In today's highly globalized and highly specialized world, Huawei relies heavily on many third parties for procurement, manufacturing, logistics, and global technical services. This makes business continuity management (BCM) critical.
Through years of sustained investment, Huawei has established a BCM system for domains such as procurement, manufacturing, logistics, and global technical services. This system covers our end-to-end processes, from suppliers to Huawei and on to our customers. As part of this system, we have developed and established effective measures to manage risks that arise during our daily work. Specifically, we have built up management organizations, processes, and IT platforms. We have prepared business continuity plans and incident management plans, and have organized BCM training and drills for employees.
Huawei's business continuity management system
Key Initiatives for BCM in R&D and Procurement
- Supply chain diversification: When designing a product, we strive to source raw materials, boards, and products from more than one supplier, prioritizing the supply diversity in raw materials. We prefer suppliers that have multiple manufacturing sites in order to safeguard sustained product availability.
- Scenario-specific stock-up: During mass production, we prepare safety stock of raw materials, semi-finished products, and finished products. This allows us to better address uncertainties from various sources, including customer demand, supply availability, and epidemics.
- Supply and demand visibility: Huawei works closely with suppliers to ensure that demand forecasts, purchase orders, and supplier inventory are all visible through IT systems. This ensures that we get timely demand information and have adequate supply.
Key Initiatives for BCM in Manufacturing, Supply, and Spare Parts
- Manufacturing and supply resource backups: Huawei considers in-house manufacturing and outsourcing capabilities equally important. We have established strategic partnerships with multiple electronics manufacturing service (EMS) suppliers. Board manufacturing and supply capabilities are shared between Huawei and EMS suppliers, and between multiple EMS suppliers, to ensure there is always a backup. We have established supply centers in Shenzhen, Europe, Latin America, and Dubai. These supply centers also serve as integrated equipment backups for each other.
- Spare part reserves to support full-lifecycle operations: Huawei reserves spare parts according to market demand and historical usage before a product reaches its end of life (EOL). After EOL is reached, we reserve enough spare parts for the full lifecycle of the product. This prevents any impact on the operational continuity of live customer networks.
Over the past decade, we weathered many crises from natural, political, economic, and trade-related conflicts to even violent conflict in some regions. In 2020, despite the devastation caused by COVID-19, Huawei continued to ensure supply continuity and achieve timely delivery of products and services to our customers. This shows that Huawei's BCM system – as part of our overall management system – is functioning properly. Huawei is a global company that works in the network infrastructure, IT infrastructure, cloud services, and smart device domains. We have worked with over 10,000 suppliers and partners, and have established sound, long-term partnerships with them.
On May 15 and August 17, 20201, the US Department of Commerce amended their foreign-produced direct product rule and released the final ruling on Huawei Technologies Co., Ltd. and a number of its non-US affiliates. This means the export, re-export, or in-country transfer of any item subject to the Export Administration Regulations (EAR) (including hardware, software, and technologies) to Huawei or its listed affiliates requires a license from the Department of Commerce.
This ruling has affected our business development to some extent. As a staunch advocate of globalization, we will continue to pursue supply chain diversity without depending on any one country or region, and then build our supply continuity upon the global supply chain. Remaining on the Entity List does not restrict or prohibit Huawei from providing products and services to our customers in accordance with compliance requirements. Based on the principles of collaboration for shared success and mutual development, Huawei is confident in our ability to work with partners to forge a secure, reliable, competitive, and healthy industry value chain. Huawei products will continue to meet customer requirements for sustained supply and delivery, and we will continue to deliver quality products, solutions, and services to our customers worldwide.
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