for the South East Asian region.

Cross-functional team

Capacity risk:  Assuming capacity can be a problem in the consumer electronics company. Capacity can be too high or low. Both the scenario is costly due to misspelled assumption. It takes a lot of time to invest a built an organization. Sometimes the breakeven time is also numerous years away. Investing in the manufacturing plants requires much planning, attention and proper resources. Thus, addition of capacity is a planned option.

Companies can reduce the excess capacity risks by making the available capacity more flexible. Samsung has a centralized capacity, which helps the company to take benefit in the economics to scale.

Intellectual property risk: Most of the electronic companies outsource to the same producers used by its competitors. To keep an aggressive edge over other companies long term profits are important. Companies can mitigate the property risks by keeping some in house production under the control of the company. Samsung invests a lot in their research and development to stay ahead of its competitors. The company does not have any outsourced manufacturer for the high end products like phones, television and more. It also has a excellent relationship with the suppliers.

Supplier delays: Sometimes the same supplier supplies in so many companies, that it makes it difficult for the company to manage everything at the same time. The companies can be in trouble due to the delays in suppliers. Depending on the demand, Samsung uses more than one platform in its individual plants to permit switching from one product to another.

Technology related risks: The electronic industry has a lot of competition. Sometimes a large investment is required to collaborate with the competitors to lower the risk of technology differences. As Samsung invests a lot in the research, it always tries to cope up with the market with some innovating products. The company also has forged associations with numerous universities to help in the advanced information technologies.

Cultural differences: Every country has different culture, it is important for the electronic companies to offer the right technology, which suits the local culture. Samsung operates a large Human resource development centre in Korea. It trains the staff to deal with the cultural conflictions of the community.

System risk: A company has so many branches around the world. There is a mother system which in connecting to all of the other systems. The failure of one system can damage the other systems too. A collapse of information in the infrastructure can create a lot of damage in the networking atmosphere. Samsung uses a business recovery service system that helps in retrieving any data during the time of breakdown.

Location specific advantages of Samsung

Samsung always tries to be innovative with its products. Recently they have launched OLED, Quantum dots, advanced optical film, Energy harvesting and so on.

Organic Light Emitting Diodes: OLED is a light emitting technology made with thin organic films in between two metal electrodes. It is thinner and efficient than the regular LCD displays. OLED has a lot of advantages, such as it lowers the consumption of power, it is much more bright than the LCD, it has a new type of display. OLED is more durable, which can be operated in a high temperature range. OLED is also very light as the screen is very thin.

Samsung introduced the first curved OLED display. OLEDs can be used in wearables and in car windshields, lamp designs and many more. At Samsung Advanced Information Technology, the company is looking to lower the power consumption as much as possible and build an innovative screen that will provide users a great experience.

Quantum dots: QD’s are very small semiconductors which unique features such as melting point, energy band gap which can be tuned anytime according to the depending on the size. It has high potential as the light emitting materials for the next generation display ha high quantum efficiency. It offers sharp resolutions; wavelengths can be tuned easily and quickly. It is useful for drug delivery system, Biosensors and more.  SAIT is trying to develop a compact process for the structure of QD.

Advanced optical film: The advance optical film technology develops the new materials and processed skills to higher the optical properties of the displays, it can enhance the brightness, widen the viewing angles, lowers the reflection in the coating films that uses a bright enhancing films. It is specially used for the flexible display market, where the films need to be more moisture and heat resistant.

Biomaterials: Chemicals that can be replaced by the usual petroleum based materials is known as biomaterials. Biomaterials are eco friendly. It can be extracted from biomasses such as woody material, corn, seaweed and so on. In the future, it can be used as a replacement for the traditional petroleum products.

Next generation battery: Efficient use of energy is increasing day by day. The importance of electric vehicles, which runs on battery, is growing worldwide. Samsung has launched the new EV batteries that reduces the greenhouse gas emission and supports the green energy worldwide. SAIT actively conducts research on the next generation electronic materials. It focuses on the cathode and lithium air battery technology (Choi et al. 2013).

Research and Development at Samsung

Harvesting of energy: The major purpose of energy harvesting is to translate and accumulate light, heat and other energies, which are wasted in the environment. These energies can be used later as a sustainable energy. It enables mobile devices to sense the networks and obtain energy from the instant environment wireless. It does not require any wired power of the batteries.

Conclusion:

For process innovation, now a day there are a variety of approaches and systems are available in the competitive market. Six Sigma and supply chain management belongs to those markets. The main aim of these techniques are to improve the quality, process, coordinate the value chain of the company, inbound logistics, sales and service to the consumers. Samsung realized that there are various opportunities in the SCM operations. Thus, the company is developing an exclusive six sigma based methodology to advance its SCM operations. The effort and investment of the company has of the company so far has been successful. The six sigma program has formed largely skilled and brilliant specialist. Currently, the other members of the institution are being trained by these specialists. The projects are conducted and organized in a disciplined manner. The outcome of the result are constantly observed and shared using Samsungs warehouse for the use of six sigma. Samsungs challenge for the worldwide optimization is keep on going and the SCM six sigma is estimated to play a large part in the institution.

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