Background
Since Hewlett-Packard (HP) was founded in 1939, the company has been a front runner in technology. The organization has developed a synonymous name over the years following exceeding client expectations and loyalty. HP aimed to continue its legacy by leveraging the Internet’s power to widen customer relationships by providing accessible and efficient delivery services (“What to Develop: A Lean Supply Chain, Agile or Leagile?”, 2019). The company established a consumer e-store, which strengthened Customer Relationship Management (CRM) while simultaneously reducing costs, increasing revenue growth, and managing demand successfully (HP.com, 2018). This was an effective way of engaging Enterprise Resource Planning (ERP), the supply Chain Management SCM, and CRM elements in business. In 1998, HP launched its online store, experiencing a revenue growth of 500% annually (HP.com, 2018. The use of technology can be seen to have aided the company maintain its client base and service delivery.
However, some areas of the organization were impacted after engaging FedEx services. HP suffered low returns by 80% and unit return decreased by 70% (HP inc., 2018). The company earned online status tracking offers that enabled tracking of the return process. After such economic tantrums, the company invented a direct distribution model, which facilitated trading through digital means (International trade, 2018). This was a technique to limit refurbished products’ inventory while simultaneously focusing on the growing consumer demand leading it to internet purchases. It was effectively done via the HPshopping.com, which gained the company’s wider sales. Supply chain management functions to promote products, competence and satisfy external client needs.
HP’s Supply Chain Strategy
HP works with third-party suppliers who provide material to the database who give it to forecusters to assess its effect on SCM. However, the company faces the threat of complete customary information of manufacturers. The company is posed with information it has for tier 1 suppliers (International trade, 2018). Data from these sites is used to create a liaison between HP manufacturing plants and suppliers who provide information on interruptions on products delivered to clients directly.
Strengths
The organization has a wide geographical reach, a strong client base, and a synonymous brand name. The SCM is based on continuous product innovation, which allows the company to maintain a strong market position while improving customer satisfaction (HP.com, 2018). The business focuses on effectively accomplishing parent’s choices and relied upon due to its model of engaging safe education and finding out environment for children by working alongside schools, instructors, industry, and network. Children prefer supply chain management for HP as it provides various activities for children, including commitment skills.
The SC is Leagile Based
HP’s SC is based on a leagile system that combines lean and agile supply management systems. Leagile supply chain involves integrating the lean and agile supply chains to gain total control on material flow (HP, 2017). A supply chain that is agile means it must read and respond to demand. In this case, HP has moved from forecasting-driven setting to one that is driven by order quantity via SCM. On the other hand, a lean supply is effective where high volumes and predictable demands must be met. However, agile would benefit environments with a wide array of items in smaller books.
Extensive Local Network
From the description of the supply chain’s assemblies for HP Inc, it means that it is available globally as it has clients in the Middle East, Europe, America, Asia-Pacific, and Africa. The HP’s supply chain is a mixture of agility even when it is widespread, thereby reducing supplier’s perceptibility. The availability of HP’s supply network locally, makes the products readily available thereby infiltrating the market.
Inventory Based on Traditional ERP System
A supply chain that is based on ERP combines customer relationship management (CRM) tenets for a better understanding of the business environment. Management of HPshopping.com turned to FedEx to aid the company in developing Enterprise resource planning (ERP) that would stabilize e-commerce. FedEx created a significant solution to management of order to fulfillment. FedEx was the best solution for HP as it incorporated access to the United States household via wide area network coverage and its extant experience in the electronic business.
HP’s Use of Outsourced Manufacturers (OM’s)
HP works with suitable stakeholders who engage skills, ready to cooperate with it and having similar business scope (HP.com, 2017). HP employs a wide array of a significant quantity of outsourced manufacturers (“OM”) globally to manufacture HP-designed products. The application of OMs creates cost competencies while simultaneously decreasing the time to market the company’s products. The company’s preference of OM’s is based on SCM flexibility, and across production units. In some cases, goods may be manufactured by third-party suppliers which are purchased by the company and sold under its brand name. The company may decide to manufacture goods for their use other than relying on third party manufacturers (HP.com, 2017).
