What supply chain lessons can be learned from Samsung Galaxy Note Recall?

Source: Samsung

Source: Samsung

Samsung has issued a full recall of the Galaxy Note7, described by some as an iPhone killer. The reputation of the brand and financial losses will be significant. Kulbinder Garcha, an analyst at Credit Suisse, estimates Apple could capture at least half of the volume of Note 7 phones that Samsung was poised to sell. Samsung initially concluded that the issue was with the batteries from one of their suppliers and scrambled to send replacement phones with batteries from a different supplier. Only days after the replacement phones hit the market, they had their own issues and started to ignite. This led Samsung no choice but to issue a full recall of all Samsung Note 7 ‘s. Most disturbing is that according to the New York Times, after a month has passed since the first issues surfaced, Samsung still has not been able to identify the root cause of the issue.

So, could good supply chain technology and processes have minimised the damage to Samsung? Certainly more stringent quality control could potentially have caught the issues. The Wall Street Journal recently reported that good quality control would have helped, but this is a more challenging task as supplier networks become increasingly complex.

Frank Gillet, Vice President and Principal Analyst at Forrester Research as quoted in the Wall Street Journal:

A design flaw should have been caught during review and testing, and this is much harder to do at global scale with multiple suppliers and factories for the same part.

Based on the little that we know now, there are two supply chain areas that need some attention:

Visibility and Collaboration: As supply chains evolve, expand, and require compressed lead times to get new products to market, there is an increasing need for visibility and collaboration throughout the supply chain internally and with all suppliers. Internally, according to the New York Times, communications was hampered by Samsung management as engineers were trying to replicate the issue:

It did not help that the hundreds of Samsung testers trying to pinpoint the problem could not easily communicate with one another: Fearing lawsuits and subpoenas, Samsung told employees involved in the testing to keep communications about the tests offline — meaning no emails were allowed, according to the person briefed on the process.

Without good visibility and collaboration, getting to the root cause is exceedingly difficult as Samsung is finding out.

Risk Assessment and Planning: Did Samsung have a formal risk management and recall plan in place? Had they planned for the unexpected instead of waiting for a disruption?

Now , Samsung’s challenge is to rebuild a brand and an increasingly complex supply chain.

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