Supplier non-compliance: burning a hole in your business?
When Samsung’s Galaxy Note 7 hit the shelves in August few would have predicted that it would be on the market for just three months. After some models exploded and set alight due to their lithium ion batteries overheating, the phone manufacturer had no choice but to recall the product. And the negative impact on its share prices meant this was much more than a nasty PR disaster for Samsung; just think how much money the company would have spent designing, developing and marketing this short lived product!
Of course the incident has led to questions over who’s to blame and many have been scratching their heads to work out how a respectable brand which surely has a sound manufacturing process and supply chain has ended up taking a dangerous product to market. Some analysts have pointed the finger towards its competition with rival Apple. Looking at Samsung’s latest model and Apple’s iPhone 7 Plus side-by-side many have noted that the battery of the Galaxy Note 7 is bigger and has a higher density, suggesting that Samsung intended it to significantly outlast the iPhone battery. Industry experts have put it down to the competitiveness of the mobile sector and keeping up with rivals may have pushed Samsung’s battery capability up to, or beyond, its limit.
Given last Christmas’ case of Swegways bursting into flames, you can understand why anyone might be concerned about the supply chains of certain industries in which brands are under pressure to get new products onto the shelves in time for peak buying periods or to stay competitive. As they race to trump one another, some manufacturers risk attempting to deliver what might be beyond their capability and harm their customers. How can the supply chain be tightened to reduce the chances of technology (and if you’re even less lucky: your brand) bursting into flames?
No company should consider it as purely the supplier’s responsibility to comply with rigorous checks. Even before you work with a supplier, being aware of safety, legal and ethical requirements is key to retailing a fit-for-purpose product or service. Part of the function of a tendering process is to apply the due diligence to ensure selected suppliers carry out the level of inspections and procedures you’d expect. Most brands fully understand the importance of supplier due diligence at the early stages of manufacturing goods, but some might let this fall by the wayside as time presses on. Even with competitive demands to meet it’s important that brands don’t push the boundaries of safety when developing a new product and that suppliers feel they are able to challenge customers when their requirements mean that normal process would have to be compromised. The supplier is just as responsible for not delivering risk into the supply chain as customers are for not demanding it.
There’s no escaping supply chain complexity in some industries and the risks that this brings, but manufacturers can shorten the lines of supply to tighten compliancy checks by nearshoring their supply chain or ensuring that global supply chains operate collaboratively and openly through technology that provides visibility. And when managing global operations, you should be aware of potential legal and cultural differences to ensure that there are no loopholes or conflicts of interest.
Whether or not Samsung’s issues occurred due to supplier non-compliance, it raises the point that all companies need to see evidence of suppliers’ own manufacturing and sourcing practices, particularly in health and safety, quality assurance and ethics. After all, it’s ultimately businesses’ reputations and bottom lines on the block. Much of it boils down to company culture and ensuring that the desire to push exciting new goods onto the market doesn’t stop them from fully addressing supplier compliance.
By Daniel Ball, director at Wax Digital
Follow @SupplyChainD on Twitter.
Pandora and IBM digitise jewellery supply chain
Pandora has overhauled its global supply chain in partnership with IBM amid an ecommerce sales boom for its hand-finished jewellery.
The company found international success offering customisable charm bracelets and other personalised jewellery though its chain of bricks and mortar retail destinations. But in 2020, as the COVID-19 outbreak forced physical stores to close, Pandora strengthened its omnichannel operations and doubled online sales.
A focus on customer experience included deploying IBM’s Sterling Order Management, increasing supply chain resiliency and safeguarding against disruption across the global value chain.
Pandora leverages IBM Sterling Order Management as the backbone it its omnichannel fulfilment, with Salesforce Commerce Cloud powering its ecommerce. Greater automation across its channels has boosted the jeweller’s sustainability credentials, IBM said, streamlining processes for more efficient delivery. It has also given in-store staff and virtual customer service representatives superior end-to-end visibility to better meet consumer needs.
Jim Cruickshank, VP of Digital Development & Retail Technology, Pandora, said the digital transformation journey has brought “digital and store technology closer together and closer to the customer”, highlighting how important the customer journey remains, even during unprecedented disruption.
"Our mission is about creating a personal experience and we've instituted massive platform changes with IBM Sterling and Salesforce to enable new digital-first capabilities that are much more individualised, localised and connected across channels and markets,” he added.
Pandora’s pivot to digital
The pandemic forced the doors closed at most of Pandora’s 2,700 retail locations. To remain competitive, it pivoted to online retail. Virtual queuing for stores and virtual product trials via augmented reality (AR) technology went someway to emulating the in-store experience and retail theatre that is the brand’s hallmark. Meanwhile digital investments in supply chain efficiency was central to delivering on consumer demand.
“Consumer behaviour has significantly shifted and will continue to evolve with businesses needing to quickly adapt to new preferences and needs,” said Kareem Yusuf, General Manager, AI Applications and Blockchain, IBM. “To address this shift, leading retailers like Pandora rely on innovation to increase their business agility by enabling and scaling sustainable supply chain operations using AI and cloud.”
Yusuf said Pandora’s success was indicative of how to remain competitive by “finding new ways to create differentiated customer experiences that protect their enterprises from disruptions to help mitigate risk and accelerate growth”.