Globalization and Operation Excellence through Process Innovation at Samsung Electronics

Dr. Sungchil Park Executive Vice President Samsung Electronics

Agenda

Samsung Electronics Overview SCM Vision & Roadmap Innovation Journey Next SCM Initiatives Lesson Learned

2006 Samsung CONFIDENTIAL

Samsung Electronics Overview

History

2006 Samsung CONFIDENTIAL

Samsung Electronics Overview

History

2006 Samsung CONFIDENTIAL

Samsung Electronics Overview

Global Network

57 Countries

Production Subsidiaries Sales Subsidiaries Production & Sales Subsidiaries Branch Offices R&D Center
2006 Samsung CONFIDENTIAL

19 38 8 31 10
5

Samsung Electronics Overview

Brand Equity

2002
Rank Rank Company Company

($B) Value Value Rank Rank

2003
Company Company

($B) Value Value Rank Rank

2004
Company Company

($B) Value Value Rank Rank

2005
Company Company

($B) Value Value

1 1 2 2 3 3 4 4 5 5 6 6 21 21

Coca-Cola Coca-Cola 69.6 69.6 Microsoft Microsoft 64.1 64.1 IBM 51.2 IBM 51.2 GE 41.3 GE 41.3 Intel Intel Nokia Nokia Sony Sony
:: ::

1 1 2 2 3 3 4 4 5 5 20 20

Coca-Cola 70.5 Coca-Cola 70.5 Microsoft Microsoft 65.2 65.2 IBM 51.8 IBM 51.8 Nokia 29.4 Nokia 29.4 Intel Intel Sony Sony
::

1 1 2 2 3 3 4 4 5 5 20 20

Coca-Cola 67.3 Coca-Cola 67.3 Microsoft Microsoft 61.3 61.3 IBM 53.7 IBM 53.7 GE 44.1 GE 44.1 Intel Intel Sony Sony 33.4 33.4 12.7 12.7

1 1 2 2 3 3 4 4 5 5

Coca-Cola 67.5 Coca-Cola 67.5 Microsoft Microsoft 59.9 59.9 IBM 53.4 IBM 53.4 GE 47.0 GE 47.0 Intel Intel 35.6 35.6

30.9 30.9 30.0 30.0 13.9 13.9

31.1 31.1 13.2 13.2

20 20
21 21 22 22 28 28 41 41 58 58 73 73 ::

Samsung Samsung
DELL DELL Ford Ford Sony Sony
Apple Apple

15.0 15.0
13.2 13.2 13.2 13.2 10.8 10.8 8.0 8.0 5.3 5.3 3.9 3.9 ::

21 21 10.8 10.8
8.2 8.2 3.1 3.1 2.3 2.3 :: 31 31 35 35 39 39 55 55 61 61 ::

Samsung Samsung
Nike Nike Canon Canon
Siemens Siemens

12.5 12.5
9.2 9.2 8.0 8.0 7.4 7.4 5.0 5.0 4.5 4.5 ::

25 25
9.2 9.2 33 33 81 81 93 93 ::

Samsung Samsung
::

31 31

DELL DELL

34 34
35 35 ::

Samsung Samsung
Nike Nike
::

8.3 8.3
7.7 7.7 ::

Nike Nike Motorola Motorola Starbucks Starbucks

::

Pizza PizzaHut Hut Yahoo! Yahoo!

::

Yahoo! Yahoo! Motorola Motorola

::

* Source: Business Week

2006 Samsung CONFIDENTIAL

Samsung Electronics Overview

Business Areas

24% Digital Media

Visual Display, Computer, Digital Video, Printer

28% Telecommunications
Mobile phone, Communication Network, Optical Fiber

6% Digital Appliance
Air Conditioner, Refrigerator, Washing Machine, MWO

Leading the Digital Convergence Revolution

29% Semiconductor
Memory, System LSI, HDD, OMS

13%
LCD
TFT-LCD

*Based on 2004 Actual

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2006 Samsung CONFIDENTIAL

Samsung Electronics Overview

Leading Products
Worldwide Market Share
DRAM 32% SRAM 24%

No.1
Monitor 22% TFT-LCD
(Large-Area)

