SUPPLY CHAINMANAGEMENT IN LENOVOINTRODUCTION Lenovois one of the leading pc manufacturers in the world and is the largest PCmanufacturer in China which is a major contributor in the field of electronics.
One of the major reasons for the company’s success in global PC industry is itsefficient usage of supply chain. Lenovo started the process of evaluation andtesting of supply chains in 2001. By 2002 the SCM system was successfullyimplemented in all the production lines of the company. The system provided theability to gather consumer behaviour information , analyse it and use it to managethe production process.
Lenovo received the Supply chain excellenceaward in the year 20091and has been ranked 24th in global supply chain rankings announcedby Gartner Inc in 20172.Lenovo favours to use long term strategy rather than short term and prefers touse outsourcing wherever possible so as to optimally utilize the resources.HISTORY OFLENOVO Thepredecessor to Lenovo was ‘Legend holdings’ which was founded in the year 1984.
The following year the company ventured into PC distribution business. In theyear of 1990 the very first Legend Brand PC was launched into the Market. In2001 Lenovo was started as a part of Legend holdings as the name legend wasbeing used by several companies worldwide and the company thus could notregister its brand in different countries . The name Lenovo was derived from “Le”in Legend and the Latin word “novo” meaning new. After launching the new brandsthe company advertised the brand with use of large media campaigns andbillboards3. In 2004the company acquired the PC business from IBM Computers and thus stepped intothe PC manufacturing business globally. This acquision gave Lenovo the abilityto make use of IBM’s ThinkPad4brandto its advantage.
Lenovo sold its Smartphone and tabletdivision in 2008 for US$100,000,000 in order to focus on personalcomputers and then paid US$200,000,000 to buy it back in November 2009. Asof 2009, the mobile division ranked third in terms of unit share in China’smobile handset market. Lenovo entered the Smartphone market in 2012 and quicklybecame the largest vendor of Smartphone in Mainland China.
On January2014 Lenovo acquired the leading Smartphone brand Motorola by purchasingMotorola Mobility from Google. Lenovoprovides the consumers with a wide range of products ranging from PCs like ThinkPad,ThinkCentre, IdeaPad, Legion, high power computing solutions such asThinkServer, ThinkStation, IdeaCentre, Lenovo and Moto Smartphones and severalother electronic devices. The company also has launched a wide variety ofmobile apps which serve several different functions.SUPPLY CHAINMANAGEMENT Supplychain management is the process of strategic co-ordination of the supply chainfor the purpose of integrating supply and demand management. A typical supplychain involved in a conventional manufacturing process is shown in the figurebelow. Supply chain management involves planning and coordinating the varioussteps in the below mentioned process thus increasing profits and optimise theexpenses.5 SUPPLY CHAINMANAGEMENT IN LENOVO Lenovo’sglobal supply chain consistently drives customer focused innovation andexecution. Since June 2006,in order to integrate Lenovo’s core values comprised of customer satisfaction,innovation, operational excellence and trustworthiness into their supply chain,the company became a member of the Electronic Industry Citizenship Coalition (EICC)6.
Following the EICC standards, Lenovocreated a new supply chain management style called a Hybrid Supply ChainStrategy. Using this new style, Lenovo focused on achieving a balanced mix ofin-house and outsourced manufacturing. Supply chain management is done byLenovo by making use of three major objectives namely Innovation, OperationalExcellence and Customer Experience and different strategies are beingimplemented to fulfil the objectives.USAGE OF HYBRIDSUPPLY CHAIN Lenovomakes use of a Hybrid supply chain to satisfy the customer requirements. Hybridsupply chain process generally involves balanced use of both in-housemanufacturing process as well as outsourcing thus delivering a competitive advantage.Thus hybrid strategy helps to optimise the manufacturing process via a tradeoff between control and cost structure. Lenovo has 7 in house plants and 3joint venture plants all over the world. In addition Lenovo products are alsomanufactured in several outsourced sites across the world.
In India Lenovo products are beingmanufactured in two major sites Chennai and Pondicherry. The Pondicherry plantis a plant which is entirely owned and controlled by the company andmanufactures personal computers. On the other hand the plant in Chennai is ownedand operated by Singapore-based contract manufacturer Flextronics7.
Lenovoentered into a contract with the company in the year 2015 to startmanufacturing both Moto and Lenovo Smartphone. INTEGRATION OF LEANSIX SIGMA Lenovohired Global Lean Six Sigma Executive, Master Black Belt & ExecutiveDevelopment Sensei David Olski in 2006 to train its employees all over theworld with Lean Six Sigma8 practices.Lean Six Sigma provides Lenovo employees around the world with a common set oftools and methodologies along with a shared language for examining and solvingproblems. This helped the employees of the company all over the world to have acommon ground by providing them with common sets of tools, terminologies andmethods for examining and solving problems.
As all Lenovo employees complete Lean Six SigmaAwareness training, and many achieve different Lean Six Sigma Belt levels, thecontinuous improvement approach allowed Lenovo to achieve high-performanceculture9. END-TO-ENDSUPPLY CHAIN MANAGEMENT Lenovo’send to end supply chain management enables the company to ideally manage theentire supply chain as a single unit. Lenovo has predictive models in planningand forecasting around run rates, seasonality, key deals with clients, etc.that are focused on protecting supply and product transitions. There is a lotof flexibility in production planning. Lenovo can build a product in multiplelocations, and can balance supply even though some sites are further away andtransportation can flex. Lenovo uses Steelwedge software10 tobring all inventory visibility together.
It is fed by SAP but comes together inan interface. This goes beyond inventory visibility and identifies potentialimpacts on inventory based on world events and provides a powerful tool forfuture planning.11 Thiscontrol over the entire supply chain assists the company with overcomingunprecedented and disruptive events such as natural disasters. 1 http://news.lenovo.com/news-releases/lenovo-awarded-2009-supply-chain-excellence.htm2 https://www.gartner.
cn/en/About/OurHistory.aspx4 ThinkPadis a family of notebook computers introduced by IBM in the year 1992.They areknown for having superior keyboard quality5 WilliamJ. Stevenson, Operations Management, Eleventh Edition, McGraw-Hill6TheElectronic Industry Citizenship Coalition (EICC) is a coalition ofcompanies working together to create a comprehensive set of tools and methodsthat support credible implementation of the EICC Code ofConduct throughout the Information and Communications Technology (ICT) supplychain7 http://www.livemint.com/Companies/3OQBWXtDNp6Zqj65YTnSaJ/Lenovo-follows-Xiaomi-as-Chinese-smartphone-makers-rush-to-I.
html8Lean Six Sigma is a combination of two powerful process improvementmethods: Lean and Six Sigma. In this method Lean acceleratesSix Sigma, delivering greater results than what would typically be achieved byLean or Six Sigma individually.9http://social.lenovo.com/en/blog/lean-six-sigma10 Steelwedge Softwareis an integrated business planning solution provider for sales, finance,operations and executive teams11https://scm.ncsu.edu/blog/2016/12/14/lenovo-goes-about-creating-the-end-to-end-transparent-supply-chain/