SAMSUMGGALAXY S6 and S6 edgeXin Peng Coming on 10 April 2015…

SpecsGalaxy S6

Display5.1" Quad HD Super AMOLED®  2560 x 1440, 577 PPI,6.85mm Depth

Galaxy S6 edge

5.1" Quad HD Super AMOLED® 2560 x 1440, 577 PPI + dual-edge7.00mm Depth

Camera (Back)16MP for exceptional clarity, 0.7 second activation for faster response, auto real-time HDR

Selfie Camera (Front)Best-in-class 5MP with 120° wide angle lens

Smart Charging10 minutes = 4 hours of regular use or 2 hours of HD video. Built-in wireless charging capabilities.

ProcessorLightning-fast 64 bit, Octa-core processor

THE GOOD• Vivid Images with a Fast, Bright Camera

• Cutting-edge Core Technology

• Introduction of Smart Charging • Easy and Protected Mobile Payment

• Improved fingerprint reader

THE BADIn the meantime, some changes of S6 and S6 edge may disappoint some long time fans:

• Non-removable batteray The battery isn't user-replaceable anymore because of the unibody design.

• Absent exstendable storage And while the entry-level models will come with 32GB of internal storage, there's no expansion slot for additional storage.

• Resembalance appearance with iPhone 6 The phone has an intensely reflective backing and looks embarrassingly like the iPhone 6.

• Not waterproof anymore

 

Demand Forecast—History NumberProducts Release Date Units sold

(million)Units sold (million)

Units sold (million)

Units sold (million)

Galaxy S2 2 May2011

3 (55 days) 5 (85 days) 10 (5 months) 40.2 by 14 Jan 2013

Galaxy S3 29 May2012

9 before release

20(100 days)

50 by14 March 2013

About 60By may 2014

Galaxy S4 26 April2013

4 (4 days) 10 (27 days) 20 (two months)

40(6 months)

Galaxy S5 11 April 2014 11 (one months)

Then the company kept silent about the sales. External guess is the number of units sold could be not pretty.

Demand Forecast

Figure1 Figure2

Demand ForecastI set two years from release date as a period to for total demand forecast since Samsung release flagship every year and according to the history number the units sold of the new product turns to be stasis after two years. Calculate the ratio of new product to the total shipments of Samsung smartphones in two years as the index.

S2:2011 494.5*(14.8%+19.2%+19.2%)/3*0.75=65.6 2012 725.3*30.3% = 219.72013 1019.7/4*30%= 76.5 Ratio = 40.2/(65.6+219.7+76.5)=11.1%

S3:2013 1019.7*31.3% = 319.2 2014 (1300.4/2)*(30.8%+25.20%)/2=182.12012 (725.30/2)*(32%+30%)/2=112.4Ratio = 60/(182.1+112.4+319.2)=9.7%

Demand ForecastThe last 3 quarters of 2015 could contribute the most to the sale of S6 and S6 edge, so I’d like to discuss about them one by one rather than roughly as a year.Obviously the market share of Samsung has been shrinking since 2014, mainly result from the show up of more competitors especially in China like Xiaomi.The second quarter of 2015 the market share may come back to 25% as a result of release, but not 30% because of the concurrent release of LG and HTC.Then may drop to 18% for next quarter after the release of Apple 7.Then may come back a little bit to 20% because of the holiday season and the typical drop of price.

Demand ForecastIn total by April 2017

2015According to fore discussion, the Shipment of Samsung could be 1284*0.75*(25%+ 18%+20%)= 202.23 2016For 2016 & 2017 we roughly take 20% as the average market share of Samsung smartphones because of existence of more and more competitors for this pie. 1435*20%=287 20171579/2*20%=157.9Total Demand for S6 and S6 edge would be (202.23+287+157.9)*10%= 64.7 million units. I take the average of the two ratios I got as the ratio for this new product for the innovative features.

