Supply Chain Management of Samsung: Case Study on Advanced Inventory Management Techniques

This is an operations management case study of Samsung's supply chain: its logistics and physical distribution, its warehousing and fulfilment centres, its global distribution network and its inventory control, across manufacturing plants in South Korea, China, Taiwan and Brazil. It analyses what the COVID-19 pandemic did to each of those functions, the technologies Samsung now runs them on, and how economic order quantity, the reorder point and Lean Six Sigma are applied to inventory. The pandemic analysis uses data from 2020 to 2022; the 2026 section is sourced separately at the foot of the page.

One point of vocabulary before the analysis starts. Most of Samsung Group's logistics and IT work is carried out by Samsung SDS, a separate listed affiliate, and most of the sourced technology evidence in this case study comes from Samsung SDS rather than from Samsung Electronics. Where a claim belongs to the affiliate rather than to the manufacturer, it is named as such.

Supply chain management has been reshaped by two things at once: the technology available to run it, and the extension of supply bases across more countries than any single manager can visit. The COVID-19 pandemic disrupted the supply chain of Samsung, one of the largest technology manufacturers in the world, and the company's own quarterly reporting for the period is quoted later in this study. The disruption reached the value chain rather than only the transport layer, and it tested whether a network built for cost could also absorb a shock.

Logistics and physical distribution are often used interchangeably, and it is worth separating them. Samsung's global transport system handles inbound and outbound logistics for manufacturing plants in countries including South Korea, China, Taiwan and Brazil, which means a large-scale logistics operation moving many thousands of stock-keeping units (SKUs) worldwide. Inventory management sits inside that operation and covers order fulfilment, stock storage, control of product sales, and the supervision of customer purchases. This study analyses those aspects of the supply chain by looking at the short-term and long-term effects of the pandemic on each.

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How Does Samsung Move Goods, and What Did the Pandemic Change?

Samsung moves goods through an integrated logistics system: inbound freight to plants in South Korea, China, Taiwan and Brazil, then outbound transport, warehousing, packaging and physical distribution to customers. The pandemic hit its three main logistics functions at once: inventory, the global distribution system and the e-supply chain. It pushed the company towards a centralised network.

Samsung's integrated logistics flow, from sourcing to the customer and back

1. 1 Sourcing Raw materials and components bought from suppliers held to the group's standards.
2. 2 Manufacturing Plants in South Korea, China, Taiwan and Brazil, holding raw material, work in progress and MRO stock.
3. 3 Warehousing Finished goods stored, packaged and controlled in distribution and fulfilment centres.
4. 4 Distribution Transport routed through regional hubs rather than point to point.
5. 5 Customer Order processing, delivery and customer support close the forward flow.
6. 6 Returns Returned products and parts collected and processed, the reverse leg of the closed loop.

Physical distribution is the part of the operation that moves unfinished and finished goods and builds the transport systems to do it. At Samsung, customer support, order processing, inventory control, transport, logistics and packaging are the main responsibilities attached to the physical movement of materials. An integrated logistics system is not only an administrative convenience: when it works, it gives the business a cost and service advantage over competitors who run the same functions separately.

Of the four plant countries, Brazil is the one whose outbound side is best documented in public sources. Samsung runs two factories there, at Manaus in Amazonas and Campinas in São Paulo state, and by 2020 had been making smartphones, notebooks, tablets, televisions and white goods locally for more than twenty years (Samsung Brasil, 2020). National distribution was contracted out rather than run in house: in 2006 Penske Logistics took on "inbound receipt verification of imported products and shipments from factories located in Manaus and Campinas" and "highway and air transportation for retail distribution", working from a 130,000 square-foot distribution centre at Barueri, São Paulo (Penske Logistics, 2006). The shape is the one this case describes for the whole network: production in the interior, one metropolitan distribution hub, and road and air transport to retail. Samsung's own releases do not describe later arrangements, so the 2006 contract is cited as the documented design rather than the current supplier.

