1. Merging a Competitive Supply Chain
1/2/2019
Merging a Competitive Supply Chain
Gilles Bouchard, SVP Operations
Imaging and Printing Group
May 15, 2003
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2. 1/2/2019
Merger Overview
Reached an annualized savings rate of $3 billion (US) 9 months after merger close
New HP is the #1 global player in servers, storage, and imaging & printing; Top 3 player in worldwide services revenue
Maintained share leadership and customer loyalty across multiple market categories, despite integration and key product transitions
Minimized year-over-year share losses and grew faster than market sequentially in most categories
Fastest rate of innovation in HP history, with 3,000 patents received worldwide since May 2002 (ranked No. 9 in U.S. patent filings for 2002)
New HP has operations in more than 160 countries and over 145,000 employees
January 2, 2019
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3. Best Practices Customer Comes First Adopt and Go Value Capture Focus
1/2/2019
Best Practices
Customer Comes First
Adopt and Go
Value Capture Focus
Short and Long-Term Planning
Focus
Recognize Cultural Differences
January 2, 2019
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4. Merger Integration Team Structure
1/2/2019
Merger Integration Team Structure
Central Program Management Office (CPMO)
Imaging and printing systems group
Personal systems group
Enterprise systems group
Services
Businesses
Go-to-market
Go-to-market
Go-to-market
Go-to-market
Supply chain
Customer to cash team (CRM, OM, PDM)
Information technology
Finance
Human resources (includes organizational design and selection)
Brand architecture
Horizontal processes
Communications – organization
Hp labs
Real estate
Cto
E-inclusion and community engagement
.Com/e-commerce
Government affairs
Culture
Closing/antitrust (legal)
Global functions infrastructure
Program specific
Communications – merger communications & messaging
Shared go-to-market
Value capture
January 2, 2019
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5. Supply Chain Value Capture
1/2/2019
Supply Chain Value Capture
1- Direct Procurement - Pricing/volume re-negotiations
- Re-qualifications
- Re-design
2- Manufacturing Cost - Plant rationalization
- CM/ODM rates
- Infrastructure / overhead
3- Logistics - Rates/cost reductions
- 3PL strategy
- Consolidate facilities
4- Indirect Procurement
Goals: /220/148/250, total
January 2, 2019
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6. Procurement Value Capture Model
1/2/2019
Procurement Value Capture Model 1
Price ($) 2 3
August L
L+ 4
L+ 30
L+ 90
Steps
Form value extraction teams
Renegotiations
Best practices
Integrated strategies
Savings Type
= Pre-Realized
= Price Collapse
= Volume Negotiation 1 2 3
Note: Market driven price changes are excluded from value capture savings
January 2, 2019
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7. Supply Chain Value Capture - January 2003
1/2/2019
Supply Chain Value Capture - January 2003
Achieved merger-related cost savings of more than $1.3B annually
Restructured direct material procurement to save $450M annually
Redesigned products & re-qualifying components to save $300M
Consolidated multiple mfg sites achieving $120M in annualized savings
Achieved manufacturing savings of $200M annually
Reduced supply chain headcount by 2,700
Realized logistics savings of $100M+ annually
Indirect Procurement negotiated annual savings of $220M
January 2, 2019
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8. HP’s Product Offering vs. Competition
1/2/2019
HP’s Product Offering vs. Competition
Sales & service operations in160 countries
~$200M/day in revenue
Millions of customers
Multiple business models
Creates unique supply chain opportunities & challenges
January 2, 2019
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9. Supply Chain Competitive Differentiation
1/2/2019
Supply Chain Competitive Differentiation
Leverage Points
Manufacturing
Procurement
Order Mgmt
CRM/PRM
Logistics
No/Low-Touch Contract Manufacturing
Vertically Integrated, High Volume
Products
Direct Configure-to-Order
Customers
Value Added Systems & Solutions
Services Logistics Supply Chain
January 2, 2019
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10. IT infrastructure & Planning Systems
1/2/2019
Leverage Points
Supply Chain Platform
Procurement
Centralized negotiation with vendor base
$2B eAuctions
standardized procurement tools
Closed loop material cost reduction program
Purchasing risk management
Manufacturing
Preferred supplier leverage
Manufacturing facility leverage
Volume consolidation
Tax advantaged manufacturing
Logistics
Leverage all transportation modes across company
Common distribution processes across company
Common hub infrastructure
Leveraged IT tool set
eTracking
Shipment optimization
Customer Operations
Order Management
Customer Relationship Management
Partner Relationship Management
Product Data Management
IT infrastructure & Planning Systems
ERP & transaction processing
eCommerce tools (shipment tracking, eProcurement, collaboration)
Leveraged planning processes
Common data warehouse & reporting tools
Financial Processes
Customer to cash cycle
Working capital leverage
Leverage effective tax rate
January 2, 2019
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11. IPG Snapshot $22B business 18 years of industry leadership
1/2/2019
IPG Snapshot
$22B business
18 years of industry leadership
Record revenue and profit
#1 in Americas, Europe and Asia Pacific
Technology leadership (inkjet, laser, LEP)
6,000 worldwide patents
265 million printers shipped
2 billion ink cartridges
420 million toner cartridges
January 2, 2019
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12. IPG Supply Chain Strategies
1/2/2019
IPG Supply Chain Strategies
Learning curve/process efficiency
Volume
40M InkJet Printers
7M LaserJets
10M Scanners & Cameras
400M Inkjet Cartridges
Integrated
Cost Mgt
External partners/strategic alliances
Design for
Supply Chain
Regional
manufacturing
Supply Chain Velocity
Network Simplification
Manufacturing moves from US
Partner
Strategy
Close internal Hardware factories
Globalize
Infrastructure
cost
January 2, 2019
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13. Design for Supply Chain
1/2/2019
Design for Supply Chain
January 2, 2019
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14. 1/2/2019
Outbound Supply Chain
1- Consolidate Outbound Network - Eliminate Nodes
AM – Eliminated 5 nodes (14 to 9) – FY02 to FY03
EMEA – Strategy in place to move from 5 PCC partners to 3
AP – Reduce HP-owned distribution centers
2- Increase Direct Shipments - Bypass Nodes
AP – Continue rollout of direct ship model to customers/CDO’s, bypass DC
AM – Enable FGI shipments from Asia factories, bypass regional PCC
AM/EMEA – Investigate opportunity to ship direct to customer from PCC
3- Increase Outbound Outsourcing - Leverage Partners
Common region strategy – migrate to turnkey product completion
“Plug and Play” Integration with partners – will help HP drive competition
Reduce HP OH: Consistent leverage of partner capabilities
January 2, 2019
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15. 1/2/2019
Partner Strategy
Extensive use of best in class external partners (CM/CDM, ODM, DSP) to drive low costs/assets, responsiveness and focus/expertise
LJ Supplies
Cameras
HP Manufacturing Content
HP Design Content
Media
Scanner
ODM
LJ HW
IJ HW
CM/CDM
In-House
Mfg.
Indigo
IJ Supplies
January 2, 2019
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16. 1/2/2019
HP logo
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