Supply Chain Uses both Just In Time (JIT) and JIP (Just In Progress) Management
To integrate suppliers effectively with clients, there is the need of Just In Time (JIT) technology. JIT services engage supply chain management by making sure that materials are there in time when needed thereby reducing inventory costs. JIT technology ensures that material is available when required, products are made and distributed, thereby reducing inventory costs.it is a strategy to reduce cost and avoid unnecessary processes at the warehouse that may delay activities. For instance, HP goods are not stored but made when needed. JIP fits well in leagile supply chain management. IT impacts inventory system by postponing opportunities to reduce waste while simultaneously responding to changes in demand. Intuitively, HP’s use of both JIT and JIP technology has advantage in reducing material waste.
Weaknesses
Mass Customization
Mass customization is the production of single-batch products using similar speed as traditional volume manufacturing methods. HP has been producing mass customized goods under a third party, which has impacted its sales negatively. The SC experiences lack of monetary and technical resources, thereby limiting the business’s ability to grow domestically and globally. The supply chain at HP is increasingly dealing with the increasing devaluation of the Mexican peso leading to a decline in monetary efficiency.
Poor Competency in Acquisitions
Ove the last 10 years, the supply chain of HP has been negatively impacted by acquisition. While some acquisitions added new skills that increased the business revenue, some were detrimental to the organization. For instance, the Autonomy Corporation, that was bought for $11 billion resulted into a failure. The company was overvalued by the time HP bought it but it ended up costing HP devaluation of $8.8 billion on its books. This acquisition has led to slowed supply chain processes since the company has not been able to account for the loss. Acquisition determines how goods will be procured, approach of the market, and bid documentation.
High Supplier Bargaining Power
Most of the companies that manufacture computers purchase their raw materials from a wide array of suppliers. This means that suppliers in dominant positions have the power t decrease profit margins of HP. Powerful suppliers in the technology sector manifest high bargaining power to extract higher prices from computer manufacturing firms. In overall, higher bargaining power lowers profitability for HP. However, the company can overcome this force by building a diversified SC.
Opportunities
SC Expansion Through Acquisition
As noted, the company provides challenging material from third-party suppliers’ databases into the tool. In the long-run, it poses problems since the data has both manufacturers and supplier information. Acquisition of the supply chain will see the company push for a more significant market share. In addition, challenges may be presented emanating from NC4 supply chain interruptions and the Anvil transport and security.
Cloud Computing
The HP SC has the opportunity of moving to cloud-based computing, where all activities from warehousing through suppliers to the vendor shall be done over a cloud-based system. This will be a greater way of interacting with the multiple suppliers and knowing when goods are available and when a vendor orders them. Intuitively, moving to a cloud-based SC will reduce costs, induce time efficiency, and elevate efficiency in operations across SC.
Supply Chain Digitalization
Digitalization of the supply chain can see the company become more efficient while simultaneously reducing costs and create good relationships with consumers and suppliers. With the modern competitive business environment on technology, it will be essential to manage the supply chain strategy to be on a competitive advantage. In addition, digitalizing the supply chain comes with the advantage of driving down production costs and ensuring timely material availability.
Use of JIT
The use of JIT is associated with effective distribution of materials and cutting down costs. HP SC should also employ the Just In Time supply chain (JIT SC) to limit inventory cost and the cost associated with production. A JIT SC moves material just before the manufacturing department requires it (Murray, 2020). In effect, there is a reduction in the storage of excess levels of materials in a warehouse and works at optimal levels when each operation is synchronized with subsequent procedures. In essence, no more materials on hand- and no fewer- than needed at the moment. As a result, the streamlining process limits storage costs, doing businesses to have an intimate comprehension of the supply chain.
Moving to a Stable ERP
HP could be placed in a competitive position if it moves to ERP SC that accommodates customer relations management (CRM). This CRM could integrate customer feedback thereby collecting client reviews on HP products. The company can therefore improve on its products while simultaneously innovating new products. This move could see the company gain more clients at its data base as compared to the current client base. The CRM could even pick calls from clients globally which effectively maintains client loyalty.
Threats
Threat of Competition
The threat of competition generally impacts all processes in business from warehouse to supply chain management. The supply chain for HP faces the threat of competition from global and domestic rivals. Moreover, the changing patterns of show business and consumer choices have also impacted the supply chain negatively. Competition from suppliers can negatively affect processes of supply chain. For instance, the costs incurred in inventory due to storage and low sales can drive the profits down.