The Impacts of the COVID-19 Pandemic on the Three Major Aspects of Samsung's Logistics

Impacts on Inventory

Goods held before production, transport or sale are inventory. In the post-pandemic market, Samsung's response ran through the business network of the group rather than plant by plant, in order to restart supply chain operations. After the first wave the company was pushed to localise resources and processes to keep operations convenient to run, and that localisation put pressure on the inventory system, because local buffers cost more in aggregate than a single regional one. Samsung's inventory falls into four categories: finished items, work in progress (WIP), raw materials and components, and maintenance, repair and operation (MRO) items, which are the four standard inventory categories in operations management. The MRO category is the one most often ignored in student answers, and it is the category that stops a line when it runs out. Inventory management therefore does more than hold stock: it determines whether sales can be made at all.

Impacts on the Global Distribution System

Samsung's global distribution system covers supply chain management, inventory management, warehousing and packaging. The pandemic forced a reassessment of the distribution network itself, because supply shocks and demand shocks arrived at the same time and in different places. Bottlenecks in the chain made it harder to reach customers, and Samsung had to work to hold customer confidence during the crisis period. The distribution function is the outbound side of the organisational logistics system, and its job is to improve the effectiveness of the channel from supplier to customer, which means it directly determines both cost and service performance.

Influence on the E-Supply Chain

Operations that integrate e-business strategies with supply chain processes are called e-supply chains. At Samsung, e-supply chain management means applying online business technologies to support and optimise value-adding activities across the supply network. Diffusion of innovation theory explains the pattern: the company adopts advanced digital technologies as the structural building block of the e-supply chain on a global scale, and adoption spreads from the units with the most to gain. The distinction between logistics and supply chain management matters here. Logistics integrates and maintains the flow and storage of items within an organisation; supply chain management coordinates the movement of goods across a company's whole supply base (Tian et al. 2019).

Hub-And-Spoke Logistics Network Model

As the operating environment shifted towards digital control, Samsung adopted cloud computing inside a hub-and-spoke logistics network to raise the overall capacity of its supply chain management. The model is centralised by design: flows are routed through hubs rather than point to point, which gives the company one place to track and control movements from distribution centres back to raw material sourcing. Because the pandemic disrupted the movement of materials across the whole network, a centralised framework became the practical way to manage risk rather than an architectural preference. That centralisation is what allowed the logistics system to be restarted quickly once restrictions lifted.

How Is Samsung's Supply Network Designed?

Around three components: purchasing and sourcing, planning and scheduling, and logistics. Each one determines how much stock the network has to hold, so the design is really an inventory decision. Location intelligence, cloud computing, the internet of things and big data analysis are used to match supply to demand across regions rather than plant by plant.

What disrupted Samsung's inventory and logistics, 2020 to 2022

1. Purchasing and sourcing

   • Procurement of materials interrupted during the crisis period
   • Sourcing strategy forced to shift towards risk management

2. Planning and scheduling

   • Supplier shutdowns and commercial lockdowns stalled planning
   • Weaker memory prices and slow consumer product sales in Q4 2020
   • Operating profit fell 26.7 per cent quarter on quarter in Q4 2020

3. Logistics and distribution

   • Social distancing and serial lockdowns from March 2020
   • Supply and demand shocks forced a network reassessment
   • Reverse logistics squeezed as market demand fell

4. Inventory

   • Localisation of resources raised pressure on inventory management
   • Bottlenecks held back the response to market demand

Effect Inventory and logistics disruption across Samsung's supply network

Data-driven supply chain operations and technologies such as cloud computing and blockchain have changed how supply networks are designed. The fishbone diagram above sorts the 2020 to 2022 disruptions by those three components, with inventory as the fourth bone; the method itself is worked through in our fishbone diagram example. The internet of things and big data analysis are used to align supply chain management with the wider picture of supply and demand across markets. The three components below are the parts of the design that create the competitive position, because each of them sets a constraint the other two have to work inside.

Purchasing or Sourcing and Its Impacts on Inventory Management

Sourcing decisions set the inventory position before a single unit is ordered. Bringing advanced technology into raw material sourcing is what lets the supply network hold both environmental standards and service efficiency inside one inventory framework. Samsung requires its suppliers to uphold international laws and standards as part of the group's social and environmental obligations (Smith-Ditizio and Smith, 2018). The pandemic then interrupted material procurement across the whole base, and the company's sourcing strategy has since had to weigh risk management alongside cost, in order to reduce compliance breaches, inventory disruption and environmental damage in logistics operations across different regions.

