Samsung's Purchasing and Supply Management - Case Study Example

Purchasing and Supply Management University name Student name Student id Course Date Table of Contents 5. Procurement and Supply Chain Strategy 2 5.1 Strategic Analysis 5 Figure 1: supply chain diagram 8 5.2 Strategic Strategy 8 5.3 Purchasing and Supply Chain Strategy Implementation 9 5.3.1Forecasting 9 Figure 2: GANTT chart 10 References 11 5. Procurement and Supply Chain Strategy Samsung has been operating in the industry for the last 70 years where it has been adopting the current technologies in its operations. The inventions and discoveries of Samsung have shaped its digital revolution history. Samsung Electrics has been competitive in the industry due to the strategies it has been employing in procurement and supply chain management. It has a diverse business that includes displays, chips among other technologies (Kim and Joo, 2007). Samsung has ensured adoption of supply chain strategies that its competitor Apple has not managed to adopt making the company competitive in the industry. For instance, the company management has entered into a partnership with the world-class partners in the process of ensuring quality and continuous manufacturing process. Samsung Electronics maintains leadership in all mobile and media technology areas by having Samsung Advanced Institute of Technology (SAIT) as its intellectual spearhead. This institute and its related organs have the aim to prepare for the new products development as the first one among the three layers of the product development. The next two are at each product division and the centre of communication division and the digital media. Procurement of components is in Samsung Electronics device solution division principle. Products that are not made in the solution division are procured through transparent processes and then assembled in the appropriate division factories around the world (Maskatia, 2009). Digital Media divisions and Device Solutions are operations focusing on marketing and logistics on Incheon Airport and Korean. Sales and marketing have different structure on its management based on the geographical area rather the product working with vendors and the outsourced logistics in each market. The supplier partnership that has been employed by Samsung uses three phases for the last twenty years. The First phase of the supplier partnership started in the year 1993 and changed in the year 1997 following the change in the management of the company that was advocating for a more efficient supply chain. During this phase, there was Samsung Electronics acknowledgment on the limitation of its plans that based on rapid growth generating to high cost and low productivity whereas there is a requirement of high quality and productivity of Samsung in 1997 (Kim, 2003). In this phase, Samsung Electronics initiated its action on the supplier partnership which includes fair management, an improvement on procurement, and social trust management. By the procurement strategy team having a responsibility on supplier partnership, it supported in the transfer of innovation methods to suppliers such as education on Sigma and process innovation (Simchi, Simchi, and Kaminsky, 2009). The team has improved in sites manufacturing and has offered support on the establishment of IT infrastructure that is mainly focused on enhancing quality and productivity. The management of Samsung Electronics managed to establish a firm foundation regarding its reputation the industry. The following second phase was from the year1997 to the year 1998 ending before the global financial crisis in 2008. Samsung Electronics experienced an intensive global competition led by domestic politics, dynamic business environment and emerging strong competitors like Apple (Song and Kim, 2012). Samsung Electronics emphasizes on suppliers’ innovation capabilities to enhance its survival among the stiff competitors through the development of technology, plant advancement, human resource development and financial support. This stage mainly focused in remaining competitive globally making the company have future-oriented strategies for managing its supplies. The last phase started in the year 2008 and ended in the year 2013 following the need for more sophisticated and competitive supply chain strategies in the industry. Samsung Electronics explained more on its management philosophy that included fair management, enhanced procurement practices; thus, ensuring transparency and improved relations with its stakeholders particularly suppliers. Samsung Electronics made it formal with supplier partnership plan and practiced it systematically so as to ensure growth in the industry (Lysons, & Farrington, 2006). During this stage, Samsung experienced development in its business philosophy thus strengthening the suppliers’ capability and position as competent firm globally with a trust-based culture. 5.1 Strategic Analysis The mission of Samsung is focused on becoming a creative leader and building its brand in the industry. In its mission statement, the company has shown its efforts of changing its reputation to become an organization that succeeds by watching other companies start new technologies in the industry then rushing behind them. This can be demonstrated by the moment the company was accused of violating some patents losing the case to iPhone. The leaders of Samsung have been working towards transforming the strategies and culture of the company through research and design (Lambert, Cooper, and Pagh, 2008). Samsung in its vision statement has shown commitment to inspire the society by making use of the advantages of its creative solutions, strength, new technology and innovative products. Samsung has the necessary skills for meeting the expectations of the customers and making use of new opportunities through making use of sound procurement and supply chain strategies. It has partnered with its supplies to ensure that the