Challenges of Nokia Corporation Supply Chain Network - Case Study Example

Name Professor Course Date Challenges of Nokia Corporation Supply Chain Network Nokia Corporation is a world primary manufacturer of mobile devices. According to analysts the company’s success is attributed to its supply chain management practices. The company has an integrated supply network that is able to interlink manufacturing plants, sales and logistic providers, suppliers, contract manufacturers and consumers. The company has 15 manufacturing plants that are located across 9 countries in the globe such as India, Great Britain, South Korea, Mexico, Finland, Brazil, and China. All the manufactured products are transferred to the mother depot in Gurgaon. Nokia company has a complex supply chain network that handles over 120 billion components, 50 strategic suppliers, and more than 15 factories worldwide (Annan 5). The below is the companies supply chain network design The above design is a simple supply chain structure of the company that shows the two tier supply sides as well as the two tier demand sides. The supply chain management is responsible for linking all the needed functions within the company as well as integrates the firm to other firms that might me of help in the focus of the supply chain. Nokia as a manufacturing firm is placed at the center of the pyramid as the company is the sole manufacturer of all its products in the globe (Baccolini 7). The suppliers named as Tier1 is the leading direct suppliers of the company- from where the company gets all the required materials, spare parts and other components essential in the manufacturing process so that it could be able to produce final products for the consumers/clients. Generally, this type of suppliers has their own suppliers who play the role of producing the raw materials that are the primary materials for the production of mobile phone batteries, phones motherboards, displays, covers and other vital parts. This type of suppliers represents the second tier also known as supplier level 2. On the left side of the supply chain network structure is the demand side customers' level that is a clear representation of the contact distributed patterns of the company as well as its patterns such as Telenor, T-mobile and Vodafone. On both sides of the supply network there exists an additional level of the end users and the customers. In the case of the mobile operator side the user purchases the mobile phone from a certain operator but not directly from the company's warehouse. The operators have a different channel over which they distribute their cell phones (Basil 34). The retail shops are always operated/ managed by third party contractors who play the role of distributing the mobile phones to the end users as well as offering after sale services to the end users. So that it can be easy to describe the connection and the integration of all the parties involved in the supply chain, it would be important to determine the challenges facing the supply chain network that limits the optimization of long-term efficient operation of Nokia’s supply chain (Batres 12). Supply Chain Visibility: Challenge 1 The most obvious question to ask the real time business today Nokia Corporation being one of them is the size of the information that the company is having in their supply chains. The company has chosen to carry out an analysis of their supply sources stretching from the tiers that the company has. In most cases Nokia is not able to determine their size of information in its supply chain since it has several mobile operators and agents who are contracted for sale the cell phones in the market (Boot 23). The wide disparity that is witnessed in the data handling within the supply chain management structure of the company is in part and in detail explained in the supply network structure. The structural issues in entails the type of technology to be used, the complexity of the products and services, and the commoditization percentage/degree in the supply network. Since the company is concerned with the thousands of tier suppliers under level 1 and those in level 2 there are thousands of items being procured. On the other hand, each item in the tier has several components that are associated with numbers of suppliers (Burton 16). Due to this bulk nature of the information handled by the company, the issue of data handling is not straightforward hence a challenge to the company. Lack of systematic approach of handling the problem of information integration may automatically lead to a supply chain risk. Such type of challenge is aggravated in the Nokia company since the tempo of technological change is at its peak; the supply chain network is linked not only complex but it is also flawed (Glaser 13). The assumptions that apply in the firm are only outmoded only in a few years making the company to face difficulties in handling the integration of the chain whereby the products are homogeneous across all the 9 Nokia manufacturing points (cell phones and its related products produced according to international standards) as well as the point in which the production bespoke is linked to the next requirement. Generally, when a buying firm defines the nature of the product, the greater is the chance to handle the information hence imposing of standards and start the change process as a result this brings power that turns to bring a higher degree of responsibility in the event of such a problem (Eliant 11). The number of visibility shared: challenge 2 Historically the company has been cautious about exposing data on chains of supply, such data are considered to be purposefully important, in some occasions there are some risks of surveillance or even interfered with, furthermore the company have been worried by the reputational damage if something wrong in the chain appears to the public attention but the company has to figure out new generation information level that will the competitors in the market to know the characteristics of the supplier, so that there is limited opportunity in keeping things secret (Field 43). Indeed there some profit-making for hunting a degree of candidness about the supply chain, not the slightest because it may guide the establishment of trust in the minds of the investors and the consumers. Furthermore, there are a number of supplementary benefits including the reality that the event of any supply chain failure- that may be easy to ward off reputational harm to other sections of the