During 2009, we penned a few postings, including our previous 2009 Predictions, noting that supply chain economics and increased risk factors would cause more companies to revisit their global sourcing or near-shoring strategies. One of our commentaries reflected on Japan-based consumer electronics companies who had made decisions toward outsourcing production beyond Japan. Our premise was that a cost-efficient value chain that can incorporate efficiency and agility, can sometimes trump a more costly product innovation focused value-chain. One company that I continue to observe as having the ability to balance both is Samsung.
Just before the Christmas holiday, global consumer giant Samsung Electronics Company Ltd. announced that it had acquired the Poland-based refrigerator and washing machine manufacturing facilities from Amica, a Polish home appliance maker, in a deal valued at US $76 million. Upon reading the linked press release, you will get a clearer sense of the combination of business and supporting supply chain sourcing strategies that Samsung is undertaking.
Samsung has declared a goal for being a market leader in the European appliance market. It has determined that the most economic and efficient means to fulfill that strategy was to move away from sourcing appliance production in China and other Southeast Asia countries, perceived low-cost regions, in favor of a strategy of near-shoring, in this case, Eastern Europe. The savings are noted as a four week reduction in order lead-times and reduced distribution costs. Samsung further states that it has manufacturing presence in seven different countries, which interesting enough aligns with the biggest geographic market growth regions for Samsung appliances.
In another related near-shoring context, Samsung also announced that it expects to dominate in the market for liquid-crystal-display (LCD) televisions. According to a recent Wall Street Journal article (subscription required), Samsung sold 2.6 million LCD televisions in 2009, exceeding its original goal of 2 million units. This division has set a goal of selling 10 million LED televisions in 2010, a fourfold increase, including the launching of eight new models during the year. A near-shoring strategy is also exercised in LCD production, with the majority of North American market bound televisions being produced in Mexico.
It will be very interesting to observe how well Samsung executes its aligned market dominance and near-shoring strategies during 2010. The result could well be a new disruptor in the market.