The fire and contaminated clean room environment at the Philips chip plant affected the
supply chains of Nokia and Ericsson very differently. Similarly, risk management will not
be viewed and practiced in the same regard by different companies. Strategic risks have
the power to stop the entire operation and profitability of a company, but there are ways to
mitigate them by using external intelligence.
External intelligence was used by Nokia to prevent and mitigate strategic risks, as they had
several other options to source the same chips after the fire. Ericsson, on the other hand,
most likely did not utilize or poorly utilized external intelligence involving supplier data.
External intelligence regarding supplier and competitor data provides knowledge to a
company from potential suppliers that may assist in risk management and prevention.
Additionally, the ‘supplier’ level of supply market intelligence communicates
“
the number
of potential suppliers that exist, the products and services they provide, their size and
capabilities, and location.” (Schlegel & Trent, 2014) If Ericsson utilized supply market
intelligence for suppliers and incorporated the data in the company’s strategic risk
management, the balance of power may not have shifted between these two companies.
Nokia viewed strategic risk as a problem that needed to be thoroughly analyzed to assist in
creating as many solutions to potential problems as possible. Ericsson did not view
strategic risk as a threat due to not being detail-oriented on the matter and relying on not
just one supplier of the chips, but only one plant from one supplier. Nokia was better
prepared for risks such as this and was able to shift suppliers and plants with no delay due
to their risk management towards strategic risks.
Have a great week everyone,
Jeff
References:
Schlegel, Gregory L., and Robert J. Trent.
Supply Chain Risk Management : An Emerging
Discipline
, Taylor & Francis Group, 2014.