chain. In other cases within the marketing chain of the company the suppliers are always genuine so that they could be able to establish a broader marketplace (Hax 7). These decisions of the suppliers in the marketing chain are not always straightforward; bringing on board less visibility in the supply chain as well as disintegrating the chain making competition to arise from the suppliers who intern break the chain network and work directly with the end consumers. As a result of the above reason the problem of decision making comes up to be the problem company finds to be a challenge that breaks the transparency of the supply chain network. Handling of risks: challenge 3 The next problem is how the Company deals with its collated information. When the company conducts and analysis concerning its trends in the market with one or two of its tiers in the chain the company operations are going to be surprising over reliant. In such a case the company has a serious choice to make so that it could be able to restructure the chain network- such as dropping a supplier and works directly with the point of vulnerability (Justus 9). In the case of Nokia it has the problem of defending the branding of suppliers own label during packaging making retailers to defect blames in the event of quality problems. For example in the 2009 India manufacturing plant had an immerse problem with its retailers due to the quality of cell phone products that they dispensed to the market. The product had limited turnovers hence led to reduced sale of the products to the competitive market making Nokia Company to make a loss of 2 billion (Leland 11). Organization to the new era: challenge 4 Lack of proper organization of the procurement process is a problem that the supply chain network of the company makes it not able to have a chain that its transparent and provenance. The Company has failed to separate the work it has with the supplier’s environment as well as the chain ethical auditing making the organization to fail complying with international standards arising from the mainstream procurement process (Maguire 11). This makes the suppliers to be faced with paradoxical demands of the company. As a result of the above challenge the buyer will have the highest ability of bargaining hence reducing the demand of goods in the market. In addition, the supply chain integration has been stopping from time to time most especially in 2010 whereby, the was a break in the chain as the manufacturer had to link directly the consumers and other third party agents. Methods of reducing the supply chain challenges Since the capacity and sources of Nokia’s manufacturing capacity have increased, the company ought to shift from plant production planning to demand driven focus so that it can be able to manage and influence its suppliers and end consumers in the supply network easily. The demand –driven approach will help the company to establish a more client based mindset that will help reduce the problem of the chain invisibility since the end consumers will be sure of the safety and quality of products being delivered to them by the company (Tim 33). Lack of integration of the chain will also be curbed if the company conducts an inter-price demand review that will help the company to have a close information audit to avoid the problem of data disintegration in the chain. Demand planning is also a main input to operations and sales process that will help the company to be able to monitor its sales inventory even though the chain network is complex (Verma 17). The company should be able to distinguish commoditization of products. This can be done in two ways so that it can be able to repair the chain network so that it could be able to eliminate the problem of chain transparency. The company should be able to create a supply chain that is able to remain cost competitive and efficient as well as integrate the companies supply chain with most modern value added services so that network transparency could be determined (Justus 43). Improvement of the cost control management, material management and component acquisition will prompt the suppliers to be able to differentiate themselves in several ways to offer value and other services to the end-consumers by: integrating vender managed inventory and drop shipping in the supply chain network. The company should be able to realize the importance of outsourcing some of the parts of the chain network. Nokia Corporation has to include market place advancements in its information system and the media as well as quality and cost of global distribution and manufacturing. In addition, the company will gain extra synergies by outsourcing the parts of the supply chain (Glaser 9). The company will attain its economic outfit and also reduce the risks of quality and safety placing control systems in place to support the supply chain challenges and incapability. Conclusion Since Nokia corporation has a complex supply chain network it should be able to relay to both internal and external chain network control auditors to make sure that the integration of the chain is up to date. Through the above solutions the Company is able to attain it economic potentials as well as solve the challenges it is facing in the network. Works Cited Annan, K. "Nokia Corporation Supply Chain." Journal of Management (2012): 1-4. Baccolini, Raffaela. Imortance of Supply Chain in Business. New York: Routledge, 2003. Basil, Davidson. Importance of Supply Network. New York: James Currey Publishers, 2009. Batres, M. Impacts of Efficient Supply Chain. Cambridge: Cambridge University Press, 2013. Boot, Max. Why Supply Chain? Los Angeles: Los Angeles Times, 2009. Burton, J. "Relevance of Nokia Supply Chain Management." Journal of Management (2011): 2-7. Eliant, John. "Significance of Supply Chain in Business." Journal of Business (2010): 2-6. Field, T. "Against Complex Supply Chain." Supply Inventory Journal (2009): 2-9. Glaser, B. The Importance of Supply Chain Network. New York: Wiley & Sons, 2009. Hax, C.A, Majluf, N. "Supply Chain Challenges." Feature Article (2004): 1-19. Justus, P. "Significance of Supply Chain Control." Journal of Business (2012): 2-67. Leland, Ryken. Should Supply Chain Network be Removed? Chicago: InterVarsity Press, 1998. Maguire, E. "Theories and research on Supply Management." Management Journal of America (2009): 3-32. Tim, Waters. Supply Chain Network. McREL, 2003. Verma, T. "Intergration of Supply network." Management Journal (2007): 4-17. Read More