Can Suppliers Kill You By Their Inaction?
Let me tell a story.
This is a very entertaining story, but that is not the reason I am telling it. It has even greater business value, especially for strategists, and senior executives.
It shows how supply chain security irrevocably altered the fortunes of a company that was a global leader at one time in the then nascent mobile phone industry.
A High Profile Industry
This story is in
Think of the time before Iphone and Samsung phones came along and conquered the supply chains of the industry, and the minds of the users. I tell that story elsewhere.
Here we focus on the simpler times.
An Uncontrollable Event
A seemingly trivial random event, in a remote corner of the world, on a fateful day in March 2000, changed the destiny of the industry.
Both Nokia, and Ericcson, the stalwarts in the mobile phone industry at that time, were equally impacted by the same event – a
Both Nokia and Ericsson experienced business disruption to an equal extent as a result.
Fire damage to the stocks was extensive
More importantly, the manufacturing capacity of the plant was damaged and it was difficult to estimate the time for repairs.
This is where the events take an interesting turn. Not everyone thinks of supply chain security beyond the physical security of goods in transit. For
In fact, all the security experts who have no background in supply chain security fail on this count – they never think deep enough in terms of the layers of
Nokia had invested months, if not years, in creating and perfecting a robust and responsive supply chain security, while Ericsson’s business network was relatively a middle-of-the-line affair that worked well when things were good.
Ericcson staff were content to go with the flow, without too much care and worry about this part of supply chain security.
Nokia Sees the Future Before Ericcson, or Even Philips Does
After the fire, Nokia was able to see the full impact of the chip shortage on its own business, as well as the entire industry with a lot more clarity than Ericsson, and even Philips.
Moving quickly, it activated other parts of its business network to shore up supplies, to redesign some of the chips to manufacture them in other plants, and to take pre-emptive steps in the network.
Ericcson Did Not Move to Secure The Supply Chain; It Lost Out For Ever
Ericsson let the situation evolve at its own pace and made decisions more reactively.
The resulting gain in profitability and market share for Nokia and the loss of these for Ericsson tipped the balance of the industry to an extent where within a few years Nokia pulled far ahead of the Ericsson which never caught up with its erstwhile equal rival.
So, Why Do I Tell This Story?
It does have some anecdotal entertainment value.
But the business value is even higher. Here are some points to ponder:
- Supply Chain Security is
amulti– layeredaffair – for the best results organise it as such:
- Supply Chain Layers
- Physical Security Layers
- Virtual Security Layers
- A random event can change the fortunes of an industry
- Better prepared companies generally wins in such events
- You do not need to be perfect, you just need to be better than your competitors
- If you don’t work to keep the supply chain advantage, you will lose it in a jiffy:
- Ericcson lost out to Nokia
- Nokia eventually lost out to
IPhone(that is a story, I tell elsewhere in my posts)
- Supply chain advantage, when you have it, translates into industry leadership, fat margins and cushy life.
- Supply chain security is directly
corelatedwith supply chain advantage. DO NOT IGNORE SUPPLY CHAIN SECURITY.
I could easily turn this above 7 point list into a large magazine article (listicle), but my readership is wise enough to connect the dots themselves, and do not need
Given the quality of my readership – I have created a
If you really want to pay