Color TV 9.4%

Flash Memory 34% MCP 29%

20% DDI 18%

* Based on 2005 Performance

2006 Samsung CONFIDENTIAL

SCM Vision & Roadmap

Vision
Vision

Leading the Digital Convergence Revolution

3P Innovation

Digital
- Product -

- Process -

Company
- Personnel -

Product competitiveness as a fast mover, based on core technology

2006 Samsung CONFIDENTIAL

Supply chain capability that ensures best-of-the -industry speed

Dynamic organization built on creativity, challenge, and autonomy

9

SCM Vision & Roadmap

Process Innovation Vision
Digital -Company
Market Driven Change
Product Process Simple & Speed
Active Collaboration

Personnel

Improve supplier capacity to support market needs

R&D Mgmt

Supply Mgmt

Demand Mgmt

Sharing product/logistics information

Improve Customer Satisfaction

Strategy

Securing inter/intra company connectivity Delivering market needs

Market Driven Process

R&D R&D Proc. Proc. Mfg. Mfg. Lgts. Lgts. Mktg. Mktg. Sales Sales Svc. Svc.

Maintain market competitiveness to support customer needs Sensing market information

Business Management 6 Sigma / IT infrastructure

Key Actions

Transform Transform individual individual processes processes into into customer/market-driven customer/market-driven Enhance Enhance customer customer and and supplier supplier collaboration collaboration Optimize and upgrade 4 Mega Processes Optimize and upgrade 4 Mega Processes Improve Improve value value creation creation with with enhanced enhanced marketing/sale/development marketing/sale/development
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2006 Samsung CONFIDENTIAL

Innovation Journey
1994~1996
Master planning & Establish infrastructure (1994~96)
Extended SCM

3P innovation
(Product / Process / Personnel)

& APS pilot (1997~99)

Consolidated operation excellence & APS roll-out (2000~03)

Marketdriven SCM (2004~)

APS Upgrade, Back to Basic SRM, Logistics, Performance to Plan Collaboration Mkt.-Driven SCM

Basic SCM

Focused on manufactng. manufactng. productivity improvemnt. improvemnt. Implement separate legacy systems

APS Pilot - Display -- Memory ERP Roll-out --All Mfg div. --Major sales sub. ERP Roll-out --FI/CO --other subsidiaries GBM Designed & Structured

APS roll-out - 12 GBMs -- 46 Sales Subsidiaries

Infrastructure

ERP Implemnt. Implemnt. -Major domestic Mfg divisions

Plan & Change Mgmt.

PI/SISP mastermasterplan

Organize GOC in GBMs

SCM training -Enterprise wide

1992

93

94

95

96

97

98

99

2000

01

02

03

04

05
11

2006 Samsung CONFIDENTIAL

SCM Vision (1994)

Deliver the right products (quality and quantity) at the right time (on time and quick delivery) at the lowest cost Anybody in Samsung supply chain can access necessary data at anytime and anywhere through globally integrated information systems Process organization to make quick decisions for customers
7 Major process
Customer Facing Demand Mgmt Strategic Resource Mgmt Resource Operation Manufacturing Distribution Customer Service

To-Be Process vision

Single Point of Contact, Customer Collaboration Single Number Forecast, Real-Time AATP Supplier Collaboration, Global Material Planning Global Supply and Demand Balancing Flexible Manufacturing, Cell Manufacturing Optimized Delivery Plan, Postponement, Supply Chain Network Optimization Value Added Customer Services

Over 100 people from all parts of organization worked on this Visioning Work
2006 Samsung CONFIDENTIAL

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Achievements
Master Planning & Build Infrastructure (1994~1996)

Build infrastructure first Process innovation at each site

No end to end integration Integration started with APS implementation in 1998

Automate the transaction process

Domestic Sales Example:

Before Batch No ATP Post-Pricing After Real-Time ATP with inventory 30% reduction Pre-Pricing

