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Real-time visibility in Supply Chain Management

30 Jan 2022

Supply Chain Management (SCM) plays a vital role in every industry, directly contributing to a company’s success and overall customer satisfaction. In previous years, international trade disputes and natural disasters have disrupted supply chain management. These disruptions make a substantial impact – the outcome is expensive at best and catastrophic at worst. They affect a company’s ability to deliver product and drive revenue and can easily cause long-lasting brand damage. Covid-19 has caused another unprecedented setback to SCM; 94% of the Fortune 1000 have reported experiencing coronavirus supply chain disruptions. This has created an even more complex challenge as supply chains have become a vital lifeline for distributing essential medical supplies, food and other key necessities where they’re needed most. With the massive shift to e-commerce, retailers are faced with an overwhelming production and delivery process to ensure a seamless online shopping experience. The entire SCM process is complex. It involves coordinating across various disbursed and commonly disconnected supply chain actors like producers, brokers, transporters, processors, retailers, wholesalers, and of course consumers. It often relies on outdated and manual processes to control and monitor a product’s flow from the procurement of raw materials and parts from the beginning of production through delivery to the consumer. Samsung Electronics maintains 216 global bases in 74 different countries, with those offices employing the services of 2,389 first-tier suppliers. This meant that when Samsung set out to build a supply chain that was economically, socially and environmentally sustainable, the task represented a significant challenge. Samsung strives to achieve cost competitiveness as well as operational efficiency through strategic supply chain management while maintaining its focus on sustainability as well. The SCM strategy of the company is based on five important criteria – cost competitiveness, human resources capacity, on-time delivery, response to risk, and supplier competitiveness. Samsung focuses on the economic and social as well as environmental aspects of its supply chain operations to manage its impact in the three areas. The focus of Samsung’s SCM strategy is to ensure an all-encompassing competitive edge in terms of cost, delivery, quality, technology, and human resources in order to maximise synergy, speed, and efficiency with its suppliers and create a corporate ecosystem that enables sustainable growth. Cost efficiency and product quality as well as technology are some important focus areas in terms of SCM for Samsung. Samsung also ensures that the suppliers abide by international standards and regulations in the areas of human rights management, work environment, ethics, and conflict mineral issues with the aim to build an open and transparent management accountability system that engages all stakeholders along the supply chain. Social responsibility and business accountability among suppliers is also an important focal point of Samsung’s SCM strategy.  To manage an environmentally-sustainable supply chain, Samsung works only with Eco-Partner certified suppliers. This way it ensures that it can assess and manage the environmental impact of components, raw materials, and manufacturing processes. Samsung had adopted sustainability best practises in manufacturing long back in 2004 and its production process focuses on making products sustainable right from the planning stage through an eco-friendly design.  Samsung has built a procurement portal for the registration of new suppliers.  It also carries out annual assessments to help the existing suppliers strengthen their competitive edge. The Korean smartphone brand has established the International Procurement Centre (IPC) and Global Supplier Relationship Management System (G-SRM) to accept submissions from new supplier organisations. It has its IPCs located strategically all over the world in key locations so that they can monitor regional technology trends and identify potential suppliers. These methods have allowed Samsung to ensure that its supply chain is competitive and strong. The suppliers that pass all the criteria are EcoPartner certified suppliers that the company has business relationships with. Samsung has also established a code of conduct for its suppliers that they are required to follow to remain Samsung suppliers. The code of conduct apart from ensuring adherence to the local laws and regulations also ensures that the suppliers manage their business operations and work environment responsibly. Since 2018 Samsung has been providing training sessions for Vietnamese industry experts under its Vietnamese Industrial Consultant Training Program. Participants include consultants, public officials and professors, and the goal of the program is to help nurture local human resources in the technology sector and lift the rate of production for locally produced components. The program offers two tiers of training – local consultant and master consultant – and is aiming to train 200 local and 60 master consultants by 2020. In 2015 Samsung launched the Smart Factory Construction program, which aimed to share technological expertise regarding the establishment of smart factories with Korean SMEs. Smart factories can improve production efficiency, reduce costs and minimise environmental impact and workplace risks. 1,086 Small and Medium-sized Enterprises took part in the smart factory program between 2015 and 2017 and saw a 54% increase in quality and a 58% increase in productivity.  Samsung is planning to reach out to 2,500 further SMEs in Korea between 2018 and 2022, with the focus of the expanded project being on sustainable growth in the era of industry 4.0. Recently, Samsung investigated the working environments of migrant workers at its first-tier suppliers in Malaysia. Migrant workers remain a vulnerable demographic and Samsung demonstrated its commitment to ensuring that they are treated fairly with its 2019 Ethical Recruitment and Fair Labour Practice Training Session, held in conjunction with the International Organization for Migration (IOM). The training drew around 80 managers from Samsung’s Malaysian supply chain, and covered issues such as ethical recruitment, due diligence, and how to identify and combat unethical employment practises. Samsung has developed its Responsible Sourcing of Minerals policy in order to ensure the ethical sourcing of minerals throughout its supply chain. The company takes the issues of environmental deterioration and human rights violations in conflict areas in 10 African countries seriously, and has banned the use of minerals that are mined illegally in conflict regions. In order to help address unethical mining practises in the Democratic Republic of Congo specifically, Samsung Electronics has started the Cobalt for Development program in partnership with other multinational companies. This program aims to improve the labour conditions and the living environments at specific cobalt mines in the country.  


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