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Abstract
This report examines supply chain techniques used by The Samsung Group. It reflects on historical management aspects of the corporation and its quality management systems. The Group adopted Six Sigma and supply chain management (SCM) shortly after its establishment in 1938. In 1994, it realized that it had not exploited SCM and modified it.
The corporation’s supply chain strategy has six components, namely, leverage, strategic communication, process and operating efficiency, risk management strategies, and continuous improvement plans. SCM has led to improvement of quality management systems used by the corporation. However, the corporation can achieve more of its objectives by adopting enterprise resource planning (ERP) tools.
Report on Samsung Group’s Supply Chain Management
A business can manage its operations effectively by adopting relevant operational and supply chain techniques. Before the early years, supply chain management was not considered a resourceful management tool. However, in the 1990s, companies began to realize the impact of supply chain techniques on their business operations (Yang, Choi, and Chae, 2007).
The Samsung Group of companies began to implement the technique shortly after it was founded in 1938. It is known globally as an important manufacturing, financial, and Services Corporation. The Group has made significant steps and witnessed impressive increase in profits since the 1990s. The corporation regards this achievement as reflecting its effort to prove global business operations. For a long time, supply chain management has been one of the main pillars of business improvement at this corporation.
Its performance has been improving due to the remarkable use of SCM solutions. In 1994, The Group decided to exploit the potential synergy linking supply chain management and Six Sigma. It created a supply chain solution with six components that play crucial roles in enhancing vendor management strategies (Yang, Choi, and Chae, 2007).
The first component of the corporation’s SCM is leverage. This tool has helped the corporation to take advantage of its potential spending power and further improve profitability (Casemore & Co., n.d.). The Group creates leverage through financial instruments such as futures and margins. It also uses debts to finance its operations.
Despite this investment method being a risky tool, it has helped the company to operate for many years. The Samsung Group has developed an effective system to overcome risks associated with leverage. It has a policy that requires initiation of leverage based on information generated and supported by independent and trustworthy sources.
The next component of The Samsung Group’s SCM is Communication. The corporation uses the tool to get support from internal and external business sources. It understands that obtaining value from service providers or product suppliers to meet developing company goals requires an effective communication plan. It has developed a communication model that ensures external parties supporting organizational objectives are aware of current business challenges such as the frequent changes in technology.
It has developed a “supplier feedback” model to ease communication with the external stakeholders. This essential component of SCM is costly to develop and maintain. The corporation invests in education and research to over come some challenges associated with it development and maintenance. It has been using it while supplying electronic components to Apple, a company that manages a series of global chain stores (Yang, Choi, and Chae, 2007).
Additionally, the company utilizes process and operating efficiency solutions. It has recognized that an increment in production translates to an increment in volumes of supply of raw materials and production machineries. Moreover, when new quality standards were introduced, the supply chain systems were affected (Casemore & Co., n.d).
This encouraged the corporation to develop efficiency solutions. For example, when the corporation began to implement the ISO quality management, it developed new inventory management methods. The long-term benefits of efficiency are numerous. However, when beginning to improve supply systems to meet customer needs, a company may invest a lot of money.
It may need to employ a larger number of trained and experienced managers, buy modern production machines, and increase employee salaries. The main problem companies often face when implementing this component of SCM is delay in increase of equity. The Samsung Group invested in the process and ultimately increased its customer base (Yang, Choi, and Chae, 2007).
The Group’s supply chain management also incorporates innovation solutions. The company has managed to keep its daily operation on course as it initiates innovation plans. It has been managing innovation by getting support from external suppliers and other trade partners. Samsung has been a supplying electronic product to Apple. The two companies have attained exceptionally high success levels due to the co-operation.
Currently, both Samsung and Apple are leading global competitors. The companies are using innovation strategies to control the market (Yang, Choi, and Chae, 2007). The companies, therefore, need to spend heavily in technological research to remain economically viable. The Samsung Group have managed it innovation plans effectively, added more services, and reduced costs. It has also been improving its relationship with other companies.
The other component of supply chain management that Samsung uses is risk management strategies. External businesses that support Samsung present high levels of uncontrollable risk to the company. These risks are invisible and not easy to manage. However, The Group has developed a system that mitigates external risks. For the system to work successfully, it requires the support of both internal and external stakeholders.
Since managing suppliers, for example, is not easy, the company has faced obstacles is trying to coordinate with them. The Samsung Group, currently, cannot have no information regarding Apple’s next step of action after it emerged that the former is emerging as a strong competitor. The Group needs to examine its strengths and weaknesses and choose to trade with new partners or rebuild business ties with Apple (Yang, Choi, and Chae, 2007).
The final component of the system is continuous improvement plans (Casemore & Co., n.d.). Samsung engages in many activities to improve its performance. Most of the improvements have impacts on external stakeholders. Improvements done on Samsung phones, for example, would lead to reduction of costs and influence the supply chain management to reduce costs through different internal and external efficiency parameters.
The Group uses control charts to decide whether to reduce costs or not. For example, if it generates a control chart like the one shown below, it increases investement in communicaction and efficiency systems. The chart shows that the SCM components are under performing. The centre line acts as the average postion. Therefore, when the other lines fall below it , it is an indication that the affected components may hinder the corporation from meeting its quality targets (Yeung, 2008).
Samsung Control Chart for Communication and Efficency
Supply chain management has created reductions in working capital and organizational risks for Samsung due to improvement in product quality. However, the corporation can make more profits by using enterprise resource planning (ERP). ERP can help the corporation to improve the way it undertakes the order fulfilment processes and enable customers to get their goods in time and with fewer errors than before (Robertjacobs and Tedwestonjr, 2007).
References
Casemore & Co. / The 6 Elements of Supply Chain Strategy. (n.d.). Casemore & Co. / Operational Excellence. Web.
Robertjacobs, F., & Tedwestonjr, F. (2007). Enterprise Resource Planning (ERP). Journal of Operations Management, 25(2), 357-363.
Yang, H. M., Choi, B. S., & Chae, B. (2007). Supply Chain Management Six Sigma at Samsung. Upload & Share PowerPoint Presentations and Documents. Web.
Yeung, A. (2008). Strategic Supply Management, Quality Initiatives, and Organizational Performance. Journal of Operations Management, 26(4), 490- 502.
Do you need this or any other assignment done for you from scratch?
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