Problem
Case Study
Purchasing, innovation and quality management
HP describes itself as 'the world's largest information technology (IT) company' ("About HP's Supply Chain", 2017). It has more than 1,000 direct suppliers, and tens of thousands of non-production suppliers in more than 45 countries. It wants to make sure it is getting the best price, the highest quality and the best support possible from suppliers. That's why HP has launched initiatives to exercise greater control of its spend, consolidate its purchases where possible, and identify and develop emerging sources of supply in China, Eastern Europe and India. In recent years a new element of supply chain management has been added in social and environmental responsibility (SER) standards and performance.
Today its operations are organized into seven segments; Services, Enterprise Storage and Servers (ESS), HP Software, the Personal Systems Group (PSG), the Imaging and Printing Group (IPG), HP Financial Services (HPFS), and Corporate Investments. These business units often have different supply requirements. One of the challenges for HP has been to map 'end to end' enterprise processes which were not 'visible' to various teams due to the inherent complexity of transactions flowing through multiple business units, functions and IT systems.
According to Supply Chain Digital (2017) HP's supply chain 'continues to strengthen the company's market leading position in printing and personal systems, helping it to better deliver for customers on a day-to-day basis. Listed at number 17 in Gartner's top global supply chains, the combination of agility, brain power and strength is paying dividends for all stakeholders.'
In 2015, the printing and personal systems divisions became a standalone business as HP Inc., with servers, storage, networking and services forming Hewlett-Packard Enterprise. According to HP 'Every 60 seconds, HP delivers 102 PCs, 63 printers, and 983 consumables to customers all over the world. Many tens of thousands of suppliers, on six continents, have a hand in engineering our unique products with integrity, and bringing them to market' (Supply Chain Responsibility, 2017). Transition complete, the new company is already starting to reap dividends from a more flexible, agile supply chain set-up, backed by what is still a $48 billion Fortune 100 organization.
'With fewer organizational layers to navigate, quick decision making between strategically-aligned senior management has facilitated flexible, rapid development. A more nimble employee base of approximately 50,000 compared to 300,000 under Hewlett-Packard has also helped create a leaner organization' (Supply Chain Digital, 2017).
Task
I. For a company the size of HP, what are the advantages and disadvantages of scaling down from a vertically integrated global supply chain to strategic business units that manage and negotiate their own supply and purchasing activities?
II. Why might locally responsive and 'nimble' decision making be important to 'the world's largest information technology (IT) company'?