Order Management Available-to-Promise Headcount Pricing

2006 Samsung CONFIDENTIAL

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Innovation Journey
1997~1999
Master planning & Establish infrastructure (1994~96)
Extended SCM

3P innovation
(Product / Process / Personnel)

& APS pilot (1997~99)

Consolidated operation excellence & APS roll-out (2000~03)

Marketdriven SCM (2004~)

APS Upgrade, Back to Basic SRM, Logistics, Performance to Plan Collaboration Mkt.-Driven SCM

Basic SCM

Focused on manufactng. manufactng. productivity improvemnt. improvemnt. Implement separate legacy systems

APS Pilot - Display - Memory ERP RollRoll-out -All Mfg div. ERP Implemnt. Implemnt. -Major sales sub. -Major domestic ERP RollRoll-out Mfg divisions -FI/CO -other subsidiaries GBM Designed & Structured

APS roll-out - 12 GBMs -- 46 Sales Subsidiaries

Infrastructure

Plan & Change Mgmt.

PI/SISP mastermasterplan

Organize GOC in GBMs

SCM training -Enterprise wide

1992

93

94

95

96

97

98

99

2000

01

02

03

04

05
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2006 Samsung CONFIDENTIAL

Key Innovation Areas Enabled by SCM

Clarify Global Business Ownership
As-Was
Dispersed business ownership (multiple profit centers) Internal competition for profit & inventory responsibility avoidance Biz Biz
Biz Biz owner owner Biz Biz owner owner Manufctring. . Manufctring Manufctring. Division Division Overseas Overseas Plants Plants Domestic Domestic Sales Sales
Compete with profit & inventory

As-Is
Single owner of Marketing, R&D, Global resource management Single owner of end-to-end process throughout the entire supply chain
Corporate Corporate HQ HQ Functional Functional Staffs Staffs

owner owner

Overseas Overseas Sales Sales

Customer Customer

Customer Customer

Biz Biz owner owner

Domestic Domestic Plants Plants

Global Business Manager is the only business owner (profit center) of the each product segment The rest organizations became cost centers GOC plays important role of managing global supply chain, synchronizing sales & production
2006 Samsung CONFIDENTIAL

Biz owner owner Biz of product product of segment segment

Global Global Business Business Manager Manager

Global Operation Center (GOC)

Cost Centers
Overseas Overseas Plants Plants Overseas Overseas Sales Sales Domestic Domestic Sales Sales

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Key Innovation Areas Enabled by SCM

Organization: GBM & GOC

Process-type organization: GBM*

GBMs of each product group implement their business strategies with global responsibilities and authorizations for profits and losses across the overall supply chain Sales and production subsidiaries play the role of cost centers supporting the GBM

Supply Chain planning/management/synchronization/ optimization: GOC**

Adjusts and controls sales and manufacturing volumes globally Allocates and adjusts materials to efficiently manage overseas plants. Improves and supports the entire supply chain with SCM operation ownership Single contact point for SCM operations Manufacturing Production Sales/ Logistics Supplier

Customer

* GBM : Global Business Management ** GOC : Global Operation Center

GOC
Integrating sales and production
Operating global supply chain
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Key Innovation Areas Enabled by SCM

Weekly Global Planning Cycle
As-Was
Monthly Cycle
Sales Forecast Manager /Order Sales PSI Subsidiary Sales & Sales Plan Marketing Global Allocation Support Plan Production Production Management Plan Purchasing Plan
Purchasing

As-Is
Weekly Cycle
Sales Manager Sales Manager Sales & Marketing Global Support Production Management
Forecast /Order PSI Sales Plan Allocation Plan Production Plan Purchasing

ConConcurrent current Planning Planning on on a a Single Single Planning Planning Table Table within within a a day day

Purchasing Plan

Real-time global information sharing (market and supply chain planning information) Generation of a single plan with simultaneous consideration of global constraints Reduction in global planning cycle time: monthly cycle weekly cycle
2006 Samsung CONFIDENTIAL

