Is Samsung's Supply Chain Prepared for its Demand?

Demand and pre-orders for Samsung Electronics’ new Galaxy Note 7 smartphone have exceeded the company’s estimates, the South Korean tech giant and the world’s largest smartphone maker announced on Wednesday.

The overwhelming demand for the phone could help the company’s quarterly earnings, analysts say the disappointing sales of Galaxy S6 last year may be repeated if the tech giant does not address supply chain issues early as possible.

Due to strong demand, the launch dates of the premium smartphone in some markets, including Ukraine, Malaysia and Russia, have been delayed. The company’s share fell 2 percent in Seoul owing to the delay.

Orders surged after the premium smartphone received positive reviews following its launch in the United States and South Korea on August 19, with a retail price of US $882. The smartphone’s features include the new iris reader and 3,000mAh battery.

Growing Competition

If supply delays continue, consumers may consider other smartphones. The company’s rivals could take advantage of the delay—Apple is set to launch its new iPhone 7 Pro in late September. Samsung is also facing growing competition from Chinese handset manufactures.

Samsung’s Workaround

However, this supply constraint is likely not long-term. Samsung is reportedly boosting Notes production at undisclosed locations to resolve the shortage. Information gathered by Reuters state that there was no production issue for the curved screens used on the Galaxy Note 7. According to IBK Asset Management fund manager Kim Hyun-su, "There could be a temporary issue but Samsung has almost never had prolonged production misses. It's a problem from selling well, so I don't think there is a need to worry too much."

Companies can never truly predict how demand will play out—what matters is their agility and competitive velocity. With a supply chain process that can quickly detect demand changes and boost production, organizations can tackle any issue, and capitalize on any opportunity.


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