Hewlett-Packard Supply Chain Analysis - Research Paper Example

Analysis of Supply Chain of the Hewlett-Packard Company Introduction With the changing atmosphere of the contemporary business world, business units have the requirement to ensure effective performance in various business areas to gain better efficiency and trustworthiness of the investors towards the business. With the rising competition amid the companies in the global business world, the scope for error in any business activities has become quite marginal (Lu, 2011). Contextually, it has been analyzed that the performance of companies in their respective supply chain is considered to be of utmost importance. It is also considered as the backbone of modern business organizations. Apparently, the success of companies is directly dependent on various aspects wherein the facet of supply chain is considered to be among the prime. Observably, supply chain is viewed as the procedure of assimilating companies and their operations together with regard to the flow of products and services (Ellis, 2010). It has been ascertained in this context that a few of the basic supply chain processes of business comprise the company itself, the suppliers, the distributers and the customers among others that are directly linked with the flow of goods as well as services for the organization. The importance of supply chain processes in context to the modern day business is quite significant as it is directly linked with the operational welfare of the company’s business. An effective management of supply chain can provide a company competitive advantage in terms of efficient management of resources, minimization of unwanted activities and quality output from suppliers among others (Warkentin, 2003). Correspondingly, this particular study will primarily deal with analyzing the importance as well as the role of supply chain management in the operations of Hewlett-Packard Company. The paper will also delineate a few of the major differences amid the supply chain of HP with that of the competitors operating in the similar industry sector i.e. computer industry. Overview of Hewlett-Packard (HP) Company Hewlett-Packard which is also widely known as HP is one of the renowned players in the electronic sector owing to its strong reputation and extensive market presence in the global electronic industry. The company was incorporated in the year 1947. The company has its headquarters located in California in the United States. The company together in alignment with its subsidiaries provides technologies, products, and software to the individual customers along with providing services to the small and medium sized business corporations. The company also provides services to the customers belonging to the government, education and the health care sector. It is worth mentioning that the operations of the company are segregated amid seven different segments which further include Personal Systems Group (PSG), the Imaging and Printing Group (IPG), HP Financial Services (HPFS), HP Software and Storage and Networking (ESSN) among others. The product offerings of the company embrace personal computing and infrastructure technology among others. The company also provides information technology infrastructure for the company which also entails the enterprise storage technology and networking solutions to name a few. The company has been among the topmost players in the respective industry wherein it has been operating which can further be justified from the aspect that it has become one of the largest PC sellers of the world in the year 2013. The key competitors of HP include Dell, Acer, Lenovo, and Toshiba among others. The company has been in the headlines for various reasons further including its merger with Compaq, its sponsorship for Mission: Space, acquisition of the Electronic Data Systems (EDS) along with attaining the ranking of 9th in the Fortune 500 list among others. All these aspects have enhanced the reputation of the company in the global market and presented it as one of the leading and trustworthy brands in the world (Reuters, n.d.). Analysis of the Evolution of HP Supply Chain as Related To Outsourcing There might be various reasons owing to which the company i.e. HP has witnessed utmost level of success in the global market over the years of its operations. Among the various aspects that have ensured effectiveness of the business of HP, its effective supply chain management approach could hardly be ignored. It is believed that supply chain is one of the most vital domains in the business sector where a major portion of the effectiveness of the business is dependent. Contextually, in this similar regard, the supply chain of HP is also seen to be among the lifeline for the operations of the company. The company has been a firm believer of making faster and smarter decisions especially within the supply chain domain of outsourcing operations. The supply structure of the company is built or designed in a way that will reduce the cost, risk and time consumption within the supply chain process. In the demanding modern day market, it is important that companies are enabling to emerge with a supply chain dimension that can ensure visibility, flexibility and responsiveness of the supply chain management process (Hewlett-Packard Development Company, 2014). HP has been quite effective in this particular domain of operations. One of the most striking prospects of the supply chain operations of the company is its buy/sell approach. This particular tool is also regarded as a price masking which was started in the late 90s owing to which the company began to outsource its manufacturing activities. It is a particular program which enables the company to ensure high quality along with best price for the products despite not being directly associated with producing the finished products. It is believed that most companies have the fear or risk of losing control of the entire supply chain operations when they outsource their manufacturing products. However, this aspect was quite different in the case of HP which has been fairly effective in this particular domain. It has been analyzed that the company is associated with several contractors and sub-manufacturers to assemble many of their