Samsung's process improvement approach to environmental sustainability

¶ … Improvement

A process is the steps to accomplish a given task. A process improvement is also strategy to make an operation of an organization to become better. In other words, a process improvement is the strategy of setting a program to make a work better. The process improvement model is better than the problem-solving model because the problem-solving model simply fixes the problem without investigating the root cause of the problem. However, a true process improvement approach investigates the root cause of the problem, and provides solutions to the problems.

Objective of this paper is to evaluate the Samsung process improvement process.

Overview of Samsung

Samsung Group is a multinational conglomerate South Korean company primarily focuses on electronic product. Samsung produces variety of product in the electronic division that includes Electronics Devices, Semiconductor & Telecommunications, and Electro-Mechanics. The company entered into the electronic business in 1980 and produced mobile phones, and fax machine. In 1990, Samsung started its global operations and became the major producer of memory chips. In 2012, Samsung became the largest phone maker and overtook the Nokia as the global largest producer of mobile phone. Samsung vision is to dedicate to the efficient production using the innovative technology that enriches people' lives. The current financial data reveals that Samsung is performing excellently. The net profit margin was 8.3% in 2011 and increased to 13.3% in 2013. The ROE (Return on Equity) also increased from 14.4% in 2011 to 22.4% in 2013.

Despite financial success that Samsung has recorded in the last few years, Samsung is facing challenges in enhancing its environmental performances. Schuetze, (2013) argues that billion of mobile phones are polluting the world making the mobile technology to pose serious environmental problem to the community. Typically, raw materials that mobile phone companies are using to produce the phone hardware are posing environmental problems to the communities. In 2013, Samsung announced that its phone would contain the tin metal from Indonesia, a country that adopted unregulated environmental harmful mining practices.

Selection of Samsung Process Improvement

Samsung, being the largest producer of mobile phones, is being accused of contributing to the environmental pollution since the company is currently manufacturing its mobile phones in China where the environmental is not regulated. Meanwhile, Samsung requires an implementation of process improvement model to assist the company becoming environmental friendly in its manufacturing process. The study selects the environmental greener process improvement to make Samsung improve its manufacturing process and enhance environmental sustainability. The major reason for selecting the greener process improvement is to assist Samsung improving its manufacturing process using the clean technologies. The paper also aims to assist the company to reduce the factory emission and maximize the energy efficiency. The key focus is to make Samsung responding to challenges posed by the climate change, and GHG emission.

Fig 1: Flowchart and Document the Existing Process

As being revealed in Fig 1, the flowchart of the existing process of Samsung Group shows that the company is implementing in green building process, promoting business excellence and corporate social responsibility to enhance production efficiency. Samsung existing process is to enhance the manufacturing improvement at Cheonan plant in South Korea. The process is also to control the environmental contaminated materials that have been occurring during the manufacturing process. The existing process also involves the pre-evaluation of the manufacturing chemical substances using the environmental evaluation system to assist the company to solve the problem of blockage of exhaustion pipe. Typically, Samsung is facing challenges of reducing the foul smell emitting from the manufacturing plants that can be harmful to the community. Thus, the company is implementing continual improvement to configure its manufacturing plant in order to reduce a foul smell. For example, Samsung has used the wastewater purification to prevent the emission of foul odor. More importantly, Samsung has installed the odor removal equipment to decrease a foul smell, and the reactor in the machine is designed to eliminate the foul smell. Moreover, Samsung has being able to manage the waste liquid using the recycling system to reduce the air pollution and discharge of wastewater. In the recent year, Samsung has recycled 900 ton of condenses solution and has attempted to improve its process through an efficient elimination of harmful odor and gas. Using the wastewater purification system, Samsung has been able to eliminate the calcium using the calcium elimination technology. Typically, the technology has assisted in preventing the environmental pollution. The new technology has also assisted in cost reduction as well as preventing the environmental pollution.

Identification of Measures to Determine the Baseline Performance for the Samsung Current Process

The study uses the global carbon dioxide emission performances of 2013 as the baseline performance for the Samsung current process, and the Table 3 reveals the company performances of the Carbon dioxide emission of the past 5 years. The study uses the key performance indicator and GHG (Greenhouse Gas Reduction) emissions intensity to determine the baseline performance for the Samsung current process.

"Samsung Electronics designated greenhouse gas emissions intensity at Korean plants which accounts for 90% of Samsung Electronics' global emissions is a key performance indicator (KPI) of its greenhouse gas Management." (Samsung, 2013 p 71).

