How HP benefits from global supply chain collabora

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How does HP benefit from global supply chain synergy

HP currently ranks 11th in the Fortune 500. It operates in 178 countries and regions at the same time, uses 15 working languages, has 150000 employees, 70000 service partners and 210000 sales partners, and produces an average of 11 patents every day

the huge scale of the enterprise has brought great challenges to HP. It is not easy to properly handle such a complex relationship. How does HP achieve global supply chain synergy to enhance its competitive advantage

reduce 200 supply chains to 5

after HP merged with Compaq in 2001, it became a super large enterprise, with a turnover of US $90billion in 2005. HP has three major business departments, namely, personal systems department, imaging and printing department and technical solutions department. Kazunori Nishida is a senior consultant of the technology solutions department. According to him, the turnover of the three major departments reached US $26.7 billion, US $25.2 billion and US $33.3 billion respectively last year. The technology solutions Department has the highest earnings. The Department has its own software, storage and other IT services, as well as its own global supply chain

HP sees this merger as an opportunity to rethink the supply chain approach and make more rational use of resources. "When Compaq was merged, we had 200 supply chains in operation. At present, it is reduced to 5. HP tries to integrate them together to provide a more efficient supply chain system." The importance of the supply chain to HP is obvious to Kazunori Nishida

first of all, as far as customers are concerned, the operation of the supply chain directly affects customer satisfaction and customer experience. "Take procurement for example. HP spends $40billion a year, which is the largest expenditure. Logistics also reaches $10billion. Putting customers at the top of the value chain and improving customer experience can drive HP's strategy and implementation throughout the value chain." Kazunori Nishida said. Computer configuration: 17 "color display 40g hard disk 1.7g CPU 128M memory color printer computer desk 1

secondly, for HP, the supply chain accounted for $51billion of HP's total expenditure and 64% of the company's total fiscal and tax revenue, that is to say, "In HP's $1 revenue, 64 cents are spent by the supply chain. The supply chain is ultimately responsible for product price, product quality, ordering time and predictability. Therefore, it has an absolutely direct impact on customers, inventory evaluation and shareholder value."

in the first quarter of this year, HP continued to grow rapidly, and its net revenue reached US $22billion, an increase of 5% compared with the same period last year. "The global supply chain is the driving force for profit growth," Kazunori Nishida said. "In recent months, HP's total cash and net cash have been very high. Our goal is to achieve continuous profit growth through the global supply chain, which is also the reason why shareholders support HP."

for HP stakeholders, HP's excellent supply chain performance can significantly enhance the capitalization of the market, resulting in the improvement of the cost structure through the growth of the total fiscal and tax amount and profits, and the increase of cash flow. "The final result is to improve the customer experience and the satisfaction of customers and shareholders. Of course, customers always come first."

global supply chain coordination strategy

HP's supply chain is the world's largest it supply chain, with 32 manufacturing plants, 88 branch centers, 700 suppliers and 119 logistics partners. Kazunori Nishida believes that HP's supply chain has a solid foundation. The most important thing is that HP has the largest customer base in the global IT industry, with 1billion customers in 178 countries and regions; To this end, HP has provided the world's largest IT products and services, with more than 650 products and 25000 patents every year. In 2005, the freight volume reached 50million printers, 30million PCs, 30million servers and so on

kazunori Nishida said: "HP's global supply chain is an effective and flexible way to connect business and customers, with the characteristics of cost intensive." It is reported that HP has five supply chain management modes: the first is the contract manufacturing mode of "no contact" or "low contact". HP puts forward design objectives for suppliers, and then suppliers purchase, manufacture and complete production by themselves according to the design requirements; The second is the vertical integration of high-speed supply chain mode, which is completed by HP from design, manufacturing to sales; The third is the value-added system solution, which provides customers with super value experience through value-added services; The fourth is the service logistics supply chain model; The fifth is the familiar direct selling mode