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Key Innovation Areas Enabled by SCM

Global Demand Mgmt and Consensus Based Forecasting
As-Was
Customer Customer Salesman Salesman
W14 ISD Total Demand Forecast (all SKUs)
7000 6000 5000 4000 3000 2000 1000 0 W14 W15 W16 W17 W18 W19 W20 W21 W22 W23 W24 W25 W26 W27 W28 W29

As-Is
Local Local Marketing Marketing Customer Customer Salesman Salesman Local Local Marketing Marketing

W14 ISD Total Demand Forecast (all SKUs)

10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 W14 W15 W16 W17 W18 W19 W20 W21 W22 W23 W24 W25 W26 W27 W28 W29

Traditional PSI method amplifying bull whip effect

W14 ISD Total Demand Forecast (all SKUs)
12000 10000 8000 6000 4000 2000 0 W14 W15 W16 W17 W18 W19 W20 W21 W22 W23 W24 W25 W26 W27 W28 W29

Global Global Support Support

HQ HQ Marketing Marketing

Global Global Support Support

Every individuals sales plan/forecast Kept In one real-time view Checked against actual

HQ HQ Marketing Marketing

Sequential to concurrent & consensus-based forecasting process on a single table MBO based on forecasting/inventory personalization (by sales subsidiary & salesman) No Forecast, No Allocation (NFNA) Sales plan based on consensus result of RTF (Return to Forecast) from GOC
2006 Samsung CONFIDENTIAL

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Key Innovation Areas Enabled by SCM

Global Optimization by Concurrent Planning
As-Was
Allocation by each plant Supply plan and Distribution plan by local plants
Korea Korea Plant Plant Global Global Command Command Center Center China China Plant Plant

As-Is
Global Allocation by Global Command Center Concurrent Optimized Plan & Synchronization of Supply-Demand

Europe Europe Plant Plant

N.America N.America Plant Plant Suppliers Plants Sales Subs Suppliers Plants Sales Subs

Global production/distribution planning with consideration of all sales and manufacturing subsidiaries Strategy driven planning for global resource optimization & profit optimization Global visibility of all global operations (APS UI, no order visibility)
2006 Samsung CONFIDENTIAL

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Key Innovation Areas Enabled by SCM

Global Real-Time Order Promising (AATP)
As-Was
Customer Customer Inv. Shortage ATP based on local inventory AATP based on supplying plan HQ HQ

As-Is

ATP ?
If you dont have products in your warehouse and you cant supply them, I will buy them from another vendor.

Allocation

Manager Manager

Salesman Salesman

Customer Customer Mat. Plan

OnHand Salesman Salesman

OnHand

InTransit

In Prod.

Prod plan

Pre-allocation down to salesman level based on forecast and production constraints AATP based on global inventory & production plan AATP policy based on customer priority and business policies
2006 Samsung CONFIDENTIAL

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Achievements
Case: Visual Display Division

P S I

Before SCM
Large inventory level caused by out of sync between S and P

P S I P S

After SCM

P S

(1998)

(2002)

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Achievements
Case: Visual Display Division
6,000 5,000 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 94 95 96 97 98 99 00 01 02 SCM Roll-Out TV Biz Merge

Sales Qty (100K)

Sales Amt ( M$ )

Profit ( 100K$ )

( Monitor Business )
2006 Samsung CONFIDENTIAL

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Achievements
3P Innovation & APS Pilot (1997~1999)

3P Innovation

Product: Restructuring Process: Quick Response, D+ Delivery Personnel: Process oriented organization

Successful internal APS showcase implementation (Display APS Pilot) Global Operation Process (GOP) implementation

GOP ownership: GBM (Global Business Management) GOP control tower: GOC (Global Operation Center)

2006 Samsung CONFIDENTIAL

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Achievements
3P Innovation & APS Pilot (1997~1999)

Restructuring

Spin-off non-core business functions

Domestic After-Market Service, Logitech (Domestic Transportation) 19 including Medical Equipment & Defense Security, automobile asset management