Planning or Scheduling and Its Impacts on Inventory Management

Planning in supply network design covers production, logistics, distribution and the efficient use of resources. Samsung plans across those segments by integrating procurement with operational strategy rather than running them as separate cycles. The company deals with a wide range of suppliers and distributors, and the network was badly affected by supplier shutdowns and commercial lockdowns during the pandemic. Its own reporting shows the size of the effect in that period: Samsung Electronics posted KRW 61.55 trillion in consolidated revenue and KRW 9.05 trillion in operating profit in the quarter ended 31 December 2020, and stated that profit "rose 26.4 percent year-on-year led by display and memory chip businesses, but fell 26.7 percent from the third quarter due to weaker memory prices and sluggish consumer products sales, as well as higher marketing costs and negative impact from the Korean won's appreciation" (Samsung Electronics, 2021). The planning lesson is in the attribution rather than the number: the quarter-on-quarter fall came from prices, demand mix, marketing cost and currency, not from a single break in the chain. Physical distribution planning was affected separately, as supplier-side output and the transport system both stalled.

Logistics and Its Impacts on Inventory Management

Logistics is the integrated approach to transport, storage, handling, cataloguing and packaging through manufacture and distribution. According to Treiblmaier et al. (2020), digitalisation has turned networks like Samsung's into integrated systems where inventory is managed through movement and storage capacity rather than through order quantity alone. The process starts with raw materials, runs through manufacture and distribution, and ends when finished goods reach the consumer or when items are returned to their origin. When the movement of raw materials and products was disrupted in 2020, inventory could not respond to demand, and the result was a bottleneck rather than a shortage.

Closed-loop supply chain management (CLSCM) is the frame for the rest of this section. In a closed loop the network runs in two directions, and both directions carry inventory. The forward direction is procurement, production and distribution, delivered through collaborations with logistics businesses in each market. The reverse direction is the collection and processing of returned electronic products and parts, which is what makes the operation sustainable rather than only efficient (Seyedan and Mafakheri, 2020). Brazil shows the reverse leg in practice: Samsung Recicla, the company's reverse logistics programme there, has run since 2017 through collection containers in Samsung stores and service centres, collected 115% more electronic waste in 2023 than in the year before (Samsung Electronics, 2024), and was extended to business customers in May 2025 (Samsung Brasil, 2025). Reverse logistics came under pressure during the recovery period, because returns volumes fall when demand falls, and a reverse network sized for normal volumes then carries fixed cost against less throughput.

Which Technologies Run Samsung's Distribution and Fulfilment Centres?

Four technologies carry the operational flow: data analytics for demand and risk, cloud computing for the logistics platform itself, automation and robotics inside warehouses and fulfilment centres, and blockchain for payment and traceability between suppliers and centres. Together they give the network the control a hub-and-spoke design depends on.

Samsung's logistics network is a global system for moving materials and products, and the technology layer is what makes it manageable at that size. The group has built an integrated logistics approach for high-volume manufacture and distribution of electronic products across many markets, and each technology addition has improved control rather than only speed (Tay & Loh, 2021). Cloud computing in particular turned the logistics network into something that can be operated from one place. The system was disrupted directly and indirectly by the pandemic through health measures such as social distancing and the serial lockdowns that began in most countries in March 2020. According to Lysons & Farrington (2020), that created a real difficulty for a global network, because production and distribution both depend on logistics services running. The way out was a set of operational rules and a production planning method, supported by technology that made both visible (Sundarakani et al. 2019).

The resource-based view explains why the IT investment counts as strategy rather than overhead. In Barney's (1991) terms a resource supports a sustained advantage when it is valuable, rare, imperfectly imitable and without close substitutes, and a logistics platform that reaches 36 countries meets at least the first three. Adopting information technology is therefore a strategic investment in the capability to exploit information, and the value of that information is what distinguishes one firm's supply chain from another's. Samsung's post-pandemic direction has been to deepen digital capability inside that structure rather than to bring more of the chain in house.

Data Analytics

The clearest sourced example is risk detection. Samsung SDS describes a system in which "with machine learning, the company automatically extracts logistics risk data from more than 60,000 global news articles complied on a daily basis", then "applies generative AI to classify the risks into three levels depending on their severity", a model built "based on over 20,000 global logistics risk cases of the past". The company reports that the time needed to set up a response plan fell "from one day to two hours" (Samsung SDS, 2024). The same release gives a worked example: when fighting broke out between Israel and Iran in April 2024, Samsung SDS notified customers with air cargo bound for Israel and rerouted the freight by sea through Oman and the United Arab Emirates. For an operations assignment that is the useful detail, because it shows analytics changing a routing decision rather than producing a dashboard.