products of the company are competitive in the market through ensuring high-quality supplies. The management of Samsung Company has been ensuring purchasing ethics that can guarantee enhanced value to the customers (Monczka, et al. 2015). The dealings of the company and its suppliers have been characterized by integrity and honesty for ensuring mutual prosperity and growth. This involves understanding and complying with the regulations, laws, and code of conduct for governing the operations of the company. The cooperation between the company and its suppliers has ensured enhanced performance and increased competitive of the company in the market. This has facilitated in ensuring that the customers can realize the value for their money as the suppliers have ensured high-quality supplies. Samsung has tried to position itself in a better position in the market through investing in the new technologies. Despite the fact that it has been lagging behind Apple, its main competitor it has managed to offer competitive products in the market. For instance, Samsung ensured there were the necessary resources to acquire the need technology that could achieve efficiency. The resources ensured that operations were automated to enhance the service delivery and ensured high-quality supplies. Besides, the interactions between the company and the supplies were improved due to the increased investment in technology (Mentzer, et al. 2001). Technology adoption helped in ensuring continuous production process. Samsung was aiming at ensuring stability in partnership management through training and providing seminars for the employees and future managers. Management of Samsung Electronics system for fair trade, included a reflection of changes in the technology escrow and prices of raw materials to ensure there is the practice of a transparent management. Samsung Electronics was committed to ensuring that there was a confidential relationship with its partners. This widened the chances in communication with the suppliers via cyber petition system and conferences (Bowersox, Closs, and Cooper, 2002). This supplier partnership strategy enabled the competitiveness reinforcement of Samsung Electronics to manufacture and obtain flexibility and effectiveness through developing and discovering of the innovative suppliers and their ideas. Samsung’s products can include galaxy s7, wireless charger, gear s2 classic, Gear VR, Gear iconx, gear fit, level on wireless pro, galaxy view, edge, galaxy view, galaxy note7 and galaxy tab s2. Samsung has been employing an evolution strategy where it has been ensuring that it has sufficient knowledge concerning the supply chain and procurement requirements. It changes its procurement practices in response to the changes that have been taking pace in the industry. For instance, Samsung has ensured that it keeps pace with the changes in consumer needs by making sure that the procurement and supply strategies are relevant in the industry. The procurement strategies of Samsung have been positioned in a way can anticipate future changes in business requirements. The dynamism of the procurement and supply chain strategies can be associated with the changes in the customer needs making them diverse. Samsung Company does adjust the procurement strategies aiming at accelerating change adoption and capture the available opportunities in the market. Many companies in the industry do adjust their supply chain strategies to achieve competitive advantages in the market (Cavinato & Kauffman, 1999). Samsung aligns the customer segments using the necessary services and products. It has managed to develop supply chains that can guarantee company success in the market through ensuring value added procurement practices. Besides, Samsung Company has been working towards achieving efficiency in the procurement process through making use of techniques that can include product teardowns. The new product is within the product range of the company as it has new features that can compete better in the market through innovative designing. The primary target market of the products can include the young generation show have the taste of the technological advancements in the industry. The pricing of the product is competitive in the market as it is low priced comparing the prices of the products of the competitors. This is possible due to the low costs of manufacturing making it possible to offer the product at lower prices than those of the competitors. The components of the new product can include faster RAM, thin screens, large storage, and ISOCELL cameras. The high-quality components do make the new product have the ability to connect to 4G networks in very challenging environments. The main competitor of the new product is Apple smartphones that have almost similar features of the new product. However, the new product has some competitive advantages in the market that can include owning and controlling the manufacturing process due to the good relations that do exists between the company and the suppliers. Figure 1: supply chain diagram 5.2 Strategic Strategy The sourcing plan that will be employed is the strategic sourcing that is holistic, long-term and systematic. This outsourcing strategy is crucial in acquiring the future and current needs of the company at the lowest possible risks and total cost of ownership to the supply line of the company. Strategic sourcing can provide a link between the suppliers and consumers necessary for ensuring improved delivery, quality, service, and costs in the process of providing the necessary means of achieving efficiency in the company operations (Van, 2002). The primary components in strategic sourcing do include market research, supplier evaluation and cost analysis. The sourcing arrangement for each component that will be employed is the strategic sourcing where management service of various categories. This sourcing arrangement is critical in improving savings of the costs, improving