Dispose of non-profitable business units

Outsourced non-core cost centers

1997
Employees #(Korea) Debt Ratio Debt (USD) 59,000 300% $ 13 Billion

1999
39,000 85% $ 5.7 Billion

2006 Samsung CONFIDENTIAL

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Innovation Journey
2000~2003
Master planning & Establish infrastructure (1994~96)
Extended SCM

3P innovation
(Product / Process / Personnel)

& APS pilot (1997~99)

Consolidated operation excellence & APS roll-out (2000~03)

Marketdriven SCM (2004~)

Back to Basic APS Upgrade, SRM, Logistics,Performance to Plan Mkt.-Driven SCM Collaboration

Basic SCM

Focused on manufactng. manufactng. productivity improvemnt. improvemnt. Implement separate legacy systems

APS Pilot - Display - Memory ERP RollRoll-out -All Mfg div. ERP Implemnt. Implemnt. -Major sales sub. -Major domestic ERP RollRoll-out Mfg divisions -FI/CO -other subsidiaries GBM Designed & Structured

APS rollroll-out - 12 GBMs - 46 Sales Subsidiaries

Infrastructure

Plan & Change Mgmt.

PI/SISP mastermasterplan

Organize GOC in GBMs

SCM training -Enterprise wide

1992

93

94

95

96

97

98

99

2000

01

02

03

04

05
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2006 Samsung CONFIDENTIAL

Key innovation areas enabled by SCM

SRM Strategic Sourcing
As-Was
No leverage of global buying power during negotiation at local site
Corporate Corporate Procurement Procurement Business Business unit unit Business Business unit unit

As-Is
Frequent negotiation at the global and/or local level with global visibility
Business Business unit unit Business Business unit unit

Manual & subjective supplier evaluation once or twice a year only

Local Local Plant Plant Procurement Procurement Local Local Plant Plant Procurement Procurement Local Local Plant Plant Procurement Procurement

Global aggregation at any time & level Corporate Corporate Procurement Procurement

Local Local Plant Plant Procurement Procurement

Local Local Plant Plant Procurement Procurement

Local Local Plant Plant Procurement Procurement

Spend analysis by suppliers & parts at site level only

Spend analysis by suppliers & parts at both global and site levels

Corporate spend aggregation, spend visibility by region, by business unit Baseline price and variance management Strategic procurement decision support by providing rapid & accurate information
2006 Samsung CONFIDENTIAL

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Key Innovation Areas Enabled by SCM

Synchronize R&D, Purchasing, Suppliers - Product Sourcing
As-Was

As-Is
Part/Manufacturer/Supplier # Item Spec Data. Cost (Standard, Target, Tooling, Bid) Supplier Pref. Obsolescence Data AML/AVL Schedule Data Supply Status Calculated Preference

Suppliers Parts Price

Sourcing Workflow
Strategic Sourcing MRP

CSM
PDM Engineering BOM PPDB MCAD #2 eCAD #1 PDM 1 PDM 2 CPC

MCAD #1

SRM Sourcing BOM

CAD File Part # Description Quantity Revision

Design Workflow

CAD File Part # Description Quantity Revision Configuration

Concurrent Workflow Target Target Cost Cost !! Preferred Preferred Parts/Suppliers Parts/Suppliers !! Part Part Reuse Reuse !! Design Design for for Supply Supply !! Faster Faster time time to to Market Market !!

Optimize designs for sourcing and supply chain constraints before they reach manufacturing for best total margin and cost for this product Establish Component & Supplier Master (CSM) to bridge design & procurement Continuous monitor & analysis of part reuse, target cost, BOM grading, & obsolescence
2006 Samsung CONFIDENTIAL

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Key Innovation Areas Enabled by SCM

1C1B: One Contact, One Bill
As-Was
Transportation plan and execution were done by different dedicated regional 3PLs

As-Is
Centralized & integrated transportation management (managing all operations, plan to execution)
Centralized Logistics

