Samsung – A Multinational Company Overview
Discuss about the Operations Management at Samsung Strategies.
Samsung is a south Korean multinational company comprise of multiple affiliated companies under it like Samsung electronics, Samsung Insurance, Samsung engineering, Samsung Heavy industries to name a few. Out of all these, Samsung electronics has the largest contribution in the revenue in the Samsung group. Few years back, it has lost a high profile case to Apple where the company is found guilty of copying large number of patents in its product. Apart from it, its Galaxy note 7 also received huge complaints and there were even cases of battery explosion. All this has impacted the reputation as well as revenue of the brand to a huge level and Apple in mobile phone and other companies is household appliances have seen higher sales. Apart from this, there are large number of external factors also like changing technologies, short product lifecycle, changing consumer preferences, globalization, changing job designs, global manufacturing that have impact on the operations of the company. Samsung has defined its vision has “Inspire the world, create the future” in its 2020 vision booklet and is redefining its strategy to regains its lost glory back. The purpose of this paper is to evaluate the impact of latest trends on the future of Samsung and what should company can do to respond to the trend effectively.
Samsung also deals in electronics and supplies semi-conductors and chips to large number of companies. As the technology is changing at a rapid pace, instead of a follower, it has to lead the innovation. It must spent enough on research and development. Apart from it, it should also be ready to response to any disruptive technology that can impact it. For instance, 3D printer is a technology that can be a threat to its manufacturing business and thus it must consider alternative options and should promote a culture of change and innovation in the organization (Brown, 2014). Take for example, its camera business has been impacted largely because of the high quality of the cameras in the mobile phone. Thus, it has to be adaptable and agile and constantly keep a watch on changing trends and consumer preferences.
With the increase in digitalization and automation, globalization has on the rise. Small companies and startups are giving tough competition to the leaders through the use of globalization. For instance, Company is competing with Apple and Google but now there are large number of Chinese companies like Xiami, Oppo that are providing large number of features in their mobile phones at a very low price compared to top brands. Though the penetration of these players is quite small but they should be taken seriously because they will make the consumers demanding. At the same time, big brands also has to leverage their huge network, after sales service, marketing as well as high quality to tackle the challenges of globalization of markets.
The Impact of Changing Technologies
Social media has really empowered the customer. Customers are looking for good service across multi channels otherwise they will not shy away from posting negative reviews or post in public. The definition of agility is also changing. Each consumer is also expecting a personalized service and various big organizations are also focusing on the individual marketing and this is made possible by use of technologies like Big Data and Analytics that identifies the patters in the data to generate insights. Thus, Organizations must have a dedicated social media strategy, Omni channel presence, and excellent service and personalized marketing. With the new players coming in, rise of cash rich e-commerce players, discounts, cash backs have become common and thus it is getting difficult for the organizations to match their prices across all the channels. Customers also expects lowest price and that too with a high degree of service.
Job designs are changing with rapid development in technology. Today, most of the mundane tasks can easily be performed by the software and thus employees can focus on the critical work that can’t be automated. Apart from this, with reduction in monotonous jobs, there is higher demand of skilled workers called as knowledge workers in today’s context. The impact of changing job designs will be favorable for the organization like Samsung whose core competency lies in innovation. Telecommuting is also a gift of today’s technology and it will also open large pool of talents for the company as location is not a constraint in hiring when people can work from any location (Oldham, & Fried, 2016).
Quality Management has always been important in the history. There are numerous cases of product recalls by Toyota, Ford and many other biggies that have dented their reputation and it took huge effort for them to get the consumer confidence again (He Rong, & Shen, 2017). Samsung also faced a similar issue when Galaxy note 7 has complain of battery problem worldwide. Though Samsung do not name the suppliers but said there were 3,4 battery vendors. In future, importance of quality management cannot be discounted even it if comes at a price because consumers has a lot of choices today and they will not shy away change their loyalty if they get a similar quality product at low price. It has to evaluate its supplier performance strictly and also put multiple checkpoints for quality before products are finally shipped to retailers or consumers.
The Rise of Globalization and Changing Consumer Preferences
Organizations are increasing their manufacturing locations as it will not only help them to get a raw materials at a competitive price but also help in serving the local customers in a better way. This has become a trend since the product life cycles have been reduced. It is because if the products are manufactured at 1 location and demand is fulfilled from there, lead time will be higher and it is possible that large number of inventory may become obsolete in a short period of time. Thus, it is advisable to have global manufacturing location or at least in the key markets to serve the customers better. Apart from it, organizations can also consider the locations like India and China that offers large number of incentives and have cheap labors also. Samsung has 2 plants in China, 4 in Korea and 1 in USA (“Manufacturing Centers Locations | Samsung Semiconductor | Samsung Semiconductor Global Website”, 2018).
Goods and service design is one of the most important operation management areas that can impact the success of Samsung going forward. In this world of constant and rapid change, it becomes increasingly critical for the businesses to continuously upgrade their products and release new products by studying the market requirements and trends. Goods and services designs serves many purposes like company will not only be able to provide the latest functionalities in their products to customers but also will be able to cut their costs (Bocken, et al., 2016). For instance, early supplier involvement during the design phase has become an important trend for the organizations to cut their costs and comes with a design that is easy to manufacture (Merilainen, 2018). Apart from it, suppliers can also be consulted so that the design should be loosely coupled, easy to assembly and also provide the better product. Innovation has become the key for the success for organizations like Apple that has released its iPhone version every year to provide improved design and more functionalities (Chen, & Ann, 2016). Nokia and Blackberry were out of smart mobile market due to lack of new product development that can serve the latest consumer needs (Van Alstyne, & Parker, 2017). Thus, in order to remain competitive, goods and service design is one of the most important area. Apart from this, organizations also has to make their new product development process very agile. For instance, if a competitor has released new product with innovative features, it will soon become trend and raises the customer expectations and other companies also have to come up with s similar or better features quickly to compete. Thus, organization should have good relationship with suppliers, contract manufacturers and other players in the overall process so as to quickly come up with a product.
