Wednesday, April 6, 2011

Gorilla Glass and Strategic Sourcing

Mobile phones, televisions and laptop computers all use glass as a major component. Yet, glass is not a product that the electronics and computer manufacturers create themselves. Glass, while integral to their products, is not their core competency. Glass is the the core competency of Corning and it is the reason Corning is a major supplier of glass for all of these products.

While mobile phones and televisions both use glass, the products are used differently and so the type of glass that they require sometimes differs to accommodate that usage. A key difference is portability. Portable products often require low weight components to ease carrying. Portable products must also be strong because users may drop them or sit on them, conditions that are unlikely to happen to a stationary TV.

A solution to the need for low weight components has been Gorilla Glass, a Corning product. The product was invented in 1963, but went mostly unused because the expected uses at that time didn’t need all of its benefits and most of its benefits could be found in cheaper products#. However, the rise of large screen mobile phones called for all of its benefits. Gorilla Glass is now in more than 100 products and the product has revenues of $170 million dollars per year#.

In Strategic Sourcing From Periphery to Core, Mark Gottfredson, Rudy Puryear and Stephen Philips provide a strategic framework to help understand how Corning and its Gorilla Glass product could become a key component for the products of competing companies.

First, firms should consider the proprietary nature of a process or function and the uniqueness of business process or function. Processes that are not proprietary and are common across industries should be outsourced. Glass displays used in mobile phones meet both of these criteria.

Second, Gottfredson et al evaluate firm capabilities. They assess capabilities by ability to perform a function and cost per transaction. Mobile phone providers would probably have a low ability to create and research glass and a high cost per transaction which should result in a firm sourcing to increase capability and to lower cost.

Mobile phone manufacturers recognize that they design circuitry and software to facilitate accessing, sending and receiving information. While some handset providers differentiate themselves through elegant design or market segmentation, none have the capacity to design a basic material like glass as well as Corning.

While Gottfredson et al approach sourcing from a purchasers stand point, their framework may also be used to evaluate the strengths of a supplier directly. Considering the ability of the supplier as compared to its customers reveals a market need. Considering the cost for a customer also reveals the potential size of the market. By meeting the needs of firms in these conditions, Corning has a stable marketplace and an ability to extend its core competencies to continue to meet the needs of its customers.

Works Cited:
1962 glass could be Corning's next bonanza seller
Ben Dobbin, AP Business Writer, On Sunday August 1, 2010, 2:14 pm EDT
Sturdy Corning glass from 1962 could be a multibillion winner in frameless TV market

Mark Gottfredson, Rudy Puryear and Stephen Philips, Strategic Sourcing From Periphery to Core, Harvard Business Review, February 2005

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