Team 8 Chris Cooper Aaron Jones Ying Zhou Technology and Adaptive Strategies in Supply Chain Management at HP

Overview Successful story of HP’s merger with Compaq HP’s adaptive SCM strategy The Key Chain program and major elements Future of HP’s SCM Lessons Learned 2 DSCI 702

Successful story of HP’s merger 3 DSCI HP announced plans to acquire Compaq HP merged with Compaq $1.55 billion in cost reduction associated with SCM.

What is HP’s adaptive SCM strategy? 4 HP created five supply chain models  No-touch  Low-touch  Configure-to-order  High-Value  Services Each business unit could use the model that best fit its processes by product. Implementation of adaptive strategy through technology – Key Chain Program.

5 The Key Chain Program Program for supply chain collaboration  Original focus: e-procurement  MRO  Indirect materials procurement  Expended to address a serials of key business issues  Federated model covers the entire supply chain  Private marketplace or private exchange to enable the collaboration DSCI 702

6 The Key Chain Program DSCI 702 Core Initiative Components

7 Major Key Chain Elements Order and forecast collaboration  e-Mercury  Cover online collaboration for purchase order  Forecast management with HP, suppliers, and contract manufacturers (CMs)  Goal: Enable the collaboration, not to replace purchase order processes DSCI 702

8 The Key Chain Program DSCI 702 Core Initiative Components

9 Major Key Chain Elements Inventory Collaboration  Complex activities surrounding SMI (Supplier-managed inventory)  Many different parties involved e-SMI u ses Internet technologies and web-based solutions  Goal: A single web-based solution flexible enough to accommodate variances around SMI process, while providing the ability to roll up a global view. DSCI 702

10 The Key Chain Program DSCI 702 Core Initiative Components

11 Major Key Chain Elements Auctions  e-Bazaar Initial focus:  Uses auction for supply chain execution, not for sourcing  Goal: Not necessarily the lowest price but to ensure supply of a scarce part. Recent focus:  A part of the broader RFP or RFQ process  Creates structured negotiating and can create select bidding  A decision mechanism for awarding business  Disposal of EOL or excess inventory DSCI 702

12 The Key Chain Program DSCI 702 Core Initiative Components

13 Major Key Chain Elements Strategic Sourcing  BuyPower program  Goal: To aggregate actual purchasing activity from a spending and price perspective, drawing from spending and price forecasts, and using that info to manage the strategic sourcing of those commodities  Allows for risk reduction/management DSCI 702

The benefits and real value of HP’s adaptive SCM strategy Benefits to HP  Adaptation and responsiveness to changing business dynamics  Faster time-to-market with new and competitive products  Decreased manufacturing production, distribution, and channel costs  Faster service and response time leading to increased customer satisfaction.  And continued leadership in the high-tech market 14 DSCI 702

The benefits and real value of HP’s adaptive SCM strategy Benefits to Suppliers  Ease of doing business  Allows a single point of collaboration with HP  Enhanced supply and demand visibility  Improves participants’ ability to predict demand  Enables suppliers to build efficiencies into their own supply chains  Enables suppliers to pass associated discounts onto customers such as HP.  Elimination of non-value-added steps, such as administration, and costs 15 DSCI 702

The benefits and real value of HP’s adaptive SCM strategy Benefits to Customers  Incremental product value delivered for the same or even lower purchase cost  Offer a one-stop shopping experience for global corporate customers  Focus on its legacy of manufacturing innovation-building and delivering precisely the product that customers need and want to buy 16 DSCI 702

17 The future of HP’s adaptive supply chain Continue to examine and deploy business and IT efficiencies throughout its supply chain Apply other innovative uses of its SCM strategy Balancing the costs and opportunities related to SCM is an enterprise business issue, not just a manufacturing problem ERP neutral or non-specific DSCI 702

18 Lessons Learned Technology was not the focus, achieving business value was the focus. Create a road map or vision. Goals must be realistic. Realize gains early for sustainable sponsorship within the company. DSCI 702

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