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HP's Transformation Towards a Digital Value Chain

By Volker Schmitz, Head of EMEA Supply Chain Operations, HP Inc. And Xavier Ribas, EMEA Logistics Director, HP Inc.

Volker Schmitz, Head of EMEA Supply Chain Operations, HP Inc.

Today, HP is a leader in Personal Computers, Printing and 3D printing; it is one of the largest companies and most successful brands in the world, with more than $57 Billion in revenue and operations in more than 170 countries worldwide.

However, the company still maintains the humbleness and a thirst for innovation that began 80 years ago, when two friends Bill Hewlett and Dave Packard came together and started a company in their garage in Palo Alto, California. The two of them embarked on a new endeavor together, and the innovation and transformation that resulted led their garage to be labeled as the ‘Birthplace of Silicon Valley’.

From operating a drill press in the garage and baking the enamel on products in their home oven, to operating one of the most highly complex and respected supply chains in the world, a lot has changed during the past 80 years. Even more recently, we are going through a massive transformation, moving from a supply chain towards a digital value chain.

To sum up HP’s business strategy, our near-term focus revolves around two main businesses – printers and PCs. Then we have initiatives to drive innovation and growth, like our HP Instant Ink subscription service and device-as-a-service offerings for our printers, and PCs. Finally, we see the future in 3D printing.

To put the scale of HP’s supply chain into tangibles, far more than 100 million products are delivered each year. That means every single second, the company ships 1.7 PCs, 1 printer, and 15 consumables (think ink or toner cartridges) to customers around the world. Gartner ranks HP’s supply chain as #7 in the world, all Barron’s ranks HP as #4 ionits 100 Most Sustainable Companies list.

"To sum up HP’s business strategy, our near-term focus revolves around two main businesses – printers and PCs"

While operating such a huge supply chain the need for a significant transformation became obvious. The world – and our customers and supply base – are moving to digitalize everything. This presents an opportunity for us to challenge ourselves by examining and reinventing everything we do, pushing ourselves and the industry forward by developing industry firsts and bests along the way.

While traditionally supply chains focus on key functional steps around planning, procurement, production, order-management and delivery, our vision is to move towards a digital value chain. In this model, the supply chain acts as a control tower and collaboration point in the eco-system, with our customers being both the start and the end points. And of course, a digital transformation must embody state-of-the-art tools, cloud targeting, and the ability to ingest and take dynamic actions based on insights and analytics across a variety of inputs.

One of the most common challenges in global logistics networks is real time end-to-end visibility. It is nearly impossible as complex and global networks are based on fragmented legacy technologies lacking a common standardization and involving many different agents and partners throughout all the steps.

Xavier Ribas, EMEA Logistics Director, HP Inc.

In today’s on-demand world, that is no longer acceptable for consumers, partners, executives, or anyone working in the supply chain. Across everything we do, it is imperative to provide timely shipment visibility from factories to final customers, anticipate issues, and adjust plans / mitigate issues before they arise. The performance of the supply chain is critical to delivering an enhanced customer experience and satisfaction, as well as the overall financial and operational health of the company.

With this, the key design objectives for the logistics control tower were grounded in three objectives:

1) Move from reactive to proactive management of the global logistics network; leverage the latest Machine Learning and Big Data technologies

2) Standardize a consistent model with end-to-end shipment visibility - globally

3) Improve delivery accuracy through predictive analytics and algorithms, then scale

As we move through this journey, the expected benefits are:

1) A collaborative near-real-time environment, with one version of truth and one standard way to see and report supply chain status

2) A proactive alert/decision system, based on near-real-time “Intelligence ETA” (iETA) from historic performance and trends

3) An enhanced customer experience by improving delivery predictability and proactive information of shipment status, thereby enabling a stronger planning for our partners and HP

4) Increased organizational efficiencies, that focus on value added activities and remove manual and repetitive tasks in day-to-day operations

5) Reduced logistics costs by optimizing delivery lead-times and eliminating unnecessary waiting times across the network

The great challenge in working with such a large and complex supply chain is that there will always be change, disruption, and/or new technologies that require a complex ingestion and optimization of a variety of factors – both seen and unseen. In today’s world, that change is only accelerating; but for us change creates an opportunity to accelerate and reinvent.

The fact that the supply chain has a “seat” at the table and remains a respected voice throughout the company – and the industry -is tremendously valuable in this transition. There has been, and continues to be, an incredible collaboration and teamwork within our cross-functional leadership team, and we see that mirrored throughout the organization. Sales, category, supply chain, product development –all works together and supports each other. Without this teamwork, we would not be as successful as we are today, nor the opportunity to digitally transform our business.

The concept of a logistics control tower strongly supports our vision of a digital value chain and is a key component for HP’s global supply chain transformation; this is foundational for accelerating the future of HP.

After all, I am convinced that the best is yet to come and that with this, the next 80 years of inspiring innovation and delivering amazing products and services begins today.

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