Samsung's success in the electronics industry can be attributed mainly to its well-articulated supply chain strategy. It goes with globalization and a localized strategy that leads to better efficiency and massive cost reduction, making it a leader in the fast-paced tech world. Samsung is now acting on its Joint Design Manufacturing (JDM) approach even more aggressively, with plans to increase phone production through the redistribution of some of the development tasks.
Samsung to increase production to 6.7 million units with the help of its JDM strategy
A report by the Korean tech channel The Elec states that Samsung plans to increase the production of its smartphones from 4.4 million to 6.7 million with the help of its JDM partners this year. The JDM strategy would entail the design process being handled by both Samsung and its Chinese partners. When the design is finalized, the company will then have it mass-produced. This jump in production would mean that the outsourced devices would make up 25 percent of the target manufacturing set by the company for 2024.
JDM partners are generally assigned budget phones for the design and handling of components. Partners such as Wintech have greatly helped Samsung achieve its aim of cost-cutting and agile production. Samsung not only shares pre-production duties with its partners but also a portion of the profit from smartphone sales. The JDM partnership also helps the company tap into local expertise to understand trends. The Galaxy C55 was, for instance, optimized locally for China with the help of the JDM partnership.
The report also revealed the vital role Vietnam would play as an outsource partner, aiming to produce about 28 million units using local expertise and facilities. With its optimized strategy, Samsung has retained its position in the market by releasing budget-friendly Android devices that take up a huge portion of the market share.
Although Samsung's strategy has been effective in the past with respect to both mass production and cost-cutting, it can sometimes lead to the quality of the components not being sustained. The Galaxy A03s, which were brought forward with the help of outsourcing, did adversely impact user experience.
Another difficulty faced due to deployed production duties was export restrictions amidst the US-China political upheaval, leading to limited access to advanced chipsets. All these hiccups occur when the pre-production is shared and multiple partners handle the company's product-making.
The company has received criticism in the past for performance delays and compromised build quality, so we can hope that the shortcomings associated with outsourcing are overshadowed by the manufacturing capabilities and reduced costs.
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