Cloud Computing Infrastructure

Samsung's logistics platform has been cloud-based for a decade. Samsung SDS relaunched Cello, its integrated logistics solution, as "a cloud-based SaaS (Software as a Service) platform as part of its efforts to expand globally", on the argument that subscribing rather than building "helps new customers in and outside Korea reduce the burden of initial investment in IT infrastructure" while letting them "optimize logistics and shipping by applying big data analytics technology" (Samsung SDS, 2016). The scale it has reached is reported in the affiliate's own results: "the number of subscribers to Cello Square, a digital logistics platform, grew by 27% YoY, with 24,625 companies using the service as of the end of 2025", and cloud business revenue "reached a total of KRW 2.6802 trillion" (Samsung SDS, 2026c). The platform is therefore both the infrastructure Samsung's own distribution runs on and a product sold to other shippers, which is worth noting because it changes the incentive to keep it working.

Automation and Robotics

Samsung's automation work sits closest to the plant. Samsung SDS supplies an Automated Material Handling System (AMHS) that provides "integrated control of materials handling vehicles and equipment including AGV, OHT and stockers" with "optimized material handling with dynamic routing of AGV", and describes it as a field-proven solution "in operation across 40 sites worldwide" in semiconductor, LCD and lithium-ion battery plants (Samsung SDS, n.d.). AGV here means automated guided vehicle and a stocker is the equipment that stores and manages material flow between process steps. On the warehouse side the same affiliate lists vision picking using smart glasses, robotic process automation and equipment monitoring as distinct capabilities. The pattern worth analysing is that the automation is concentrated where the product is most valuable per unit of handling time, which is inside the fabs rather than in the outbound warehouse. Where machine learning is being added to the same handling and planning decisions, our AI in supply chain management sample takes the analysis further.

Blockchain Technology

Samsung's blockchain work in logistics is real but narrower than the general claims made for the technology. In October 2018 Samsung SDS announced that it "signed a blockchain-based maritime logistics project with ABN AMRO (one of the top three Dutch banks) and the Port of Rotterdam Authority (who runs the largest port in Europe)", and planned "to complete a pilot project to connect its blockchain platform, Nexledger, with ABN AMRO's Corda by February next year", the stated aim being that "import and export-related documents will be shared in real-time" and document falsification prevented. The same release records an earlier Korean project delivered "through a consortium comprised of 38 Korean organizations" (Samsung SDS, 2018). A commercialised example followed in 2019, when Samsung SDS reported being first in Korea to commercialise a blockchain service giving "transparent processing history of the aquaculture-shipping-distribution of the marine products" (Samsung SDS, 2019). Note the distinction a marker will look for: the Rotterdam work was announced as a pilot, and Samsung published no follow-up confirming its outcome, so it should be cited as what was signed rather than as what was delivered.

How Does Samsung Manage Inventory Using EOQ and the Reorder Point?

Economic order quantity sets the order size that meets demand without surplus stock; the reorder point sets the level at which replenishment begins for each stock-keeping unit, allowing for lead time. This case runs both inside a Lean Six Sigma DMAIC cycle so each decision produces evidence. The cycle is the analyst's frame: Samsung publishes its technologies, not its method.

The DMAIC cycle applied to inventory in this case

1. 1 Define Name the waste: surplus stock, stock-outs and the holding cost behind them.
2. 2 Measure Record demand, lead time and cost for each stock-keeping unit.
3. 3 Analyse Compute the economic order quantity and the reorder point from those figures.
4. 4 Improve Set the order size and trigger level, with lead time built into the reorder point.
5. 5 Control Automatic replenishment once stock falls below the trigger, monitored through the cloud platform.

Inventory management is where the rest of the supply chain shows up as a number. Samsung's inventory performance weakened during the pandemic as demand changed and operational barriers appeared across the wider network. Lean Six Sigma is the method this case uses to attack the resulting waste, with the technologies Samsung SDS documents above, analytics and automation, placed inside the DMAIC cycle: define, measure, analyse, improve and control. Running inventory through that cycle is what turns a stock policy into something testable, because each stage produces evidence rather than an opinion. Supply chain network design sits alongside it, building and simulating the network in order to understand the costs and times involved in getting goods to market from a given set of resources and locations.

