The issue arrived when the plant of Philips,which is the major supplier of Ericsson,caught the fire at its production facility that was used for the production of semi-conductor chips for the handsets and the products of the Ericsson Company. This semi-conductor chip was essential for the production and manufacturing of the new phones that the management of the company was about to launch in the market.
The supplier called the company and informed the lower technician about the incident of fire that had taken place at its facility. The technician was told that the plant will be in a working condition in less than a week as the employees and the safety staff of the company immediately put out the fire and the damage was not supposed to be serious.
However, the actual damage that had been caused and was later discovered was serious and time consuming because the fire had damaged the clean rooms of the plant considerably. It is the place where finished inventories are kept and likewise the inventories of the finished products were also damaged. It was later estimated that the plant could take roughly more than six weeks to be back to its full production capacity.
The issues of non-availability of the supplier goods for the production purpose are often encountered with issues as there can be several problems or emergencies like natural disaster and other calamities. This is not considered as a big deal in many organizations as such lead times in the supplies are frequent in the day to day business.
The companies that involve production activities in their operations always keep inventory levels in their stock for raw materials to counter lead times like this and this was the reason why the lower level technician did not inform the upper level of management of the organization as he did not consider it to be a big issue for the production process of the company.
He was told that the issue would be resolved in less than a week and this caused this lower level technician to not share the information with his manager or any upper level authority to whom he was under command. However, what he did not know and was not told is that the damage was much serious and the problem was more time consuming and simultaneously this could halt the manufacturing operations of the organization.
There were other serious issues also that led to these crises as the information despite reaching within the organization could not be shared and analyzed. The most serious among all was that there was no appropriate communication and co-ordination among the employees, technician and the manager or the senior management of the organization. This is clearly due to the absence and non-implementation of a proper chain of command in the organization. The information reached the top level management of the organization several days or roughly more than a week after the fire incident and by then it was already too late for the management to pursue any action. This resulted in the halt of launching of the first Bluetooth mobile in the industry.
After analyzing the above information, it can be summarized that there was no appropriate and effective channel of communication between the manager of the company and the technician of the company who received the call and was informed about the incident. This lack of communication and chain of command was also a reason that the technician did not inform anyone concerned who should have known about it.
Philips was a supplier to both Nokia and Ericsson and the fire that took place at the plant of the company affected the operations and created issues for both these organizations. The supply of chips to both these companies was roughly 40 percent of the production.
The management of Philips informed both these organizations about the issue and one of them was able to counter it while also increasing its growth and the revenues for the period. On the other hand, the other faltered and suffered immense losses in the business due to this issue had to shut down its independent production operations.
This clearly highlights that there was something wrong with the policies and strategies of Ericson and there was something smart and effective in the strategy of the management of Nokia…………………….
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