The greenhouse of emission of Samsung Electronic is higher due to its manufacturing process of electronics. Thus, Samsung has selected GHG (Greenhouse Gas Reduction) to enhance energy efficiency. Since 2009, the company been trying to meet its green house reduction emissions target and has declined the intensity of the green house by 40% in 2011.

The Table 1 reveals the Samsung goal vs. The actual performances for its achievement of the GHG emissions. The company has been able to meet its target by reducing the CHG emission to 2.23 compared to the target goal of 2.38. However, its global emission increased from 7,486 to 8,018 (1,000 tons CO2) between 2012 and 2013 showing that the Samsung was able to meet its goal for the reduction of the CO2 global emission. The study uses carbon dioxide emission performances for the 2013 as the baseline performance for the Samsung current process.

Table 1: Achievements and GHG (Greenhouse Gas) KPI

KPI

Item

2009

2010

2011

2012

2013

Intensity of GHG emissions

(production in Korea)

Goal

6.85

5.65

4.62

2.87

2.38

Performances

5.83

5.11

4.46

2.54

2.23

Reduction Ratio (%) as being (compared to 2008 baseline)

22

31

40

47

53

Five-year Cumulative GHG emissions reductions (Global, 10,000 tons)

Goal

1,169

2,695

5,108

8,469

Performances

1,529

3,292

5,834

8,859

Table 2: Intensity of GHG Emissions

Region

Item

2009

2010

2011

2012

2013

Korea

Goal

6.85

5.65

4.62

2.87

2.38

Performance

5.83

5.11

4.46

2.54

2.23

Global

Performance

4.35

4.15

3.70

2.34

2.13

Table 3: Global GHG Emissions by Type

(1,000 tons CO2)

2009

2010

2011

2012

2013

CO2

6,340

7,012

8,378

5,943

6,394

SF6

2,037

2,397

1,738

PFCS

1,015

1,079

N2O

HFC

2

2

2

2

2

Total

9,625

10,655

11,304

7,486

8,018

Fig 2: Flowchart of New Process

As being revealed in the flow chart in Fig 2, Samsung will be more proactive in its social, economic and environmental activities using the new process. Moreover, the production process will become more sustainable, which will assist the company to produce with healthier materials. Samsung will also enjoy more opportunities using the new process for its production. First, Samsung will enjoy market advantages by enhancing the sustainability of its product. In many countries especially the advance countries, consumers are being aware of the health effects of excessive use of mobile phone. Thus, by producing products that will be environmental friendly, Samsung will be able to dominate electronic global market. Moreover, Samsung will be able to increase its revenue by producing sustainable product, which will assist the company to dominate the global electronic product. More importantly, Samsung will be able to attract highly skilled and talented workers thereby enhancing the quality of its production.

6. Identification of Control Measures to assure the process is Operating Properly

The statistical control measures are the strategies that can make Samsung to determine whether the new process is operating efficiently. For example, the company should collect data of its carbon emission rates of the previous years and compare it with the present carbon emission rates. If the carbon emission rates of the new process are lower than the previous years, the results show that the new process is going smoothly. Moreover, Samsung should use qualitative and quantitative approach using the survey and interview method to sample the opinion of consumer to determine the extent the company has been able to enhance its environmental sustainability. The survey should be conducted in every quarter within a fiscal year. The findings of the survey will assist the company to assure that the new process is working smoothly. Moreover, Samsung should engage an external environmental auditor to audit the new process against the previous years environment process. The outcome of the auditing will assist the company to determine whether the new process is operating properly.

Reference

Blackburn, J.D., Guide, V.D.R., Souza, G.C. et al. (2004), "Reverse supply chains for the commercial returns," California Management Review, 46 (2): 6-22.

Samsung (2013).Facts & Figures. Samsung Electronics Sustainability Report.

Schuetze, C.F. (2013). Billions of Cellphones Polluting the World. The New York Times. April 29, 2013. Samsung Group.

Youn, S. Yang, M.G. & Roh, J.J.(2012). Benchmarking: Extending the responsive and efficient supply chains framework of the green context. An International Journal, 19 (4): 463 -- 480.

Samsung (2014). Samsung Electronics Environmental Report. Samsung Group.

Samsung (2014). Samsung Electronics Annual Report. Samsung Group.