Devaluation in Mexica Peso
The increasing devaluation of Mexica Peso against the United States dollar may decrease the business’s financial muscle, and hence the supply chain power decreases. Many companies that rely on peso face challenges when its price depreciate. Peso devaluation would adversely impact many manufacturing sectors. As a result, low skilled workers migrate to the countryside thereby increasing agricultural production at land covered by tropical forest. HP trades in Mexico among other NAFTA countries which therefore is impacted negatively by the devaluation.
Diversified PC Makes
The decline in PC sales following multiple makes that have entered the market has also seemed to weaken the supply power of PC globally. The competition from companies such as Dell, Lenovo, and Asus has disrupted the supply chain power. Emergence of these makes pose threat to HP as they sale them at low cost. HP cannot afford to lower its cost following the diversified supply chain that incur cost at every stage. However, these companies do not incur inventory cost and aim at infiltrating the market with their computer makes.
Retaliation by Incumbent Firms
The market enterprise of software solutions has high profits and this might impose competition in HP products. Competition from other companies means that the organizations have created a strong supply chain. Intense competition from incumbent firms may hinder HP’s supply chain from gaining a route access to emerging markets. Companies like IBM, Lenovo, and Dell among others are entering markets at a high pace. In addition, suppliers gain high bargaining power thereby leading to low profits.
Slow Growth Rate of Laptop Market
The slow growth rates of Laptop market led to high costs in inventory and other warehouse processes. Slow growth rate will lead to other costs associated with packing and delivery. In addition, the market will be impacted by inflation rates meaning that production cost to distribution will be high. Supply chain management will hence be expensive to maintain. Bearing in mind that dollar is tied to oil prices, slow growth rate may take the company long to recover production costs.
Comparing and Contrasting Hewlett-Packard Strengths with Dell
Analyzing the Strengths of Hewlett-Packard (HP)Supply Chain
Management is one of the verges of breakthroughs in understanding how an industrial company’s success depends on the interactions between materials, money, flows of information, capital equipment, and workforce. These five flow systems interlock to amplify each other and trigger change and fluctuation, which form the basis for anticipating impacts of policies, decisions, investment forms, and decisions. Forester introduced a theory of distribution management that incorporated the integrated nature of organizational relationships. Since these organizations are intertwined, system dynamics can impact functions, including research, promotions, sales, and engineering.
Given these set of factors, SCM can be termed to comprise three or more entities involving upstream and downstream flows of products, services, finances, and information from a source to a client base. This part seeks to explore the appropriateness of Hewlett-Packard (HP) SCM by analyzing its strengths, weaknesses, opportunities, and threats (SWOT), comparing it with Dell Company, and offering recommendations for HP SCM. This section will prove a contrast in supply chain management of HP Inc. Strength with that of its competitor, Dell. The tenets to be compared will include the type of supply chain employed, the production technology, and lead time.
Figure 1: Comparing HP’s Supply Chain Strengths with Dell Supply Chain
League, Lean and Robust
While HP employs leagile Sc, its competitor Dell engages the use of robust SC. Leagile supply chain involves integrating the lean and agile supply chains to gain total control on material flow. Agile supply chain is one that has potential to read and respond to client demand. A lean supply chain is significant where high volumes and predictable demands are experienced (“What to Develop: A Lean Supply Chain, Agile or Leagile”, 2019). Agile would therefore be significant for businesses with smaller volumes but more product variety. However, agile would benefit environments with a wide array of items in smaller volumes. Therefore, leagile SC combines both lean and agile when an organization has a wide variety of products and high volumes. League Sc reduces and responds, creating a scenario where the organization benefits from the duo.
Environments with both low variety and low volume, the procurement and supply chain should engage robust supply chain. In effect, the SC must be strong and sturdy to aid smooth flow of goods while simultaneously addressing meager changes in goods volume. This is where the Early Buyer Involvement (EBI) or Early Supplier Involvement (ESI) is sought due to changes incurred in base (“What to Develop: A Lean Supply Chain, Agile or Leagile”, 2019). As a result, the organization results to the holding of stock to Just in Case (JIC) following the lower volumes and lower costs. However, environments with multiple product variety, and insignificant volume, the focus is on the supply function and procurement ensures the satisfaction of demand in an agile manner. This calls for ESI, where the supplier is surfaced with demand information to allow planning.
