On March 17, 2000, lightning hit a power line in Albuquerque, New Mexico, and caused a fire at the Philips (Philips Electronics, NV of the Netherlands) radio frequency chip manufacturing plant.  Although the fire was extinguished within ten minutes, millions of microchips were damaged, which triggered a far-reaching chain of consequences for two of Europe’s largest electronics companies:  Nokia Corp. in Finland and Telefon AB L.M. Ericsson in Sweden.  The damaged chips were crucial components in the mobile phones that both companies sold worldwide. Both organizations were going to discharge new phones into the market and those minor chips were the key segment to their item's usefulness. In its underlying reports of flame to Ericsson and Nokia, Philips transferred that it would take around seven days before creation would return. Nokia's treatment of its production network interruption gives a sensational case of how an organization's vital hazard administration can lighten budgetary catastrophe and lay the basis for achievement later on. Irritations in store network administration are inescapable, and become increasingly hard to survey as the commercial center turns out to be more globalized.

1. A
CASE BASED PRESENTATION
ON
Presented By:-
Aamir Malik
Pankaj
Vasa Anand Joshi

2. PHILIPS
• It was founded in Eindhoven in 1891 by Gerard Philips and his father Frederik.
• It is one of the largest electronics companies in the world and employs around
105,000 people across more than 60 countries.
• Royal Philips is a Dutch technology company headquartered in Amsterdam,
Netherlands with primary divisions focused in the areas of electronics,
healthcare and lighting.
• 80% of the cell phones sold overall utilized Philips chips. Other than cell
phones their chips were being utilized as a part of the other electronic gadgets,
for example, new autos, computerized cameras and versatile memory gadgets.

3. ERICSSON
• Ericsson was founded in 1876 by Lars Magnus Ericsson
• Ericsson is a multinational networking and telecommunications equipment and
services company headquartered in Stockholm, Sweden.
• The company offers services, software and infrastructure in information and
communications technology (ICT) for telecommunications operators, traditional
telecommunications and Internet Protocol (IP) networking equipment, mobile
and fixed broadband.
• Ericsson had 35% market share in the 2G/3G/4G mobile network infrastructure
market in 2012.

4. NOKIA
• Nokia Corporation is a Finnish multinational correspondences and data innovation
organization, established in 1865.
• Nokia is headquartered in Espoo, Uusimaa, in the more prominent Helsinki
metropolitan zone.
• According to the case, Nokia was the world’s leader in cell phone sales and the
largest corporation in Europe by market capitalization in the year 2000.
• In 1999 Nokia sold 128 million phones.

5. OVERVIEW OF CASE
• On March 17, 2000, lightning hit a power line in Albuquerque, New Mexico, and
caused a fire at the Philips (Philips Electronics, NV of the Netherlands) radio
frequency chip manufacturing plant. Although the fire was extinguished within ten
minutes, millions of microchips were damaged, which triggered a far-reaching
chain of consequences for two of Europe’s largest electronics companies: Nokia
Corp. in Finland and Telefon AB L.M. Ericsson in Sweden. The damaged chips
were crucial components in the mobile phones that both companies sold
worldwide.
• Both organizations were going to discharge new phones into the market and
those minor chips were the key segment to their item's usefulness. In its underlying
reports of flame to Ericsson and Nokia, Philips transferred that it would take
around seven days before creation would return. Nokia's treatment of its
production network interruption gives a sensational case of how an organization's
vital hazard administration can lighten budgetary catastrophe and lay the basis for
achievement later on. Irritations in store network administration are inescapable,
and become increasingly hard to survey as the commercial center turns out to be
more globalized.

6. PROBLEM IDENTIFYING
Issues at Philip’s end
• Fire breakout in Philip's perfect rooms.
• Failure to decide the correct harm to
clean-rooms.
• Failure to decide their 'time for typical
generation continuing' .
• Absence of crisis arrangements .
Issues at Ericsson's end
• Weak crisis judgement
• Inability to take incite activities in time
• Single provider unwavering quality

7. DIFFERENT RESPONSES OF NOKIA AND ERICSSON
ON A FIRE AT ONE OF THE SUPPLIER’S FACILITY
 Ericsson’s experience was quite different
 Took 4 weeks for the news to reach upper management
 Realized five weeks after the fire regarding the severity of the situation.
 By that time, the alternative supply of chips was already taken by Nokia.
 Devastating impact on Ericsson
 $400M in potential sales was lost
 Part of the loss was covered by insurance.
• Led to component shortages
 Wrong product mix and marketing problems caused:
• $1.68B loss to Ericsson Cell Phone Division in 2000
• Forced the company to exit the cell phone market

8. NOKIA'S ACTIVITIES TO BALANCE SUPPLY CHAIN
MANAGEMENT
• Early theories of conceivable emergency
• Readiness against supply emergency
• Discovering elective wellspring of chip supply

9. SOLUTIONS TO PHILIPS
Recognizing that Philips’ problem could affect the production of several million
mobile phones, Nokia took three key steps.
• One team of executives and engineers focused on Philips, seeking a major role in
developing alternative plans. Guided by Mr. Korhonen and assisted by CEO Jorma
Ollila, it pressed Nokia’s case with Philips executives, including its CEO, Cor
Boonstra. Philips responded by rearranging its plans in factories as far away as
Eindhoven and Shanghai.
• A second cross-continental team redesigned some chips so that they could be
produced in other Philips and non-Philips plants. Where appropriate, it consulted
with Philips to assess the possible impact of its actions.
• A third group worked to find alternative manufacturers to reduce pressure on
Philips. Two current suppliers responded within five days.

10. RECOMMENDATIONS TO ERICSSON
• Because of carelessness and non-acknowledgment of significant emergency,
Ericsson needed to face substantial misfortunes from where it was never ready to
ascend again in the market. It could have maintained a strategic distance from the
fiasco by:
• Instantly reacting to the profiting chi emergency as opposed to sitting tight for the
supply from Philips to continue.
• Conceiving a crisis creation recuperation system ahead of time for dealing with
sudden production network emergency.
• Recognizing elective wellspring of semiconductor chips quickly, to adapt up to the
shortfall made due to slowed down creation at Philips

11. ANY QUESTION ?

12. THANK YOU !