Changing Job Designs and the Emergence of Knowledge Workers
Supply chain design is another important area of operation management. It consists of buying, manufacturing, order booking, transportation and all other aspects till the product reaches to the customer. The objectives of supply chain management is to deliver the right product at a right place in a right quantity in a right time. Thus, it is not a matter of just 1 organization but all the partners have to work with a common vision to achieve the goals. It is possible that the Samsung has shipped the product at the right time but due to challenges of logistics partner, things got delayed resulting in excessive inventory in a system. Sometimes, there is also a delay in obtaining the right raw material at the right time that will delay all the downstream processes. Thus, effective supply chain design requires that all the partners’ work with a collaborative mindset. There are numerous techniques like vertical integration i.e. to acquire suppliers that supplies critical product, sharing the forecasts and other important information across all the partners, sharing point of sales by retailers with all the partners in real time. Technology has made this collaboration possible and there are supply chain leaders like Zara, Walmart, Cisco, McDonalds, Unilever, amazon that has changed the entire business dynamics and has huge competitive advantage due to their strong supply chains. If the supply chain is robust, it becomes easy for the company to deal with uncertainties in demand and supply and provides higher fulfillment and on time delivery of the products. There are also some supply chain strategies like postponement, cross docking, vendor managed inventory (Waters, 2018) that can be leveraged to make the supply chain more adaptable, agile and aligned (Dubey, & Gunasekaran, 2016). Samsung should also revisit its supply chain like procurement process, supplier relationships, logistics partner, strategies and ensure that there should be key performance indicators that are holistic in nature i.e. Key performance indicators should not at the department level or at a single company level but at the overall level so that all the partners collaborate to achieve the goal (Stevens, & Johnson, 2016). With globalization, organization deals with large number of suppliers and customers at multiple geographies and also high lead time of products, thus it becomes important for them to analyze and improve their supply chain.
Samsung has announced in 2016 that it is stopping the production of its galaxy note 7 due to issues. At this point of time, if the organization has large inventory of galaxy note 7 in warehouse, retail shops, in transit, all will become obsolete and converted to a huge loss for the company (Ambrose, 2018). Similarly, product lifecycle has also been reduced considerably in last few years with newer versions and product launches coming every few days. If there is some game changer mobile launched by any company which has become instant hit, competitive will suffer if their products have large inventories. As a result, managing inventories has become a quite critical topic because organizations can’t produce less goods because that will an opportunity loss and too much production can also be risky (Kortmann, & Piller, 2016). One way to reduce is that companies should reduce the lead time of the product so that they should spent minimal time in transit. Apart from it, organization can also look to setup global manufacturing facilities or at key locations. Easy to assemble, loose coupled products and flexible manufacturing are some other techniques. There are also advanced software to manage the demand forecasts very well with minimal amount of error. Agility and visibility are other important aspects to better manage the inventories. In fact, effective management of inventories is a subset of supply chain design and the output of company’s supply chain management strategy. This single are of operation management can provide a huge competitive advantage. There are leaders like Zara that are known for managing their inventory very well.
Conclusion
This report looks at some of the important areas of the operation management like product and services design, supply chain design and inventory management and how and why they can have huge impact on any organization including Samsung Electronics which has been chosen for this report. It also analyzes some latest challenges and trends like globalization, changing job design, rising customer expectations, changing technologies and how each of them might impact the Samsung and what Samsung should do to overcome those challenges briefly.
References
Ambrose, K. L. (2018). Keeping it all together: the challenge of complexity, reputation, and supply chain crises.
Bocken, N. M., de Pauw, I., Bakker, C., & van der Grinten, B. (2016). Product design and business model strategies for a circular economy. Journal of Industrial and Production Engineering, 33(5), 308-320.
Brown, A. (2014). Organisational paradigms and sustainability in excellence: from mechanistic approaches to learning and innovation. International Journal of Quality and Service Sciences, 6(2/3), 181-190.
Chen, C. M., & Ann, B. Y. (2016). Efficiencies vs. importance-performance analysis for the leading smartphone brands of Apple, Samsung and HTC. Total Quality Management & Business Excellence, 27(3-4), 227-249.
Dubey, R., & Gunasekaran, A. (2016). The sustainable humanitarian supply chain design: agility, adaptability and alignment. International Journal of Logistics Research and Applications, 19(1), 62-82.
He, L., Rong, Y., & Shen, Z. J. M. (2017). Product Geographical Distribution under Recall Risk.
Kortmann, S., & Piller, F. (2016). Open business models and closed-loop value chains: Redefining the firm-consumer relationship. California Management Review, 58(3), 88-108.
Manufacturing Centers Locations | Samsung Semiconductor | Samsung Semiconductor Global Website. (2018). Samsung.com.
Meriläinen, S. (2018). Development of Early Supplier Involvement (ESI) Process–Study for a Case Company.
Oldham, G. R., & Fried, Y. (2016). Job design research and theory: Past, present and future. Organizational Behavior and Human Decision Processes, 136, 20-35.
Stevens, G. C., & Johnson, M. (2016). Integrating the supply chain… 25 years on. International Journal of Physical Distribution & Logistics Management, 46(1), 19-42.
Van Alstyne, M., & Parker, G. (2017). Platform Business: From Resources to Relationships. GfK Marketing Intelligence Review, 9(1), 24-29.
Waters, D. (2018). Towards a Strategic View of Supply Chain Management. Global Logistics And Distribution Planning: Strategies for Management.
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