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Electronics Production | October 13, 2006

ESCC COLOGNE 2006

The first European Supply Chain Convention, organised by EIPC together with CircuiTree and EMS Now took place in Cologne on October 4th & 5th, and was well-attended by some 180 delegates, who sat in on two parallel sessions covering topics of interest to those involved in the PCB and EMS sectors.
At the conference a number of EMS seminars were held. Representatives from HP, Sanmina SCI, Elcotec, DEK, Universal Instruments, Celestica and Valor Computerized Systems were all invited as speakers at the conference. Proceedings commenced on Wednesday 4th October with a Keynote Speech from Patrick Schoeller, the Director of Central Direct Procurement at Hewlett-Packard, entitled 'Collaborating for Success'. Patrick has spent 25 years in the supply chain, and in procurement, and he gave us some facts and figures. HP employ 3000 people, have a turnover of $48 billion in three market customer segments, namely technology systems, imaging and printing and personal systems, and they are either No 1 or No 2 in all of them. HP are known for their printers, and 137,000 of them are shipped every day. But you may not have been aware that they also ship 82,000 PC's every day, too, they get an on-line order every 9 seconds on average! They have a modular supply chain - three routes to market, volume direct, value direct and volume indirect. Objectives are to serve their customers globally, delivering the latest technology, with a wide range of products and services. Their strategy is to drive efficiency and effectiveness, and they leverage the portfolio of products. Patrick mentioned the situation known as 'Black Friday' in the States, which is the one day at Thanksgiving when America goes shopping. Wal-Mart sell an HP laptop PC for some $398, and for that one day Wal-Mart took 221 truckloads of them! He further mentioned Deloitte, who wanted to re-equip all their staff with 240 customised notebooks, in 7 just days. They got them. For the curious, it is Canon who supplies the toner for the laser-jet printers, and have done for 15 years. For Inkjet ink, they make their own, protecting their IP. Their supply chain is multi-tiered - with complex relationships, where delegation carries some risks, not least being their inability to pursue suppliers who do not deliver. They have a system where they buy the components and sell to the OEM. By operating their own BOM (Bill of Materials) they know component prices, and can monitor costs. They operate an executive relationship with the component supplier, and allow suppliers to 'rate' HP, called a reverse scorecard, measuring performance, where both parties monitor each others performance. Of their $67 billion procurement bill, $50 billion is done through e-sourcing. Patrick mentioned Procurement Risk Management, something he started with his team, which is the management of uncertainty. Uncertainty includes unknown demand, unknown supply, and unknown market price, so they have developed tools to cope with that, based on statistical methods, and now have a financial technique adapted to procurement, whereby a commitment to volume by HP means that they take the risk, but they have measured that risk. The supplier does not carry the risk, and can thus offer reliable pricing and predictable delivery. Of interest to the assembled company was the parting shot - in 2005 HP bought $450 million worth of PCBs, of which 66% comes from Asia, 1% EU, 8% Japan, and 25% in the States. Collaborate they do, successful they certainly are.
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