1 - Supply Chain Council
1 - Supply Chain Council
1 - Supply Chain Council
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HP’s Global <strong>Supply</strong> <strong>Chain</strong><br />
Optimization<br />
Mark Bakker<br />
November 9, 2011 - Singapore<br />
© Copyright 2011 Hewlett-Packard Development Company, L.P. The information<br />
contained herein is subject to change without notice. HP Confidential.
Agenda<br />
The HP <strong>Supply</strong><br />
<strong>Chain</strong><br />
Optimization<br />
Scale and complexity<br />
The <strong>Supply</strong> <strong>Chain</strong> Optimization<br />
Workstreams<br />
The Process & IT<br />
Focus<br />
Leverage, standardization, and<br />
efficiency – major focus areas<br />
2 © Copyright 2011 Hewlett-Packard Development Company, L.P. The information<br />
contained herein is subject to change without notice. HP Confidential.
Introduction<br />
© Copyright 2011 Hewlett-Packard Development Company, L.P. The information<br />
contained herein is subject to change without notice. HP Confidential.
HP: The largest<br />
information technology<br />
company in the world<br />
• Fortune 11 – U.S.<br />
• Fortune 28 – Global<br />
• Doing business in<br />
approximately170 countries<br />
• Over 320,000 employees<br />
© Copyright 2011 Hewlett-Packard Development Company, L.P. The<br />
information contained herein is subject to change without notice. Confidentiality<br />
label goes here
Leadership across the portfolio<br />
#1 and #2 across markets<br />
Hardware<br />
Market<br />
Share<br />
Blade servers 1 50.0%<br />
Automated software quality 1,6 39.0%<br />
Inkjet printers 8 48.7%<br />
Desktop PCs 18.8%<br />
Worldwide market share data for calendar Q1 2011*<br />
5
Leadership across the portfolio<br />
#1 and #2 across markets<br />
Hardware<br />
Market<br />
Share<br />
IT Asset Management software 1,6 18.3% 14<br />
IT Services 1,4,7,12 6.0%<br />
Outsourcing 1,7,12 8.6%<br />
Support and training 1,7,12 6.7%<br />
Worldwide market share data for calendar Q1 2011*<br />
6
Strong financials, poised for growth<br />
Q3 FY11 revenue: $31.2B<br />
REVENUE BY SEGMENT<br />
REVENUE BY REGION<br />
Imaging &<br />
Printing Group<br />
20%<br />
Personal Systems<br />
Group<br />
31% HP Services<br />
29%<br />
U.S.<br />
35%<br />
EMEA<br />
35%,<br />
flat, Y/Y<br />
HP Financial Services<br />
and other<br />
1%<br />
Software<br />
2%<br />
Enterprise Servers,<br />
Storage,<br />
& Networking<br />
17%<br />
Americas<br />
45%<br />
flat, Y/Y<br />
Canada/Latin<br />
America<br />
10%<br />
Asia Pacific<br />
20%,<br />
up 9% Y/Y<br />
© Copyright 2011 Hewlett-Packard Development Company, L.P. The information<br />
contained 7 herein is subject to change without notice. Confidentiality label goes<br />
here
HP has the LARGEST<br />
IT SUPPLY CHAIN in the world<br />
Dedicated to providing<br />
products and services<br />
with a meaningful<br />
impact on business,<br />
life and the earth<br />
Both today and tomorrow
EVERY 60 SECONDS...<br />
HP DELIVERS TO OUR CUSTOMERS<br />
SERVERS<br />
PCS<br />
PRINTERS
<strong>Supply</strong> <strong>Chain</strong> delivery across HP<br />
HP’S SUPPLY CHAIN DELIVERS ACROSS A BREADTH<br />
OF CUSTOMER NEEDS<br />
CONSUMERS BUYING<br />
IN AN A RETAIL<br />
ENVIRONMENT<br />
SMBS WHO WANT<br />
TO BUY ONLINE<br />
ENTERPRISES WHO<br />
LOOK FOR AN HP<br />
PARTNERSHIP<br />
PUBLIC SECTOR<br />
WITH SPECIFIC<br />
NEEDS
<strong>Supply</strong> <strong>Chain</strong> Optimization<br />
FOUR KEY WORKSTREAMS
Scale and Complexity<br />
Imaging & Printing Group Personal Systems Group Enterprise Business Group<br />
Plan<br />
Procure<br />
Produce<br />
Deliver<br />
Plan<br />
Procure<br />
Produce<br />
Deliver<br />
ACQUISITIONS<br />
Plan<br />
Procure<br />
Produce<br />
Deliver<br />
REGIONAL VARIATIONS<br />
4 Business<br />
Units<br />
ROUTES TO MARKET VARIATIONS<br />
1 Business<br />
Unit<br />
5 Business<br />
Units<br />
A L L R E G I O N S<br />
12 © Copyright 2011 Hewlett-Packard Development Company, L.P. The information<br />
contained herein is subject to change without notice. HP Confidential.
