Nokia retools its supply chain to regain lost market share
Nokia has announced a new restructuring programme in order to save costs, realign business and refocus its manufacturing. The latest cuts, perhaps, may not have needed to be as drastic if supply chain had played a bigger role in Nokia’s global strategy.
With the rise of smartphones, Nokia has steadily lost global market share to the likes of Apple and Google. Long the leader in mobile phone manufacturing, the company found itself no longer in the lead during the second quarter of 2011, when Apple surpassed Nokia in terms of quantity of smartphones shipped to vendors. According to Gartner, Nokia sold a total of 97.87m units in the second quarter compared with 111.47m units a year earlier, giving it a total global market share of 22.8% down from 30.3%.
As part of the planned cuts, the Cluj, Romania manufacturing plant is scheduled to close by the end of this year. The Cluj facility only opened in 2008; after Nokia closed its facility in Bochum, Germany with the company saying that labour costs were ten times higher in Germany than in Romania at the time. Nokia said it was closing the Romanian plant because its "high-volume Asian factories provide greater scale and proximity benefits" even as CEO Stephen Elop said that Europe would remain "core to Nokia’s future". A Nokia spokesperson commented, "Cluj manufactures basic feature phones and the suppliers and the key markets for these phones are in Asia." This is rather short-sighted as smartphones are forecasted to make up 51% of mobile shipments in Southeast Asia by 2015, up from 17% in 2010. Nokia must hope it can successfully upgrade along with its customers.
In addition to closing the Cluj facility, Nokia is adjusting its supply chain operations in Europe, as well as concentrating its mapping and commercial development operations in Berlin, Boston and Chicago (US) and closing those operations in Bonn, Germany and in Malvern, Pennsylvania (US). The long-term role of its factories in Salo, Finland, Komaron in Hungary and Reynosa, Mexico will be reviewed as well. "We are seeing solid progress against our strategy and with these planned changes we will emerge as a more dynamic, nimble and efficient challenger," Nokia’s Elop said.
Nokia’s announced restructure plan clearly illustrates not only the importance of supply chain, but the need for it to be a part of a company’s strategy. Particularly within the high-tech vertical sector, the need for speed-to-market is necessary to maintain a strong market share. Nokia missed its opportunity, as Apple surpassed the company with its more nimble supply chain to take the lead in the mobile phone industry. It will remain to be seen if Nokia will be able to return to the top as not only the largest mobile phone manufacturer by quantity but also by revenue.
Quelle: eyefortransport
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