Six things to read about Samsung's supply chain meltdown

14 October 2016

The question nobody – not even Samsung’s chairman Lee Kun-Hee – can answer is: when will the exploding smartphone scandal stop growing?

Faced with an exploding phone – the Galaxy Note 7 – that led to planes being grounded, children injured, and disillusioned brand enthusiasts wondering why their replacement was no better than the recalled model, Samsung has appeared inept, evasive and confused. Attempts to shift responsibility for the debacle to suppliers have not been entirely successful, especially as documents leaked by the International Trade Union Confederation suggest that a toxic internal culture, where management are encouraged to “dominate employees”, may be partly to blame.

1. An exchange programme for self-combusting handsets wasn’t the most sensible of starts for Samsung, points out Mark Sullivan of FastCompany, indicating a lack of leadership.

2. Are today’s management tools struggling to maintain quality control of a large network of suppliers? This is the question raised by Angus Loten, Barbara Castellanos and Steven Norton in the Wall Street Journal. With a design flaw not picked up at an early stage, it becomes much more complex to resolve the issue when it achieves a global scale with multiple suppliers and factories. Perhaps IOT is not the solution, it suggests.

3. Quality across the brand will be questioned as long as Samsung still doesn’t know – or doesn’t say – what cause the exploding handsets, points out The New York Times, suggesting that this may make consumers worry about the safety of other products with the brand name, such as washing machines. Journalists Brian X Chen and Choe Sang-Hun point out that 21 years ago Samsung demonstrated its commitment to quality when the then chairman burned 150,000 handsets that were faulty.

4. It pays to have disaster recovery plans in place. To return the faulty phones, Samsung issued flame-proof, thermally-insulated boxes - that once filled could not be transported by plane. The company blames the fault on one of its two battery manufacturers. As CNN Money’s Jethro Mullen notes, they decided not to make any more of the phones on 10 October but took another day before announcing they would recall them.

5. The cost of this tech and media disaster was revealed to be £4.3bn, exponentially greater than Samsung’s payout to Apple for patent infringement of its iPhone design. That £4.3bn must be regarded as a provisional figure as it is far too early to assess the long-term damage to Samsung’s brand and business – and indeed to the Android phone business. As David Gewirtz asks on ZD Net: “Given that Samsung is, by far, the leading Android phone vendor and its top of the line device has melted down literally, does this mean the Android itself is doomed?”

6. Drilling down into the technical makeup of the Galaxy Note 7, analyst Robert Catellan wonders if manufacturing issues with large and curved screen problems could give Samsung - and other phone makers - further problems. 

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