PLAN<br />
PROCURE<br />
PRODUCE<br />
LOGISTICS<br />
A comprehensive optimization across HP<br />
Notebooks, desktops, Laser & volume Ink<br />
ESSN (servers), RPS & GSB<br />
VOLUME<br />
VALUE<br />
HP Services, MPS, GPSC & GCSO<br />
OpenView, Exstream<br />
Toner & Ink<br />
SERVICES<br />
SOFTWARE<br />
SUPPLIES<br />
HP SUPPLY CHAIN OPTIMIZATION<br />
PROCUREMENT AND<br />
PRODUCT DESIGN<br />
PHYSICAL NETWORK<br />
AND LOGISTICS<br />
PROCESS AND IT<br />
APPLICATIONS<br />
SERVICES AND<br />
WARRANTY<br />
• Leverage scale spend &<br />
common parts<br />
• Consolidate suppliers and<br />
Manufacturing Partners<br />
• Reduce # of nodes<br />
• Consolidate logistics providers<br />
• Enable with competitive processes<br />
and IT solutions<br />
• Reduce # of IT Processes and<br />
Applications<br />
• Deploy capabilities providing<br />
competitive advantage<br />
• Replace inventory with<br />
information<br />
• Consolidate services & warranty<br />
centers
<strong>Supply</strong> <strong>Chain</strong> Optimization Across HP<br />
PROCUREMENT AND<br />
PRODUCT DESIGN<br />
PHYSICAL NETWORK<br />
AND LOGISTICS<br />
SERVICES AND<br />
WARRANTY<br />
PROCESS AND<br />
IT APPLICATIONS<br />
STREAMLINE, SIMPLIFY, STANDARDIZE<br />
© Copyright 2011 Hewlett-Packard Development Company, L.P. The information<br />
contained herein is subject to change without notice. Confidentiality label goes here
<strong>Supply</strong> <strong>Chain</strong> Optimization Across HP<br />
PROCUREMENT AND<br />
PRODUCT DESIGN<br />
PHYSICAL NETWORK<br />
AND LOGISTICS<br />
SERVICES AND<br />
WARRANTY<br />
PROCESS AND<br />
IT APPLICATIONS<br />
© Copyright 2011 Hewlett-Packard Development Company, L.P. The information<br />
contained herein is subject to change without notice. Confidentiality label goes here
Leveraging scale through convergence and<br />
standardization<br />
PC<br />
Industry<br />
Standard<br />
Server<br />
Storage<br />
Array<br />
Non-stop<br />
Server<br />
ProCurve<br />
Switch<br />
Driving component standardization across all HP product lines<br />
MEMORY PROCESSORS HARD DISK DRIVES
<strong>Supply</strong> <strong>Chain</strong> Optimization Across HP<br />
PROCUREMENT AND<br />
PRODUCT DESIGN<br />
PHYSICAL NETWORK<br />
AND LOGISTICS<br />
SERVICES AND<br />
WARRANTY<br />
PROCESS AND<br />
IT APPLICATIONS<br />
© Copyright 2011 Hewlett-Packard Development Company, L.P. The information<br />
contained herein is subject to change without notice. Confidentiality label goes here
Global Footprint<br />
SHARED SITES + PSG + ESS + IPG + DISTRIBUTION CENTERS<br />
Too many nodes in Today’s HP <strong>Supply</strong> <strong>Chain</strong><br />
Leverage learning and success from within business units<br />
to reduce nodes across HP
Rationalizing our Locations<br />
Streamlining the route to our customers<br />
Logistics<br />
IPG Dist. Center<br />
(Walnut, California)<br />
21 miles apart<br />
STORE<br />
Logistics<br />
PSG Dist. Center<br />
(Ontario, California)<br />
Logistics<br />
Shared Dist. Center<br />
(Southern California)<br />
STORE
Current Status & What is left to do<br />
Node consolidation is on schedule<br />
NODE COUNT<br />
TODAY<br />
Linearized Goal<br />
• Steadily moving towards FY12 Exit goal of<br />
47% reduction in nodes<br />
• HP-shared Distribution/Service nodes have<br />
increased 3 to 4 times<br />
Actual / Plan<br />
Q1 FY10<br />
Q1 FY11<br />
Q1 FY12<br />
Q1 FY13<br />
Q4 FY13
<strong>Supply</strong> <strong>Chain</strong> Optimization Across HP<br />
PROCUREMENT AND<br />
PRODUCT DESIGN<br />
PHYSICAL NETWORK<br />
AND LOGISTICS<br />
SERVICES AND<br />
WARRANTY<br />
PROCESS AND<br />
IT APPLICATIONS<br />