"in terms of supply chain strategy, the first is to make our cost structure reach the world-class level; the second is to seek growth. I think China will be a very good market for HP in the future; the third is to make our customers very satisfied; the fourth is to make our assets, including personnel, inventory, equipment, patents, advanced experience and so on, bring high benefits into play." Kazunori Nishida said, "to achieve these strategic goals, we must implement the coordinated cooperation of the global supply chain."

how can supply chains achieve global collaboration? Kazunori Nishida revealed how HP operates

first, form alliances across departments, enterprises and borders to achieve common benefits and achieve a win-win situation for customers, suppliers and HP. Everyone is satisfied. "Multi win is the reason why they are willing to cooperate with us."

second, HP should not only properly coordinate the relationship with customers, but also coordinate the supply side reform system between customers to eliminate duplicate and non value-added enterprise activities. "If we do so, our problems will be solved at an appropriate time. The enterprise will benefit a lot and help us reduce risks and costs most effectively."

third, share information publicly. HP has many inventory resources. In the next stage, it will better use automation technology to manage inventory and help suppliers make correct decisions; In terms of suppliers and customers, HP has also planned and strictly implemented certain processes to improve the performance of the supply chain, strengthen cooperation with suppliers and better understand the needs of suppliers

high visibility of supply chain collaboration

kazunori Nishida believes that the reason why HP wants to implement global supply chain collaboration is to realize the value of enterprise extension and expansion, "better? That is, to obtain the benefits under the ideal state from the cooperation with trading partners. If there is no collaboration, the enterprise will lose 40% to 50% of the actual benefits due to the variability and uncertainty of supply and demand, which is a huge loss."

HP's global supply chain implements a continuous collaboration mechanism, covering the whole process from giving specific orders to scheduling, sharing forecast information, improving inventory visibility and even automatic replenishment. The supply chain presents the following operation process: give a specific order, then manually pay attention to the inventory information regularly, and share the inventory information within the supplier; During the sharing process, the supplier continuously obtains information about demand, inventory, the upper and lower limits of the total amount, and controls the inventory supply at the expected level. When the expected value of the supply level is abnormal, the supplier shall timely notify the buyer; At the same time, HP also launched an automation solution to automatically calculate and implement an optimized freight plan in the supply chain

HP's global supply chain collaboration focuses on four areas, namely, prospect prediction collaboration, product data and design collaboration, purchase order collaboration, and service agreement collaboration. "For example, we can then change these coordinates to design collaborations. On the one hand, we should control the diversity of products and continuously reduce inventory; on the other hand, we should find the commonalities of products so that we can reuse components and use them in new products. The electronic industry is greatly constrained by the environment, so we should abide by various rules and regulations, design products according to the environment and try to shorten the time to market of new products. At the same time, we should simplify the process and ensure that Ensure the smooth operation of the design chain and transmit the right information to the right people at the right time. "

global supply chain collaboration pursues high visibility of enterprises and improves performance. It can effectively track products around the world, understand real-time freight information, ensure the visibility of third-party logistics partners, and continuously improve the coordination level of branches. "On the contrary, visibility is the cornerstone of global supply chain coordination, which improves the elasticity and flexibility of the supply chain, helps to identify problems or opportunities early, speeds up response time, and improves customer satisfaction and enterprise performance." Kazunori Nishida said dialectically

"Visibility is very important. It can help us judge what actions are necessary and what early warning measures must be taken. If customers do not understand what may happen in the future, they will find other manufacturers to cooperate. HP must strengthen visibility and try to make suppliers and customers better understand HP's situation. For example, if the inventory in Japan becomes larger, there will be some problems in delivery. If the visibility of the supply chain is high, I If we take appropriate measures in Japan, we may reduce inventories in Europe. Because of the high visibility, it is easy to predict what will happen and do a good job of risk prevention in advance. "

for the benefits of high visibility to HP, Kazunori Nishida can be summarized into three points: reducing enterprise costs and making business processes more efficient; Make inventory management more automatic and better meet customer needs; Share business activities and profits with partners to achieve mutual benefit and win-win results. All this is achieved through the coordination of global supply chains. (end)

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