branded products which include printers and personal computers among others. However, this particular approach of the company in its supply chain has augmented complications within the supply chain as they will lose control over visibility and pricing of the parts that are further implanted in its products. The company was also aware of the complications that might arise in the supply chain owing to the rising complexity in demand and supply pattern within the operations of HP. There was also concern in the outsourced supply chain of the company in the domain of weaker buying power of the company, problems in the contractual agreement amid the suppliers and reduced quality of the products that will not meet the quality standards of the company among others. Correspondingly, the entire responsibility of ensuring sustainable supply chain is to effectively run the buy/sell program. In this particular concept, the global procurement services of HP buy raw materials or the parts from the suppliers and sell them to the contract manufacturers. The EDI and web based programs of the company help in the domain of automating the flow of order and information within the supply chain management of outsourcing. The buy/sell strategy of the company in its supply chain depicts a four way relationship amid the HP’s Global Procurement board, the suppliers of the component, contract manufacturer along with the original equipment supplier (OEM). These are also amid the main players of the supply chain of the company in the outsourcing domain. It will be vital to mention that the OEM which is among the major players in the supply chain mainly includes the company itself in most of the scenarios where it assembles all the parts or the products by its own to deliver the final products in the market. Within the supply chain, the company operates in away where it ensures hiding all the confidential data that are relevant to the supply chain operations. This particular aspect within the outsourcing supply chain further has enabled the company to hide the price of various strategic transactions which also help it to gain competitive advantage over that of the competitors. As a result of this particular approach, the company puts pressure on the suppliers to balance the prices of the components they provide with that of the OEMs. This particular approach in the supply chain further reduces the overall cost of operations of the business. However, cost is not the only factor that drives the supply chain operations of the company in the domain of outsourcing. With effective supply chain management, the company also makes itself competent to balance the aspect of supply and demand which is again deemed to be one of the most vital features of the supply chain operations (Keller International Publishing Corp, 2013). Contextually, when there is shortage of material within the supply chain, the company assigns the scarce resources or parts to the contract manufacturers in order to ascertain optimum use of the same. Through the approach of outsourcing most of its manufacturing activities within the supply chain, HP has enabled itself to focus more in the domain of design as well as innovation in its products which is one of the most sustainable approaches in the contemporary business scenario. Furthermore, another important feature of the outsourcing supply chain of the company is its approach of ensuring utmost collaborative operations amid the various partners so that utmost level of co-ordination could be attained (Singh, 2009). Hence, it can be comprehended that the company, i.e. HP has been quite effective in the domain of supply chain management as related to outsourcing which has largely assured competitive benefits to the company over the potential competitors. Reasons behind HPs Supply Chain Success Success in the supply chain is one of the most critical determinants, which has stabilized the performance of HP over the years of its operations. However, it will be quite significant to comprehend the success of the company especially in the domain of supply chain to delineate its approach that has strengthened the overall business operations of the unit. One of the biggest strengths of the supply chain infrastructure of the company is its collaborative program which is also termed as Key Chain. Owing to this particular approach, the company has ensured an overall savings of US$113 million in its entire supply chain. The savings in the supply chain of the company also included the reduction in the cost of the outsourcing activities in the supply chain which has resulted in more than 10% of cost reduction. HP is also involved in extensive negotiations in the domain of forming contractual agreements with the suppliers which has further resulted in the reduction of the supply chain costs of the company. It will be crucial to mention that the Key Chain program of the company was initiated in the year 2000 which primarily includes the aspect of indirect material procurement. Since the company is involved in diverse product mix, the key chain approach of the company has enabled it to gain all the information from the handheld computers along with the large UNIX system. Prior to this particular approach, a decentralized approach was being practiced in the supply chain of the company which further broke its supply chain into several autonomous line of products, ensuring a major concern for the entire business operations. The collaboration approach of the company in supply chain outsourcing worked positively for the overall business as per the key chain supply chain structure. Effective selection of partners in the outsourcing supply chain is also amid the major success factors for the company in the supply chain of HP over the years. It is believed that the effective partners of the company within its various supply chain areas work with utmost dedication and ensure higher productivity further boosting the entire profitability of the business. Notably, this aspect has also contributed positively in ensuring the deliverance of cost effective operations as the company has been able to reduce the cycle time in its purchase order management. When the company puts orders for the products within the outsourcing supply chain, it involves in little