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Supply Chain Agility: Nokia’s Supply Chain Management Success

Some companies have proven they can reinvent themselves, remaining current and agile despite supply chain disruptions. This is the case of Nokia Corp, a Finnish company founded in 1865 as a paper mill. The company's evolution offers a broader lesson to the industry.

Nokia did not start manufacturing phones until 1982. The company's interests and businesses were diverse: Telecommunications, consumer electronics, rubber, and cable kept it busy until 1992, when it gave its telecom business all its attention and focus and closed down the others. By making this strategic decision, Nokia became a global leader in telecommunications by 1998.

A history of adaptation in supply chain management
Industry experts have been fascinated by Nokia's ability to manage and adapt its supply chain over almost 150 years. According to the experts, the secret is its supply chain management and its long-term relationships with its suppliers, which make the company ideal for case studies.

The Harvard Business Review published such a case study in 2012. Throughout the study, we learn how Nokia's effective chain of command, its well-placed crisis plan, and an aggressive, multi-pronged strategy helped it avoid production losses for its new cellphone when a March 2000 fire damaged its entire supply of semiconductor chips at the Royal Philips Electronics plant.

Having a strategic risk management plan in place can help you avoid, or at least alleviate, financial difficulty. In a world where supply chain disruptions are simply inevitable, handling them successfully can lead to a happy. The Harvard Business Review case study contrasts Nokia's supply chain management success with the not-so-successful ending the Swedish company Ericsson experienced (with serious financial consequences) when losing its semiconductor chip supply in the same fire delayed production of its new mobile phone.

Lessons from Nokia on supply chain agility
A research paper published in the International Journal of Physical Distribution & Logistics Management in 2006 points to the ways that Nokia Networks' demand planning can make supply chain networks more agile. The authors take lessons from Nokia's integrated project management program, which is based on the implementation of a “truly customer-focused delivery process.”

The researchers found, “Supply chain agility does not just happen but requires continuous planning,” something Nokia Networks has mastered.

According to the paper, there are several ways companies can implement agility into operations:

  • Promoting the flow of information with suppliers and customers
  • Developing collaborative relationships with suppliers 
  • Designing for postponement
  • Building inventory buffers by maintaining a stockpile of inexpensive but key components
  • Having a dependable logistics system or partnership
  • Drawing up contingency plans and developing crisis management teams

Building Nokia's global supply chain management success
Since 1995, Nokia's SCM approach has been to create the most efficient supplier network in order to offer the best solutions and meet customer expectations. The pillars for the company's success include:

  • Creating value-based partnerships with suppliers backed by factual information
  • Leadership
  • Flexibility 
  • Trust

“Making the impossible possible through collaboration” is one of the company's well-known and often-used mottos. Following this approach, it has made its supplier network a central element of efforts to reach its corporate objectives:

  • Great products
  • Operational excellence 
  • Customer satisfaction

Nokia's leadership philosophy responds to four elements: head, heart, hands, and sisu (a Finnish word that may be roughly translated into English as “guts”). That last one plays an important role in making the impossible possible at Nokia.

Below, Max Sjöström from Nokia Oyj talks about gaining a competitive advantage with supply chain.

This story is part of the Special Report: Top 25 global electronics distributors. Read more from this report including coverage of the evolving market, the supply chain, the impact of big data and the IoT, and more.

12 comments on “Supply Chain Agility: Nokia’s Supply Chain Management Success

  1. Daniel
    June 6, 2014

    Susan, there is no doubt that Nokia had played a good role in market by reinventing themselves through various stages.  But what's their position now. Eventhough things are happens due to mismanagement; the end result is failed to sustain in market and finally acquired by Microsoft. I think if anybody is closely observing in Nokia's journey, they can get many similar case studies.

  2. t.alex
    June 6, 2014

    I still remember E63 was still my favourite phone while everyone was around was playing with iphone 🙂

    Symbian OS was pretty good and the battery  can lasts for days.

  3. Daniel
    June 9, 2014

    “I still remember E63 was still my favourite phone while everyone was around was playing with iphone 🙂 Symbian OS was pretty good and the battery  can lasts for days.”

    Alex, that's old stories. Let's wait and see about the various offerings from MS through Lumina series.

  4. Susan Fourtané
    June 9, 2014

    t.alex, 

    There is more Nokia that just the handset division that was sold to Microsoft. This is something many people don't seem to understand. 

    Nokia is stil a company that is well alive with three divisions. 

    -Susan 

  5. Susan Fourtané
    June 9, 2014

    t.alex, 

    There is more Nokia that just the handset division that was sold to Microsoft. This is something many people don't seem to understand. 

    Nokia is stil a company that is well alive with three divisions. 

    -Susan 

  6. Susan Fourtané
    June 9, 2014

    Jacob, 

    This story is not about phones, and it's not about Nokia's ex-handset division. And it's definietly not about Microsoft new handset business. 

    -Susan 

  7. Susan Fourtané
    June 9, 2014

    Jacob, 

    I think you don't see the point behind this story and are confusing it with a story about Nokia's ex-handset division business, which doesn't exist anymore as part of Nokia, but as part of Microsof. Nokia has nothing to do with phones anymore and this article is not about a phone business.

    This is about supply chain agility and supply chain management. It's about what works and what doesn't work. Maybe reading the whole story could help?

    Microsoft acquired only Nokia's handset division. There are three divisions that Nokia runs today: Networks, HERE, and Technologies. You speak of Nokia as if the company doesn't exist anymore, or as if the only thing that can be related to Nokia is phones.  

    -Susan 

     

  8. Daniel
    June 10, 2014

    “This story is not about phones, and it's not about Nokia's ex-handset division. And it's definietly not about Microsoft new handset business. “

    Susan, I mean about Nokia in general. Eventhough it has many divisions, its famous for mobile phones among common peoples.

  9. Daniel
    June 10, 2014

    “This is about supply chain agility and supply chain management. It's about what works and what doesn't work. Maybe reading the whole story could help?”

    Susan, I meant about supply chain management in Nokia as whole.

  10. Wale Bakare
    June 15, 2014

    >>Nokia is stil a company that is well alive with three divisions<<

    @Susan, nearly 100% of people around the world got no knowledge about Nokia business portfolio but, phone.  Ask people, even technical professionals in the field of telecoms and IT. Mention word Nokia, it's like a synonyms to mobilephone.

    Nevertheless, is there any products the firm's planning to role out soon?

  11. t.alex
    June 17, 2014

    Susan, that's interesting to know as I am not aware of it. What are the main focus of Nokia now?

  12. Daniel
    June 18, 2014

    “nearly 100% of people around the world got no knowledge about Nokia business portfolio but, phone.  Ask people, even technical professionals in the field of telecoms and IT. Mention word Nokia, it's like a synonyms to mobilephone.”

    Wale, Smartphone is the only products from Nokia for common peoples and hence in customer mind Nokia means phone manufacturer. But apart from that, they have many other communication products for the corporate word.

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