On March 11, 2018 Samsung released their Galaxy S9 Plus phone. Prior to this launch date, Samsung needed to decide what would go into their new phone, create the phone and then make sure everything was working with their new phones. After this, they needed to decide how many phones to make. This number was based on forecasts. Samsung needed to make sure the Galaxy S9 plus was a hit; a few years ago they had a problem with their Galaxy Note 7’s (they kept on exploding). Samsung’s S8 had done very well and they were hoping to continue this trend with their S9. Samsung had high hopes for their S9 and they forecasted sales of around 43 million phones, and 12 million in the first quarter. This number is up from their sales of the S8, which were 41 million. However, Samsung’s sales on the first day of release were only 70% of their sales on the first release of the S9. Phone sales as a market are also down from the previous year. It will be interesting to see if Samsung meets their targets. Samsung set high expectations for their new phones due to new materials.
Samsung’s bill of materials for the S9 Plus was much higher than for the S8. Samsung added an extra $43 of costs to their phones due to new additions, such as: a state of the art new and improved camera, and improved processors. However, Samsung has had some problems with their new phone. There have been certain dead spots on the phones. This is not good for a phone that costs around $730 and this phone was supposed to challenge the Apple iPhone. Samsung has issued statements allowing customers to ship back their old phones and receive new phones, however, the phones are on backorder. Samsung is now going to have to factors these returns into their master schedule framework. They are going to need to scale up their production and possibly incur costs of overtime workers. This is because they need to keep up with their forecasted demand and produce phones to fill that forecast, but they will also need to fix the defective phones. This defect could hurt their phone sales in general and it is possible that they do not meet their forecasted sales. Samsung is going to need to fix the phones as fast as they can in order to limit the damage to their reputation, because of the extra cost associated with overtime and the increased production needed to combat their new phone production and their defect fixing, Samsung’s bill of materials will greatly increase. Samsung already has a rocky relationship with their customers due to previous issues, so I am interested to see how their customers address this latest setback.
I have never personally owned a Samsung phone, so my opinion of their phones is solely based off of what I read. I am curious though for those who own Samsung phones: How do they compare to Apple products? Have you been affected by any of their defect problems? Have you had enough with their defect problems? I will monitor this situation closely, as I am very curious to see how their sales are affected by this latest setback.