Samsung is well placed to run the economic order quantity (EOQ) and reorder models together with the Six Sigma approach. EOQ lets a business estimate costs and set an order size large enough to meet demand without overshooting it (Efrilianda & Isnanto, 2018), which for a product range of Samsung's width means computing EOQ per product to hold down both holding expense and surplus stock. The reorder point is the minimum stock level for a given product, and replenishment begins when that level is reached (Park et al. 2021). Applying both models across a manufacturing base of Samsung's size means assessing cost and waste for each SKU rather than for the category, which is why the Lean Six Sigma framework is the enabling piece: it gives a repeatable way to evaluate the nominal cost of sourcing and procuring material through the chain. The company's information systems then carry those decisions into practice by tying the organisational objectives to what the IT infrastructure actually schedules.

Samsung's supply-chain sustainability page describes its aim for the semiconductor supply chain as "growing together with our suppliers based on a philosophy of fairness, openness, and mutually beneficial cooperation" (Samsung Electronics, n.d.). Inside that relationship, EOQ and the reorder point combined with Lean Six Sigma give the company tighter inventory control than either would alone, and automation and cloud computing are what make the control continuous rather than periodic. Integrating inventory management with the closed-loop supply network adds the second direction of flow to the same optimisation. The practical difficulty is scale: manufacturing and logistics planning involves so many variables that a firm can easily lose the thread, which is exactly why the reorder point is calculated with lead time built in rather than ordered at the last minute. In a fixed reorder quantity system, a fresh order is triggered automatically once stock falls below a defined level, returning inventory to its target (Lukiman & Richard, 2020). Across a product range as wide as Samsung's, that combination of demand forecasting and automatic replenishment is the mechanism that keeps the network supplied, and the cloud services described earlier in this study are what run it continuously.

Samsung's Supply Chain in 2026

The direction this case study describes has held. Samsung's logistics run through Samsung SDS, the group's IT and logistics affiliate, which reports a network of 36 countries, 52 branches and more than 300 sites operated on its Cello logistics platform, with the figures footnoted on its own page as current "as of 2026" (Samsung SDS, 2026a).

Samsung SDS logistics network, as of 2026

Countries

36

Branches

52

Sites connected, at least

300

Cello Square subscribers, end of 2025

24,625 Up 27% year on year.

In February 2026 Samsung SDS presented a digital logistics solution that handles "international ocean and air freight, land transportation, and local logistics including warehousing" together with customs clearance on a single platform, Cello Square, with "real-time monitoring of the entire logistics process, along with AI- and machine learning-driven risk factor prediction and accurate Estimated Time of Arrival (ETA)" (Samsung SDS, 2026b). For an assignment written now, that is the evidence the cloud computing and data analytics sections above describe a running programme rather than a plan: the hub-and-spoke control described in the first section is the same idea, several years on.

Conclusion

Samsung's supply chain management is best read as one design problem rather than four departments. Purchasing sets the inventory position, planning sets the exposure, logistics sets the response time, and inventory is where all three are measured. The pandemic tested that design and found it dependent on movement: when materials stopped moving, inventory could not answer demand, and the reverse network carried fixed cost against falling volumes.

What the company did next is the part worth taking from this case. The technology layer was extended in specific places rather than everywhere: analytics where the decision is a routing choice, cloud where the platform has to be reached from many countries, automation where handling time is expensive, blockchain where the problem is a document rather than a container. Each of those is verifiable from Samsung SDS's own publications, and each is narrower than the claims usually made for the technology.

Two limitations belong in the conclusion of an honest answer. The financial evidence in the pandemic sections is Samsung Electronics' own reporting, which explains a quarter rather than a supply chain. And the technology evidence is Samsung SDS's, which describes capability rather than outcome. A stronger version of this assignment would pair each capability with a published performance figure, and would say plainly where no such figure exists.

Need help with a similar supply chain or operations case study? Message us on WhatsApp with the brief, the word count and the deadline, and we will tell you what we can do. For a comparable strategy case study, read our Toyota global strategy and competitive advantage case study. If your brief is a SWOT rather than a case study, our SWOT analysis of Toyota applies the four quadrants to the other big lean manufacturer.

References

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