The manufacturing strategy for HP is leagile and is currently decoupling plants located along with tactical topographical areas, which spreads the supply chain and regulator at some point (Das, 2018). Following the mass customization, the manufacturing cost is low with a short lead time. The manufacturing system for Dell combines both lean and robust, enabling pulling manufacturing viewpoint and outsourcing engineering in most departments (Dell, 2017). The customization of Dell products proposes a client product line made on JIT and JIC. However, lean is expensive to create order service and comes with ample lead time.
HP’s JIP Versus Dell’s JIT
HP engages both JIP and JIT technology whereas Dell uses JIT technology. For environments with high volume, emphasis will be placed on reducing waste and cost to create a lean supply chain. This will involve reviewing the SC’s activities and liaising with an external client to establish actual needs. For effectiveness, the procurement department engages the Early Buyer Involvement (EBI) who advise the company on means to limit waste (Murray, 2020). This will necessitate the provision of Just In Time (JIT). Intuitively, this brings together the expertise of suppliers, buyers, and other significant stakeholders to create a lean and agile environment. This is all pursued in creating Just In Time Progress inventory using postponement opportunities to reduce waste while simultaneously responding to changes in demand.
Supplier Chain Network Structure
From the description of the supply chain’s assemblies for HP Inc, it means that it is available globally as it has clients in the Middle East, Europe, America, Asia-Pacific, and Africa. The HP’s supply chain is a mixture of agility even when it is widespread, thereby reducing supplier’s perceptibility. Dell’s SC has not been that effective to be spread globally but in sections bordering their suppliers, which aids control of the supply chain (Ataseven, and Nair, 2017). The supplier’s obtaining method is based on a partnership that aligns goals and the presence of the supplier.
HP’s uses of OM’s While Dell Does Not
While HP engages the use of outsourced manufacturers (OM’s) Dell does not engage them in management. HP finds suitable stakeholders built on reasons involving skills, readiness to work together, site, scope, and scope effect (HP.com, 2017). HP employs a wide array of a significant quantity of outsourced manufacturers (“OM”) globally to manufacture HP-designed products. The application of OMs creates cost competencies while simultaneously decreasing the time to market the company’s products. The company uses myriad Oms, which preserve flexibility in supply chain and manufacturing processes. In some cases, third-party suppliers may manufacture some goods that are bought and resold under the HP brand. HP practices effective means of satisfying customer requests for goods. This is mainly because HP produces products to significantly exploit industrial and logistics competencies vi manufacturing high bulk of elementary formations.
Recommendations for HP Supply Chain Management
Based on HP and Dell’s supply chain management strengths, this study proposes recommendations on different tenets. To begin with, Hewlett-Packard outsourcers and outsources should focus on improving the supply chain connection. The company should have a complete prominence and mature aligning of all procedures with suppliers. Moving to cloud computing will see the company effectively and efficiently streamline its SC. Even though technology has been around for the last two decades, only a few managers tried migrating their SC to a cloud-based system. Supply chain management software revenue is exceeding $19 billion in 2021 (Benjabutr, 2018). Hybrid SCM settings with cloud and on-premises applications are commonplace nowadays, with supplier networks and information hubs pushing for move to the cloud.
Moving to cloud technology will significantly impact Hewlett-Packard supply chain managers. It will increasingly make it easier to track products throughout their lifecycle. A cloud-based supply chain will greatly reduce the lost product’s chances since shipments can be located at any transport stage. Therefore, a misdirected shipment can be rerouted, enabling quick decision-making and effective communication. Most traditional supply chain management founded on transactional hindering real-time accuracy and the 360-degree control of the cloud-based system.
Consolidate Product Lines
Hp’s website offers a wide array of product versions ranging from ecteronic types to laptops and printers. In the laptop category, the company sells 56 different laptop models with 31 of them can be customized in millions of combinations. However, the company should consider customer complains expressed following too many choices, as they tend to turn to other competitors. In most cases, the close competitors to HP is Apple, Inc. who offer few laptop models that are highly rated. In that case, this study offers a recommendation for HP to whittle down the number of laptops it offers in its website from dozen to perhaps two to three. In essence this paradigm shift will not only do away with redundancies and induce clients to buy more following paradox of choice but also quality of products will be higher (Charlton, 2021). Supply chain has to focus on client needs including customer relations management which is why the company needs this shift as it will have profound impacts on sales.
References List
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