Samsung is not only none of the most successful global electronic brands, but one of the most successful brands period. (And with the surging popularity of Android, and it’s new Galaxy tablet, it’s market share is increasing rapidly in that market – one of the hardest to compete it.) On top of this, it is a supply chain leader, ranked #8 on the Gartner 2013 Supply Chain Top 25. How did they do it? A recent piece over on Supply Chain 24/7 on 7 Best Practices that Transform Samsung Electronics’ Supply Chain by SupplyChainOpz that referenced research by the Harvard Business Review, Supply Chain Management: The International Journal, and the Journal of the Operational Research Society did a great job of identifying the key decisions, and transformations, that helped propel Samsung from a much smaller player in trading, food processing, textiles, insurance, securities and retail to a world leader in electronics and digital technology.
Since they will work for any Supply Chain with a few tweaks, SI is strongly suggesting that you (re-)read SupplyChainOpz 7 Best Practices that Transform Samsung Electronics’ Supply Chain before continuing on to SI’s 7 Transformations that will transform your CPG Supply Chain.
7 Transformations that will Transform Your CPG Supply Chain
- Listen to the Voice of the Customer
Look at the top 10 of the Gartner Supply Chain Top 25. Apple, McDonald’s, Amazon.com, Unilever, Intel, P&G, Cisco, Coca-Cola, and Colgate-Palmolive. Every single one of these companies sells products the customer wants in every market they are in. To better understand the market, Samsung sends senior employees to MBA programs at local universities to help them understand the market and then establishes connections with appropriate leaders and partners in those markets to keep the insights coming in after the executives return to their HQ. While it’s not critical to attend a program in the target market, it is critical to be tapped in. Pay attention to market intelligence, go to trade shows and see what is attracting attention, follow the emerging trends, and consider what an average individual in your target market does in the course of a day and a week.
- Setup a Cross Functional Team Composed with the Right Talent
As a Supply Management practitioner, this is a best practice that should be well ingrained by now as you should be setting one up for every strategic sourcing project. However, there should also be a cross-functional team that guides the over-arching supply chain strategy.
- Adopt a Measurable Supply Chain Improvement Methodology
Samsung adopted Six Sigma and transitioned to DMAEV (Define, Measure, Analyze, Enable, and Verify). There’s also TPS and the Lean Methodology that fell out. The particular improvement methodology is not as critical as the commitment to implementing and executing on it day in and day out.
- Transition to Standardized Technology, Processes and Parts
Samsung standardized parts and processes and produces the majority of its components in Korea to enable them to better monitor and manage product quality. But don’t stop at parts, and production processes, move to planning and management processes and the underlying technology processes. For every function, there should be one system and one version of the truth. Each department can use its own best-of-breed systems if, and only if, there is a central data store that functions as the master data repository that each system works off of and that is always taken as the one version of the truth.
- Utilize Advanced Sourcing, CRM, and Production Systems
An Advanced Planning and Production System is a good start, but lets face it, true efficiencies materialize by getting the sourcing right. Be sure to source all strategic or high-value components using a strategic sourcing process that makes use of spend analysis and decision optimization and other advanced technologies. In addition, be sure to capture all of the sales data and user feedback that you can with good CRM systems. And be sure to make sure that you react to sales forecasts appropriately with your advanced planning and production systems.
- Implement Risk Monitoring and Measurement
The best laid plans are easily and quickly ruined by a single supply chain disruption. Implement an advanced supply chain visibility and monitoring system that monitors your suppliers and their suppliers to detect minor supply hiccups before they become major supply chain disruptions and to make sure you are aware of any significant event (such as an earthquake, border closing, civil uprising, etc.) that could affect your supply chain as soon as it happens.
- Focus on Your Talent
Samsung threw out the seniority-based performance evaluation system and implemented a performance-based system in its place that allows the best and the brightest to have their career fast-tracked. Make sure you have a system that allows talent to advance through your organization if you want to attract, and retain, the talent you need for your supply chain.