Production SystemMain goal: High level of flexibility

• Possibly fluctuating demand

• Threats from low-end competitors like XiaoMi to high-end competitors like Apple

• Ability to manufacture various innovative products beside S6 and S6 edge

Production SystemWhy Manufacturing Cells:

• Better human relations• Improved operator expertise• Less inventory and handling• Higher productivity, shorter throughput time• Higher Capacity• High levels of innovativeness and flexibility• Moderate levels of cost, quality and performance• Less defects

Last but not least, manufacturing has already been applied to Samsung’s other production lines like S5, which means EXPERIENCE!

CapacityChallenges: 1. Demand Fluctuation 2. Products variability (low-end to high-end, release of flagship every year)

Solution: Flexibility× Outsourcing (Samsung doesn’t do outsourcing!) Schedule fewer hours or schedule an extended shutdown period at low demand period Flexible plants with movable equipment, knockdown walls, and easily accessible and reusable

utilities which can be easily adapt to quick change. Flexible processes with flexible manufacturing systems and simple, easily set up equipment,

which permits rapid low-cost switching from one product to another. Better collaboration with suppliers Flexible workers with multiple skills and the ability to switch easily between tasks Cost of holding inventory might be lower than over-capacity.

.

LocationFive common candidates—China, Thailand, Malaysia, India, Vietnam.My suggestion would be Vietnam.

Malaysia:• Naturally unstable (earthquake, tsunami,etc)

Thailand:• Politically unstable.

China:• Increasing labor cost• Reduced market share• Government incentives not so competitive• Increasing cost to manufacture products

Location India: • Existence of competitors: Motorola and local mobile phone sellers such as Micromax and

Carbonn (threat for market share and workforce)• Shaky government

Vietnam :• Lower wages• Closeness to component supply chain from China and Taiwan• Tax breaks: paying no corporate tax for the first four years of operation and only half the rate

for the next nine years, subject to certain conditions.• Politically stable • Young, increasingly well-educated workforce• Existence of Intel and Nokia plants also proved the viability• A port which makes it easier to ship S6 and S6 edge around the world.

Level of AutomationIntroduction of automation could reduce the waste of motion and improve effectiveness, but still the manufacturing should rely much on human hands.

Where should be automated：• Automated lines for batteries production (Apple is doing)• Use robots to split chips and diodes long strips of plastic onto circuit boards (tiny components)• Robotic trucks for picking up boxes, read barcodes, shipping etc.• Final stages of testing

Where Human hands should be kept:• Remove little bits of tape, press some boards together, test voice quality and put products into

boxes for shipping.• Manual double-check, such as screen quality and audio quality for calls• Delicate assembly tasks like checking out whether camera is grotesquely off where the

amount of pressure applied is critical

Reference[1]Jacob, F. Operations and Supply Chain Management (13th ed.). [2] Samsung Galaxy S6 and S6 edge - https://www.youtube.com/watch?v=CnYtWWDor2s[3] http://www.samsung.com/us/explore/galaxy-s-6-features-and-specs/[4] http://www.cnet.com/products/samsung-galaxy-s6/[5] http://www.businesskorea.co.kr/article/9724/bright-forecast-analysts-increase-galaxy-s6-sales-estimates-20-based-killer-hardware[6] http://www.phonearena.com/news/Galaxy-S5-price-tag-would-fall-24-by-the-summer-research-firm-suggests_id52534[7] http://www.bloomberg.com/news/articles/2013-12-11/samsung-shifts-plants-from-china-to-protect-margins[8] http://www.ibtimes.com/why-samsungs-move-build-smartphones-vietnam-will-help-it-better-compete-china-1724014[9] http://www.itproportal.com/2014/04/09/a-look-inside-samsungs-galaxy-s5-factory-production-line/[10]http://www.samsung.com/us/aboutsamsung/investor_relations/financial_information/downloads/2014/2014_business_quarter02.pdf[11] http://www.samsung.com/us/aboutsamsung/investor_relations/financial_information/downloads/2013/2013-samsung-electronic-report.pdf[12] http://www.statista.com/