© Copyright 2011 Hewlett-Packard Development Company, L.P. The information<br />
contained herein is subject to change without notice. Confidentiality label goes here
Services physical supply chain<br />
Evolving from three to one in stages<br />
Current State<br />
IPG GCSO<br />
PSG TCSO<br />
Physical Network<br />
Optimization<br />
Physical Network Alignment<br />
(Co-location)<br />
IPG<br />
GCSO<br />
PSG<br />
TCSO<br />
TS<br />
GPSC<br />
SDA – Service<br />
Delivery Architecture<br />
Pan-HP <strong>Supply</strong> <strong>Chain</strong><br />
Optimization<br />
Pan-HP Services<br />
(Operational & IT<br />
Convergence)<br />
TS GPSC<br />
$1B benefit to HP, inclusive of SC and non-SC, anticipated from<br />
Service Delivery Architecture initiative<br />
Source: Pan-HP <strong>Supply</strong> <strong>Chain</strong> Physical Network, Services Team, February 2010
Warranty node reduction<br />
Simplification<br />
- 53% node reduction<br />
(from 17 to 8)<br />
- 75% partner reduction<br />
(from 8 to 2)<br />
Parts fulfillment site (OSS)<br />
Parts fulfillment site (GPSC)<br />
Whole unit repair site<br />
Raw Hub<br />
Drivers<br />
• Eliminate of duplicated hubs<br />
• Integrate repair and parts activities<br />
• Consolidation spare parts and repair locations and<br />
suppliers<br />
• Better trade-off between labor and freight<br />
Source: PSG <strong>Supply</strong> <strong>Chain</strong> Strategy team, EMEA OptiNet team, February 2010
<strong>Supply</strong> <strong>Chain</strong> Optimization Across HP<br />
PROCUREMENT AND<br />
PRODUCT DESIGN<br />
PHYSICAL NETWORK<br />
AND LOGISTICS<br />
SERVICES AND<br />
WARRANTY<br />
PROCESS AND<br />
IT APPLICATIONS<br />
© Copyright 2011 Hewlett-Packard Development Company, L.P. The information<br />
contained herein is subject to change without notice. Confidentiality label goes here
The Future: One Way Across HP<br />
CONSISTENCY and VISIBILITY lead to improved management control while<br />
exceeding our customer’s expectations.<br />
PLAN:<br />
Two planners – one for inkjets in Chile and the other for PCs in Egypt – use the<br />
same systems and processes for demand planning.<br />
PROCURE:<br />
Partners and suppliers see one company across all HP business units.<br />
PRODUCE:<br />
Standardized messaging allows plug and play<br />
Standardized HP Mfg Operations enable WW Solution Integration.<br />
DELIVER:<br />
Door to door visibility of goods in transit and at our warehouses.<br />
25 © Copyright 2011 Hewlett-Packard Development Company, L.P. The information<br />
contained herein is subject to change without notice. HP Confidential.
HP <strong>Supply</strong> <strong>Chain</strong> scale and complexity<br />
IMAGING & PRINTING<br />
GROUP<br />
PLAN<br />
PERSONAL SYSTEMS<br />
GROUP<br />
PLAN<br />
ENTERPRISE BUSINESS<br />
GROUP<br />
PLAN<br />
Tools<br />
62<br />
Processes<br />
175<br />
PROCURE<br />
PROCURE<br />
PROCURE<br />
54<br />
190<br />
PRODUCE<br />
DELIVER<br />
PRODUCE<br />
DELIVER<br />
ACQUISITIONS<br />
REGIONAL VARIATIONS<br />
PRODUCE<br />
DELIVER<br />
70 177<br />
139 505<br />
306 1047<br />
ROUTES TO MARKET VARIATIONS<br />
4<br />
Business<br />
Units<br />
1<br />
Business<br />
Unit<br />
A L L R E G I O N S<br />
5<br />
Business<br />
Units
Process and IT Optimization Across Businesses<br />
INTEGRATION AND VISIBILITY<br />
Logistics<br />
Warehouse<br />
STORE<br />
Manufacturing<br />
Systems<br />
Warehouse<br />
Management Systems<br />
Transportation<br />
Management Systems<br />
DEMAND PLANNING<br />
SUPPLY PLANNING<br />
27 © Copyright 2011 Hewlett-Packard Development Company, L.P. The information<br />
contained herein is subject to change without notice. HP Confidential.
