At the beginning of October all Samsung’s Galaxy Note 7 smartphones were recalled due to a dangerous fault causing the phone to overheat and in some cases, catch fire. How did this happen? What are the lessons in supply chain compliance procurement can take away?
One of the first questions following this crisis was, ‘how has Samsung, a household name, allowed an unsafe product onto the market?’
Suppliers under pressure
Has the rigid competition with Apple pushed Samsung to rush their product to the market without properly addressing the true capabilities of its battery technology? It certainly seems like that could be the case and if so, where else in their supply chain could there be discrepancies?
Maybe this is part of a larger problem affecting many consumer technology manufacturers. Let’s not forget the hoverboards last Christmas. Battery life is one of the hottest issues for the makers of new devices, and is one of the most important aspects when it comes to purchase choice. Is it possible that consumer demand and the brands that fulfil them are causing suppliers to push their battery technology beyond current limits?
Profit, or customer first?
This begs us to ask another question, one that can be applied to any competitive marketplace. When did becoming more competitive and gaining a more competitive edge become more important than the customer’s safety? You might be surprised to hear this, but people have been asking this question for over 100 years.
In the aftermath of the Titanic, the “indestructible” liner, the media was ablaze with finger pointing and accusations. It was supposed to be made of indestructible material, so how did it sink? The comparisons are similar, cost and time pressures, and in Titanic’s case plans to ‘double skin’ the hull for safety were scrapped to win the race across the Atlantic.
Obviously the parallels with Samsung are far less grave but nevertheless the damage done to reputation, and ultimately bottom line, could have been avoided with more due diligence in the supply chain.
Safely balancing the rules of supply and demand
The role played by procurement today, where it seems competitiveness pressures are rising in almost every market, is no doubt a challenging one. Procurement is often seen by other departments as the delayers of product to market, or the inhibitors to innovation, when quite the opposite can be true when procurement teams are able to offer nimble, easy-to-use tools to evaluate, check and select suppliers.
Now, more than ever, procurement technology needs to play a bigger role in the decisions businesses make to ensure the rules of supply and demand are effectively balanced, lest we see customers paying the price of the flagship going down.