bargaining with the suppliers in terms of delivery date along with the price of the products which in turn reduces the compression time thereby resulting in reducing the time of supply chain operations. Overall, it can be ascertained that in HP the supply chain operations is more responsive and flexible which reduces the operational time and ultimately acts as a reason of success for the overall business operations. Another important reason for the outsourcing supply chain success of the company is the increasing velocity of interactions of the supply chain operators which raise the performance in terms of working efficacy. These approaches of the supply chain operations of HP make it apparent that the company is quite concentrated to attain its supply chain goals of achieving positive Return on Investment (ROI) from each of the investments in any particular domain. Another success factor for the company in the domain of supply chain is its order and forecast collaboration. This particular approach ensures that each of its purchase orders within the outsourcing supply chain collaborates with the forecast management activities amid the suppliers and the contract manufactures. This aspect works positively for the supply chain and the business of HP as owing to this it is able to record all its supply chain activities through the Enterprise Resource Planning (ERP) system. This has indirectly enhanced the degree of commitment of the different supply chain players within the supply chain management of HP in the outsourcing domain. Another reason for the supply chain effectiveness of the company includes the prospect of inventory collaboration. It is a particular approach where the internet and web-based solutions are considered to be among the major tools to align the various players that manage the supply chain of the company. Notably, in the domain of outsourcing, the company has various suppliers and manufacturers which enhance the complexity in the systematic execution of the entire supply chain operations. The company has intended to create a single web-based platform for all the supply chain players to enable flexibility in the entire supply chain operations (McKibben, 2002). Hence, these approaches of the company i.e. HP has been among the major elements of success for the overall business of HP specifically in the domain of outsourcing supply chain. Evaluation of the Differences in the HPs Supply Chain with Other Companies Supply Chain in the Computer Industry From the above analysis, it is apparent that supply chain operations are directly associated with the success or failure of the business in the long run. It is one of the major components, which provides utmost stability to the business units all over the world. Contextually, the supply chain operations of the company i.e. HP was also comprehended elaborately in the domain of outsourcing in order to understand the significance of supply chain operations and determine the need for creating effective strategic decisions in this particular domain. Notably, the company has been quite effective with its approaches and decision making in its supply chain which has resulted in reduced cost and effective coordination amid the various supply chain players within the outsourcing supply chain management. With such effectiveness within the supply chain domain, the company has been able to gain an upper hand over that of the competitors in the computer industry. Notably, it has been learnt that there exists certain differences in the supply chain operations of the company as compared to other players in the computer industry which has further enhanced the supply chain operations of the business of HP up to a considerable extent altogether. In order to derive a better understanding in this particular regard, a thorough discussion has been undertaken in this paper which is presented hereunder. It is believed that similar to that of the approaches of HP, companies such as Dell and Apple among other players in the computer industry are extensively involved in outsourcing their business requirements within the supply chain operations. It is also believed that all the topmost players of the computer industry including HP, Dell and Apple have been quite effective in the supply chain domain and has outperformed other companies operating in this particular sector. However, there are certain aspects within the supply chain domain of the company which are dissimilar to one another, further providing sustainability and competitiveness in their operations within the computer industry. HP has performed well in the supply chain domain in comparison with competitors such as Dell, Samsung and Canon in terms of dealing with the environmental and social issues. The company i.e. HP is extensively involved in determining the issues of environment and the society within the supply chain while the competitors of the company within the computer industry are less transparent in this context. The difference in the supply chain operations of HP can also be determined in the domain of supplier standards, auditing program of the supply chain and the engagement initiatives amid the players among others. In this regard too, HP has an upper hand over that of its competitors in the industry (King, 2012). The difference in the supply chain operations of the company can also be comprehended from the aspect that companies such as Apple and Dell are contracted with OEMs such as SCI Systems and Jabil Circuit to manufacture their finished products. On the other hand, the OEMs in the supply chain management of HP mainly include the company itself as it is involved in assembling the final products in the in-house process. This is also a potential difference in the supply chain approach of HP with that of other players in the industry (Ernst & Kamrad, 1999). The supply chain of Dell also has major difference in comparison with that of HP in the computer industry. Notably, Dell is one of the major competitors for HP in the global market owing to the aspect that it works at a similar scale and offers similar kind of products to that offered by HP. However, the company has its diverse approach in the domain of supply chain which further ensures competitive advantage for Dell in the global market. p which Hp