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Proactive Component Management: 4 Lessons from Samsung’s Supply Chain Challenges

Legally, companies can be subject to strict liability if the products they furnish to consumers do not meet the expectations for ordinary use that consumers have. In other words, even if you are as diligent as you can possibly be in component checkouts, you can still be strictly liable for products that neither you nor anyone ever imagined would malfunction.

This brings us to supply chain management and the Samsung 7 phone battery explosions of late 2016. One of the persons injured by an exploding Samsung 7 was an 18-year-old Swiss girl who suffered third degree burns.

Image courtesy: Samsung

Image courtesy: Samsung

At the time, a Samsung Switzerland spokesperson responded, “”The battery used in the device was not supplied or manufactured by Samsung or a company authorized by Samsung. Federal Laboratories for Materials Testing and Research in Dübendorf Laboratory, corroborated this conclusion.” Legally, it didn't matter. The company was still strictly liable for the failures of its suppliers. 

What exactly happened?

After months of investigation, Samsung disclosed that there were problems with batteries from two different suppliers. The first, Samsung SDI, didn't allow enough room between the heat-sealed protective pouch around the battery and the battery’s other internal elements. The second, Amperex Technology, issued some faulty cells that were missing insulation tape and some batteries that had sharp protrusions inside the cell that led to damage to the separator between the anode and the cathode.

Samsung concluded that more rigorous testing was needed throughout its manufacturing processes. It also wanted more rigorous certifications of vendors, and it acknowledged that the smaller form factors of electronic devices and the greater volatility of lithium batteries in these shrinking form factors, made the possibility of a device explosion more likely.

What can electric companies learn from the Samsung 7 disaster?

Supplier certifications must include thorough and ongoing reviews of vendor quality and components.

Vendors minimally should be able to conform to your own internal testing requirements. This includes subcontractors of vendors that you might not know about, too.

Track and trace capability is absolutely vital.

The food industry gets this. It now uses track and trace from farm to table, and has been able to intercede in cases of bacteria or contamination outbreaks-and shut these incidents down before they have dire consequences for consumers and brands. Electronics manufacturers need a similar mechanism.

Electronics manufacturers require end to end supply chain visibility, even as shrinking electronic components render it more difficult.

The demand for track and trace of very minute components  has given rise to new electronics component coding technologies that function in tiny spaces by  delivering indelible marks on a variety of substrates at high production line speeds. Electronics companies should consider the adoption of these technologies as they manufacture devices with shrinking form factors.

Predictive analytics purpose built for the electronics supply chain can help companies identify risk in their supply bases—and act to prevent these risks before a serious situation unfolds.

A risky situation might involve identifying a sole supplier of highly critical components (you want multiple suppliers), or predicting certain companies or geographic zones where supply chain disruptions are likely—and then planning and acting on them before they manifest.

One would think that most companies would already have these preventive steps in place, but that isn't necessarily the case. Many electronics companies don’t have the resources of a Samsung and can’t afford to cross check all of the components being sourced from suppliers. In other cases, companies have their own internal test processes and stick with them—even though these tests might not be comprehensive enough and the supply chains they use might not be transparent enough to reveal a potential quality issue. In other cases, there are companies that are willing to tolerate greater levels of risk.

Should companies be willing to take these risks? 

“If you're a phone maker, you should be thinking this could happen to me too,” said Gerbrand Ceder, a professor of materials science and engineering for the University of California at Berkeley, in a recent article. “Any other attitude would be really callous, really dangerous.”

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