Supply Chain Matters has previously posted commentaries regarding the ongoing brand, product and supply chain learning implications regarding the product recall surrounding the fairly newly announced Samsung Galaxy Note 7 and its manufacturer, Samsung Electronics. Incidents of fires presumably caused by lithium ion battery thermal runaway remain a concern, as is the damage to the Samsung brand. The Note 7 represents the premium smartphone model offering in the Samsung product lineup and now upwards of 2.5 million of these devices have been recalled across 10 geographic markets.
The initial news of the recall prompted Samsung investors to punish the stock to a 13 percent decline, but the company’s stock quickly bounced back on news of the product recall efforts.
Since our last update at the end of September, there was a fire incident involving a phone belonging to a passenger flying on a Southwest Airlines flight traveling from Louisville Kentucky to Baltimore Maryland. The fire incident caused the evacuation of that aircraft. The Galaxy Note 7 phone in that incident was a new replacement phone and battery, raising added concerns that the battery fire incidents may or may not be addressed in the prior product recall. Other incidents involving replacement phones are also being investigated by safety agencies and Samsung.
The Wall Street Journal, citing a source familiar with the matter is today reporting that Samsung has now temporarily halted production of the troubled Note 7. A statement by Samsung indicates that the manufacturer was “temporarily adjusting the Galaxy Note 7 production schedule in order to take further steps to ensure quality and safety matters.” Samsung is further offering a software update for customers in South Korea that limits the charging to only 60 percent of battery capacity.
In its reporting the WSJ opines that this latest production halt underscores the growing seriousness of how Samsung is dealing with its largest product recall to-date. The publication also points to the global supply chain implications involved in the production of the product’s battery. Noted is that the smartphone battery cells are produced in both South Korea and China but the unit’s packaging is performed in Vietnam.
The manufacturer further indicated to the WSJ: “If we determine if a product-safety issue exists, Samsung will take immediate steps approved by the CPSC (U.S. Consumer Product Safety Commission) to resolve the situation.”
On the distribution front, AT&T, T-Mobile and Verizon Communications have now indicated that each would stop issuing new replacement Galaxy Note 7’s to replace recalled units, in essence forcing customers to select other Samsung model phones as replacements or to seek a refund.
Obviously this latest news adds many more dimensions to the ongoing Samsung product recall efforts involving the Galaxy Note 7 smartphones and perhaps to other smartphone manufacturers who may have a similar supply chain profile. Time, product and supply chain troubleshooting and degree of response are all key to this ongoing set of challenges that are impacting Samsung.
Consumer trust is all important and for current Galaxy Note 7 owners, such trust is growing quite thin.