whiach has Unlike HP which has extensively involved in the production or the assembling of the final products all by its own, Dell is involved in outsourcing of its products from external partners. This particular approach of Dell can be considered to be quite risky in terms of assuring the quality of the final products which might further impact its overall business operations. However, on the other hand, the approach of HP in manufacturing or assembling the final products all by its own has enhanced the chances for ensuring the quality of the products and services before finally delivering it to the ultimate customers. Again another difference in the supply chain operations of the company includes its approach of involving less number of players to reduce the complexity of the supply chain which is again seem to be different in the approach of Dell as their supply chain operations is deemed to be more complex in nature. Furthermore, it has also been noted that in the supply chain of Dell, the company is more involved in delivering products directly to the customers without the presence of retailers or any other third party which ensures the deliverable of quality products to the customers. On the other hand, the approach of HP towards delivering the products to the customers is more complex as compared to that of Dell. The company delivers products to the customers through the presence of distributers and retailers which depicts an indirect approach of product deliverance (Slideshare, 2013). This aspect shows the difference of the supply chain of HP in comparison with other players in the computer industry. In order to get a more extensive understanding in this regard, it will be crucial to depict the supply chain approaches of certain other companies in the computer industry. Notably, Apple Inc. has been one of the biggest and reputed electronic companies in the world especially in terms of its scale of operations and wider market presence. The company is witnessed to be quite systematic in its approach of managing the entire supply chain which is again ascertained to be different with regard to the supply chain management of HP. It has been noted from the earlier discussions that HP hardly involves in any sort of negotiations with regard to the delivery dates and ordering volume with the suppliers which further saves a lot of time and money for the company within the supply chain. However, on the other hand, the management at Apple in terms of managing each and every activity of supply chain is quite systematic in nature. The company is deemed to have proper contract with each of the supply chain members for each of their conducts within the supply chain operations. Though this particular process might consume much time and cost as compared to the approach of HP but it ensures the completion of all the activities in an effective way further adhering to the norms and guidelines involved in the contract (University of San Francisco, 2014). Hence, the difference amid the approaches of HP and other companies of the computer industry can also be determined from this particular evaluation. Conclusion From the overall analysis and understanding of the paper, it can be stated that the importance of supply chain is deeply rooted within the functioning of any particular business. It is a crucial element of a business that is directly linked with the operational success/failure of the business. Notably, in the contemporary scenario, business units have the need to assure that they are much effective and updated within their supply chain operations which can further provide them with utmost sustainability and competitive advantage in comparison with the rivals in the global market. In order to have a better comprehension in this context, a discussion has been presented in the paper with regard to the supply chain of HP and its differences with the supply chain of other companies within the computer industry of the world. The company has been quite effective over the years in its supply chain operations, which has contributed in its global success. With a less rigid approach in the supply chain operations, the company saves a lot of time and money which is beneficial for the entire business. The company is also deemed to have proper control over its supply chain operations as it acquires the ultimate rights to assemble the final products and deliver it to the customers. This particular approach and other supply chain operations are deemed to be quite different from that of its competitors such as Apple and Dell in the industry. Hence, it can be concluded that proper supply chain management is indeed crucial for efficient business functioning. References Ernst, R. & Kamrad, B. (1999). Evaluation of supply chain structures through modularization and postponement. European Journal of Operational Research, 24, 495-510. Ellis, N. (2010). Business to business marketing: relationships, networks and strategies. United Kingdom: Oxford University Press. Hewlett-Packard Development Company. (2014). Supply chain management. Retrieved from http://www8.hp.com/in/en/industries/manufacturing.html?compURI=1091467#.U2cr04GSxe9 Keller International Publishing Corp. (2013). HP shows how to outsource production while keeping control over suppliers. Retrieved from http://www.supplychainbrain.com/content/research-analysis/supply-chain-innovation-awards/single-article-page/article/hp-shows-how-to-outsource-production-while-keeping-control-over-suppliers-1/ King, B. (2012). Apple, Dell, HP outperform competition on supply chain transparency. Retrieved from http://www.sustainablebrands.com/news_and_views/articles/apple-dell-hp-outperform-competition-supply-chain-transparency Lu, D. (2011). Fundamentals of supply chain management. London: Bookboon. McKibben, J. (2002). Key chain: supply chain collaboration at HP. Retrieved from ftp://ftp.hp.com/pub/enterprise/ent-old/DH_Brown_PLM_Keychain.pdf Reuters. (n.d.). Hewlett-Packard Co (HPQ.N). Retrieved from http://www.reuters.com/finance/stocks/companyProfile?symbol=HPQ.N Singh, A. (2009). All for one and one for all. Retrieved from http://www.supplychainquarterly.com/topics/Manufacturing/scq200903contract/ Slideshare. (2013). Supply chain of Dell. 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