procurement management and ensuring efficiency in operations. A single outsourcing strategy will be used for each component as it ensures that risks are reduced. This strategy can be crucial in enhancing the relationship management programs of the company, especially with the company suppliers. I would ensure that there is partnership relationship because it creates some opportunities for reducing the risks associated with delays in supplies (Thomas and Griffin, 2006). I will use relationship purchasing because it can be crucial in improving the relationship that does exist between the company and the suppliers. The transportation mechanism that can be used in the process of delivering the product to consumers can include distribution through agents as it can assist in reaching many customers. Outsourcing has some benefits that can include reduced costs and improved efficiency. However, it has some risks that can include lack of control in the operations hence affecting the manufacturing process. I can manage the outsourcing relationship that does exist in procurement by ensuring that there are proper communications. 5.3 Purchasing and Supply Chain Strategy Implementation 5.3.1Forecasting I do expect the demand for the product to continue increasing due to the increased marketing of the new product. Over a period of 12 months, the demand is expected to be high where the sales are expected to reach around $20 million by the end of the first year of the product launch. Seasonal variation in demand can take place due to the changes in factors hat do affect demand like the economic situation of the country hence it is crucial to consider the various factors affecting demand during forecasting process. Forecast entails reducing the future outcome based on the present situation. It is considered important in ensuring that the current operation of the company can be adjusted to meet the future demands in the market. This can assist in coming up with the necessary strategies for achieving the company goals in the future. Various types of forecasting methods can be used that can include time series, judgemental and average approach method. The choice of the forecasting method is determined by the environment in which the company operates (Lambert and Cooper, 2000). The forecasting method I can use is judgmental forecasting where I will use the available information concerning demand to make judgments about the possible future demand. I will be considering full demand that considers the overall demand for the products in the market considering the products that are offered by the competitors. I would use forecasting to ensure that I can align the resources of the company to meet the market demand. Through forecasting, I will be in a better position to come up with the best strategies that can meet the market demand changes in a better way. Market information concerning the consumer demand will be useful information in determining the demand. The purchasing strategy that I can employ can include just in time purchases where I will ensure that I make purchases of the supplies that are needed in the production process. Figure 2: GANTT chart The product will reach the consumers in the market through establishing distribution channels in the market where the consumers will be able to access the company products. This will involve ensuring that the customers have the necessary marketing skills to ensure excellent customer experience (Cooper, Lambert, and Pagh, 2007). Technology will be utilized in the process of ensuring that there is efficiency in operations and guarantee service quality. References Bowersox, D.J., Closs, D.J. and Cooper, M.B., 2002. Supply chain logistics management (Vol. 2). New York, NY: McGraw-Hill. Cavinato, JL & Kauffman, L 1999, The Purchasing Handbook, A Guide for the Purchasing & Supply Professional, McGraw Hill. Cooper, M.C., Lambert, D.M. and Pagh, J.D., 2007. Supply chain management: more than a new name for logistics. The international journal of logistics management, 8(1), pp.1-14. Kim, M.J., Samsung Electronics Co., Ltd., 2003. Notebook computer. U.S. Patent D336,465. Kim, Y.J. and Joo, H.U., Samsung Electronics Co., Ltd., 2007. LCD TV receiver. U.S. Patent D542,747. Lambert, D.M., Cooper, M.C. and Pagh, J.D., 2008. Supply chain management: implementation issues and research opportunities. The international journal of logistics management, 9(2), pp.1-20. Lambert, D.M. and Cooper, M.C., 2000. Issues in supply chain management. Industrial marketing management, 29(1), pp.65-83. Lysons, K & Farrington, B. 2006, Purchasing & Supply Chain Management, 8th edition,Pearson publication. ISBN:978-0-273-72368 Maskatia, A., Acer Incorporated, 2009. Mobile internet device. U.S. Patent D602,487. Mentzer, J.T., DeWitt, W., Keebler, J.S., Min, S., Nix, N.W., Smith, C.D. and Zacharia, Z.G., 2001. Defining supply chain management. Journal of Business logistics, 22(2), pp.1-25. Monczka, R.M., Handfield, R.B., Giunipero, L.C. and Patterson, J.L., 2015.Purchasing and supply chain management. Cengage Learning. Simchi-Levi, D., Simchi-Levi, E. and Kaminsky, P., 2009. Designing and managing the supply chain: Concepts, strategies, and cases. New York: McGraw-Hill. Song, J.Y. and Kim, J.S., Samsung Electronics Co., Ltd., 2012. Terminal for portable mobile communication. U.S. Patent D663,298. Thomas, D.J. and Griffin, P.M., 2006. Coordinated supply chain management. European journal of operational research, 94(1), pp.1-15. Van Weele, AJ 2002, Purchasing and Supply Chain Management, 3/e. Thomson Monczka, RM. et al 2001, Purchasing and Supply Chain Management, 2/e, South Western Thomson Learning. http://www.intechopen.com/books/aeronautics-and-astronautics/an-agile-cost-estimating-methodology-for-aerospace-procurement-operations-genetic-causal-cost-centre http://www.tutorialspoint.com/management_concepts/management_concepts_quick_guide.htm http://sukirgenk.dvrlists.com/building-gantt-chart.html Read More