MFG Region Dedicated 3PL DC MFG

X-Docking

Direct Ship

Regional DC

Customer

Customer

Route Optimization

Outsourcing to 3PL Network Optimization People Consolidation Minimizing transportation cost by route optimization, X-Dock, direct shipment etc. Real-time proactive monitoring and multi-dimensional KPI management
2006 Samsung CONFIDENTIAL

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Achievements
APS Roll-Out: SCM Performance Index (2000~2003)
SCM Performance Index Forecast Accuracy On-Time Delivery Days of Inventory

3Q 2001
22% 32% 20 Days

4Q 2003
41% 81% 14 Day

2001

2002

2003

Q1/2004

Stagnation in Performance Improvement

2006 Samsung CONFIDENTIAL

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Innovation Journey
2004~
Master planning & Establish infrastructure (1994~96)
Extended SCM

3P innovation
(Product / Process / Personnel)

& APS pilot (1997~99)

Consolidated operation excellence & APS roll-out (2000~03)

Marketdriven SCM (2004~)

Back to Basic/ APS Upgrade, Performance SRM, Logistics, to Plan/ Collaboration Mkt.Mkt.-Driven SCM

Basic SCM

Focused on manufactng. manufactng. productivity improvemnt. improvemnt. Implement separate legacy systems

APS Pilot - Display - Memory ERP RollRoll-out -All Mfg div. ERP Implemnt. Implemnt. -Major sales sub. -Major domestic ERP RollRoll-out Mfg divisions -FI/CO -other subsidiaries GBM Designed & Structured

APS rollroll-out - 12 GBMs - 46 Sales Subsidiaries

Infrastructure

Plan & Change Mgmt.

PI/SISP mastermasterplan

Organize GOC in GBMs

SCM training -Enterprise wide

1992

93

94

95

96

97

98

99

2000

01

02

03

04

05
30

2006 Samsung CONFIDENTIAL

Recent SCM Initiatives

Recent Activities
Based on the visibility improve delivery and demand management capability
(Performance to Plan) 04 : Back to Basic and improve visibility
Clean up mater data Improve data accuracy Improve system functionalities and usability Training all employees

05 ~06 : Improve SCM capability

Delivery capability
Make Good Production Plan On time manufacturing on hourly basis Daily production and shipping Supplier delivery capability

Demand Management capability

Make Good Sales Plan Sell to Plan On Time Delivery

06 05

04
[ Focus on S&OP ] [ Focus on SCM Basic Infrastructure ]
2006 Samsung CONFIDENTIAL

[ Focus on Sales Management ]

Improve Distribution Capability Improve APS Usability

31

Key Innovation Areas Enabled by SCM

3-Day Committed Operation (3COR) for Back to Basic
As-Was As-Is
Performance to Plan

Fix
Set Aggressive Goal
Material Material or or Capa Capa Issue Issue

Optimization (Do Your Best)

Set Achievable Goal

Material Material or or Capa Capa Issue Issue

Achieve It!!!

Line

Shop Floor

Rescheduling ASAP

Line

Shop Floor

Stop, Understand the Problem & Fix it

No Trust among Supply Chain Entities

Trust among Supply Chain Entities

Focused on Market-Driven SCM, but difficult to realize (thus Back-to-Basic with 3COR) Trust based Performance-to-Plan with 3 Principles: 1) Maintain 100% accurate master data, 2) clear rule define and follow the rule, and 3) system-driven operation
2006 Samsung CONFIDENTIAL

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Key Innovation Areas Enabled by SCM

Daily Execution Enhancement for Quick Response
As-Was
c Weekly Supply Request
Supply Request = 1200

As-Is
Si Plan Capacity Weekly, Execute Daily with Customer Order
Fixed

W1

W2

Replenishment Request = 200

Weekly supplying request within the weeks given RTF** Level/uniform load production is not encouraged
Line

Daily replenishment request Level/uniform load production is encouraged to synchronize with daily changing market demand Daily GR Plan for 2 weeks
Secure 20% JIT material inventory buffer
Line

