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1161 SA UV cases 01Case study
Nokia
Project
Event management and lessons 
for scarce resources
Illustration
Resilience
This is a textbook example of supply 
chain event management, included here 
for its potential lessons with regard to
anticipating and managing scarce natural
resources. The example is drawn from
Martin Christopher’s book, Logistics and
Supply Chain Management.
In March 2000, lightning caused a fire in 
a semi-conductor plant owned by Phillips
Electronics NV, in New Mexico, USA. The
fire was brought under control, but silicon
wafers for thousands of mobile phones
were destroyed, and smoke contaminated
the factory’s entire stock of chips. Two of
the factory’s main customers were Nokia
and Ericsson, who accounted for 40% 
of its sales.
Almost immediately, Nokia supply chain
managers detected a problem and, within
two days of the fire, knew something 
was badly amiss. Nokia contacted Phillips,
learned of the incident, and immediately
put key components on a ‘special 
monitor’ list. 
It was soon clear that supply could be
disrupted for months, and Nokia put
pressure on Phillips at the highest level to
find and use additional capacity in its other
plants. Nokia also sent representatives to
other suppliers in Japan and the USA to
secure priority status for all available
supplies of chips and to persuade them to
speed up production. Nokia also set about
reconfiguring its products to take slightly
different chips from other sources.
Ericsson was oblivious to the fire until
three days after the event, when a Phillips
technician called to notify them about the
fire and reassure that it was a minor event.
Ericsson did not recognise the need to act
until early April, by which time Nokia had
secured all its supplies. Because Ericsson
had made a strategic decision to single
source key components in order to simplify
its supply chain, it had no alternative
sources and lost an estimated USD400
million as a result. Nokia was able to
maintain production levels and secure its
position as European market leader.
Insights:
— Supply chains can be extremely
vulnerable to disruption and
discontinuity.
— Vigilance and proactive management 
are essential to anticipate and manage
problems.
— Vigilance requires foreknowledge of the
key variables or components to track.
— Natural resource components and/or
‘moral’ conflicts that may constrain
access to natural resources should be
seen as key variables, warranting great
vigilance and strategic management
within any supply chain.
Case Study
Nokia: Supply Chain Event Management
As corporate supply chains grow ever 
more vast and global, smart business
strategists must equip themselves to
anticipate and manage an array of
environmental and social impacts,
dilemmas and trade-offs outside the
company's direct footprint. 
Unchaining Value, a report by
SustainAbility, the UN Environment
Programme, and the UN Global Compact,
explores a variety of best practices, 
drawn from different sectors. 
The report illustrates how multinationals 
like IKEA, Unilever and Hewlett-Packard 
are working with suppliers towards a 
shared understanding of the role of
sustainability in supply chain management
and the mutual value to be achieved. 
Included in the report are several case
studies that illustrate a range of benefits
that companies — and their supply chain
partners — can realise from a collaborative,
proactive and sustainability-minded
approach to management across the 
chain, such as improved engagement &
communication, capacity building,
efficiency improvement, resilience, 
and risk avoidance. 
Unchaining Value July 2008 www.sustainability.com/unchainingvalueSustainAbility / UNEP / UNGC