With today's highly globalized division of labor, Huawei must rely on a wide variety of third parties (including outside companies and agencies) for procurement, manufacturing, logistics, and global technical services. Therefore, the discontinuity of third-party business could directly or indirectly compromise Huawei's operations and business performance.
Through years of ongoing investment, Huawei has established a Business Continuity Management (BCM) system for procurement, manufacturing, logistics, global technical services, and other domains. This system covers end-to-end processes, from suppliers to Huawei, and on to our customers. As part of this system, we have developed and established measures to manage risks that arise from our day-to-day work. Specifically, we have built up management organizations, processes, and IT platforms, prepared business continuity plans and emergency response plans, and organized BCM training and drills for employees.
Key Initiatives for R&D and Procurement
Diversity: When designing a product, we strive to source raw materials, boards, and products from more than one supplier and prefer suppliers that have multiple manufacturing sites in order to safeguard product and component availability.
Scenario-specific storage: During mass production, we have a reasonable and safe inventory for raw materials, semi-finished products, and finished products, so that we can better respond to fluctuations in demand and supply.
Supply and demand visibility: Huawei works closely with suppliers to ensure that demand forecasts, purchase orders, and supplier inventory are all visible, and guarantee the quick transfer of demand and supply responsiveness through advanced IT systems.
Strategic partnerships: Huawei establishes strategic partnerships with core suppliers to ensure stable supply. We also sign long-term supply assurance agreements with key suppliers to guarantee supply capacity and availability, and avoid material bottlenecks. Additionally, we encourage suppliers to establish their own BCM systems, arrange for special audits, and follow up on their improvements.
Key Initiatives for Manufacturing, Logistics, and Spare Parts
Manufacturing resource backups: Huawei has established strategic partnerships with multiple EMS suppliers. Board manufacturing and supply capabilities are shared between Huawei and EMS suppliers, and between different EMS suppliers as backup. We have also established supply centers in Shenzhen, Europe, Latin America, and Dubai, which serve as integrated equipment backups for other regions.
Logistics and transportation backups: Huawei works with many leading global logistics service providers to design a wide and diverse network of transportation routes that cover our global delivery. This network ensures alternative transportation routes are always available in the event of emergencies, enabling us to maintain continuity in logistics and transportation.
Spare part reserves to support full-lifecycle operations: Huawei reserves spare parts according to market demand and historical usage before the end of life (EOL) of a product is determined. After the EOL is determined, we reserve sufficient spare parts for the full lifecycle of the product in one go. This prevents any impact on the operational continuity of live customer networks.
Over the past decade, Huawei has successfully addressed many major political, economic, and trade upheavals; cyber-attacks (e.g., ransomware attacks); and natural disasters like the tsunami in Japan, the floods in Thailand, and the earthquake in Nepal. Throughout all of these challenging situations, Huawei has managed to ensure supply continuity and the timely delivery of products and services. This demonstrates the feasibility of Huawei's supply continuity management system.
Huawei is a global company that works in the network infrastructure, IT infrastructure, cloud services, and smart device domains. We have worked extensively with over 10,000 suppliers and established sound, long-term partnerships with them. Looking to the future, we have confidence that our partners can help us build an ecosystem for shared success and development as well as a secure, reliable, competitive, and healthy industry chain.