Post management of possible highinventory level by GR* control

Sales, transportation, and manufacturing synchronizes with daily demand fluctuation Plan weekly with daily plan adjustment: Plan weekly capacity, but if there is no customer order then no production/execution) Daily level production is encouraged at manufacturing
2006 Samsung CONFIDENTIAL

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Achievements
Market-Driven SCM: SCM Performance Index (2004~2005)
SCM Performance Index Forecast Accuracy On-Time Delivery Days of Inventory

3Q 2001
22% 32% 20 Days

4Q 2003
41% 81% 14 Day

4Q 2005
45% 91% 14 Day

2001

2002

2003

2004

2005

2006 Samsung CONFIDENTIAL

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Overall Achievements
Financial Benefits of SCM

2006 Samsung CONFIDENTIAL

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Overall Achievements
AMR Research 2005 Supply Chain Top 25

2006 Samsung CONFIDENTIAL

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Next SCM Initiatives

Adaptiveness
- Strengthen partnership with customers and business partners
P/O process collaboration and integration of sales channel inventory Toward Merchandise Planning

Differentiation
- Set-up personalized response process for individual customer needs
Mass Customization

- Provide total solution for customer needs

DELL Plus : Customized system design ~ support after-sales management

- Fast response to market change

Nokia: Response to a market change within 1 hour over entire supply chain Toyota: Delivery within 5 days from order receipt (D+5 delivery)

Market Driving
- Enhance market sensing capability
Foresee market change Pre-occupy opportunities Drive the market

- Fast response to supply chain exceptions

Monitoring, analysis and quick response to supply chain events

* Merchandise Planning : It supports Field Marketing Strategy by detecting and analyzing product exposures, display states, store info (competitors, prices, inventory, sales status), etc., (Time To Market realization) * Mass Customization * Dell Plus Service : Phrase that comes from a combination of 'Mass in Mass Production and 'Customization : Total Solution of Software, Hardware, Asset Management, Part Replacement, etc.,
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2006 Samsung CONFIDENTIAL

Lessons Learned
Characteristics of Samsung SCM

Top Down: Tops mind and commitment

May 2006, Monthly Executive Speech

First, must further internalize the D+3 Internal Benchmarking Day Production SCM experts Commitment Mr. Jong-Yong Yun, CEO Framework initiative Synchronization of Process, Systems and Organization in supply-related areas End to End (customer to supplier) process Second, must further enhance our Enterprise Architecture: SAP R/3, i2 SCM competency in demand-side areas such as sales and marketing GBM, GOC,

Education

PI, PS

Third, need to further strengthen our innovation activities for raising cost competitiveness
2006 Samsung CONFIDENTIAL

Change Management

May 2006 Monthly Executive Speech

38

Variability in todays market the primary force behind inefficiency

Rapid Rapid Market Market Change Change Global Global Operation Operation

10km/h

300km/h

Endless Endless pressure pressure To To Reduce Reduce Cost Cost

High forward visibility Intelligent and fast decision making & execution
(Process Capability)

Optimization across business functions

(Reduce Complexity)
2006 Samsung CONFIDENTIAL

Velocity
39

Lessons Learned

Change organization, Process and then System Trust across supply chain is the key

Visibility first, then Capability Performance to Plan S&OP Good Plan Performance to Plan Fast Replanning with PDCA

2006 Samsung CONFIDENTIAL

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Be an expert (professional) and understand overall business, especially finance and control. MOT is a process of managing technology. Innovate process, system and people. Technology for customer satisfaction and money, not for engineering excellency.

2006 Samsung CONFIDENTIAL

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SCM at Samsung in the Past

What did SCM stand for in the beginning of SCM journey at Samsung?

Supply Chain Management? Solution Consultant Manager? Software Configuration Management? Source Code Management? Sweet Chin Music (wrestling finishing move)? ..

SCM: Set for Crash Mode

2006 Samsung CONFIDENTIAL

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SCM at Samsung Today

MCS: Money Collecting System

2006 Samsung CONFIDENTIAL

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 2006 Samsung CONFIDENTIAL

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