HP Partner Integration<br />
EDI Standardization<br />
PLAN PROCURE DELIVER INVOICE<br />
HP Planning<br />
Forecast<br />
Commit<br />
HP Procurement<br />
Purchase<br />
Order /<br />
PO Change<br />
PO Confirm/<br />
PO Change<br />
Confirm<br />
HP Receiving<br />
ASN<br />
ASN<br />
Ack<br />
HP A/P<br />
Invoice<br />
Standardized EDI messaging<br />
and collaboration methodology<br />
between HP and Partners<br />
EDI<br />
830<br />
EDI<br />
870<br />
EDI 850<br />
/ 860<br />
EDI 855<br />
/ 865<br />
EDI<br />
856<br />
EDI<br />
824<br />
EDI 810<br />
ERS<br />
Supplier<br />
Planning<br />
Supplier<br />
Purchasing<br />
Supplier<br />
Shipping<br />
Invoicing<br />
One standard, used everywhere<br />
28 © Copyright 2011 Hewlett-Packard Development Company, L.P. The information<br />
contained herein is subject to change without notice. HP Confidential.
Process & IT Applications<br />
Customer Benefits<br />
HP’S PROCESS ALIGNMENT enables us to…<br />
– Have the right product in the right place at the right time<br />
– Allocate inventory to a waiting customer at any point in<br />
the supply chain<br />
– See the status and location of customer’s order,<br />
anywhere, anytime<br />
29 © Copyright 2011 Hewlett-Packard Development Company, L.P. The information<br />
contained herein is subject to change without notice. HP Confidential.
Going Forward<br />
What we’re doing<br />
Leveraging Scale across HP’s business units<br />
Reducing complexity - one way and one system to do things<br />
Increasing efficiency - implementing best in class methods across HP<br />
30 © Copyright 2011 Hewlett-Packard Development Company, L.P. The information<br />
contained herein is subject to change without notice. HP Confidential.
<strong>Supply</strong> <strong>Chain</strong> Optimization<br />
How we did it
HP <strong>Supply</strong> <strong>Chain</strong> Optimization leadership<br />
HP SUPPLY CHAIN BOARD – CHARTERED BY THE EXECUTIVE COUNCIL<br />
SVP ESSN <strong>Supply</strong> <strong>Chain</strong><br />
SVP IPG <strong>Supply</strong> <strong>Chain</strong><br />
SVP PSG <strong>Supply</strong> <strong>Chain</strong><br />
VP GPSC<br />
SVP GCSO<br />
SVP PSG Services<br />
VP <strong>Supply</strong> <strong>Chain</strong> IT<br />
SC OPTIMIZATION PMO<br />
Lead, Team<br />
PROCUREMENT AND<br />
PRODUCT DESIGN<br />
PHYSICAL NETWORK<br />
AND LOGISTICS<br />
PROCESSES AND IT<br />
APPLICATIONS<br />
SERVICES AND<br />
WARRANTY<br />
•Workstream Lead<br />
•Workstream Team<br />
•Workstream Lead<br />
•Workstream Team<br />
Release 1 (R1)<br />
•Business Lead<br />
•IT Lead<br />
•Workstream Lead<br />
•Workstream Team<br />
Release 2 (R2)<br />
•Business Lead<br />
•IT Lead<br />
32 ©2010 HP Confidential
HP <strong>Supply</strong> <strong>Chain</strong> Optimization Program Management<br />
Success Factors<br />
– Structured calendar<br />
• Board Meetings<br />
• CEO Reviews<br />
– Independent work<br />
– Alignment with finance<br />
– Alignment with IT
HP <strong>Supply</strong> <strong>Chain</strong> Optimization Program Management<br />
IT Alignment<br />
– IT structure aligned to different<br />
supply chains<br />
• Release 1<br />
• Release 2<br />
– Collaboration on annual IT POR
Lessons Learned from HP’s <strong>Supply</strong> <strong>Chain</strong> Optimization<br />
– Need strong organizational leadership<br />
– It’s hard to boil an ocean, and that’s exactly what we’re trying to do<br />
– Be prepared for appropriate and calculated risk taking<br />
– Adaptability is key!<br />
– Business continuity is especially important during transformational<br />
efforts<br />
35 © Copyright 2011 Hewlett-Packard Development Company, L.P. The information<br />
contained herein is subject to change without notice. HP Confidential.
Thank You
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