Lenovos Supply Chain - Report Example

Report on Lenovo’s supply chain Author Course Tutor Date Table of Contents Item Page Introduction ………………………………………………………………....3 Definition of quality…………………………………………………………3 Lenovo on quality………………………………………………………......4 Importance of innovation…………………………………………………..4 Lenovo on innovation………………………………………………………5 Supplies for product delivery…………………….……………………….6 Supply chain and sustainability…………………………………………..6 Proposed supply chain process map…………………………………...8 References…………………………………………………………………...9 Report on Lenovo’s supply chain According to the company website Lenovo was formed as Legend Holdings in1984 in China, it was incorporated in Hong Kong in 1988. The company changed its name from Legend Holdings to Lenovo in 2004 and in 2005; it acquired the PC Division of IBM. The company has its operational headquarters in Morrisville, North Carolina USA while its registered office is in Hong Kong. It manufactures personal computers, mobile phones, workstations, servers and tablets. Its best known products are ThinkPad notebooks & ThinkCentre desktops. In October 2012, it was reported that Lenovo has overtaken Hewlett-Packard, the hitherto world’s top personal computer maker to claim the world’s number one position (Gartner 2012). As mentioned earlier Lenovo has many products, but for the purpose of this section we shall consider the ThinkPad notebook which together with ThinkCentre desktops can be considered the company’s flagship. The notebooks are adeptly designed as far as aesthetics are concerned; indeed one of the earlier models, ThinkPad 701 of 1995 has been displayed in the New York Museum of Modern Art. These laptops started being manufactured when IBM still owned the PC department and Lenovo continued with the same quality when it took over the department in 2005. Q1 Definition of quality Boyer & Verma (2010) define quality as the ability of a good or service to consistently meet and exceed customer expectations. The meaning of quality and how it is pursued varies in different facets of the production process. Since customer expectations change, and since a key component of quality is meeting their needs, the meaning of quality has to change with their expectations. In the computer industry, customer expectations change very fast, a condition that is partly fueled by the types of products involved and how fast they change. Lenovo on quality Lenovo has worked hard to improve quality as a way of reducing external cost. Although ThinkPads are portable, they have been made in such a way as to ensure that they can withstand several physical conditions and still be elegant as shown in the ThinkPad X1 carbon, the most recent model. The above mentioned design considerations have seen the company save on costs through quality. The savings have happened by reducing on warranty claims and product recalls. Concerning customer satisfaction, a survey by Technology Business Research showed Lenovo coming second globally in notepads customer satisfaction, this strong showing was mainly based on product characteristics including performance and reliability. Lenovo’s exponential growth in market share is attributable to this fact. Regarding sales engagement and service the company does not score as highly, a sample of Lenovo customer’s blogs while commenting on customer support shows a generally poor standard of service. Granted that quality of customer service is one way of ensuring customer loyalty, the company might lose the loyalty of its customers (Atkins et al 2002). Indeed from the blogs many individuals cite poor customer service as the main reason as to why they regret having bought Lenovo Notepads. Granted the almost absolute availability of information in the social media era, this is likely to tarnish the image of the company in the eyes of many potential customers (Porteus 2000). Q2 Importance of innovation Innovation, being the ability to define and develop new products, is important in organizations due to the fact that today’s marketplace is extremely competitive and customer expectations keep increasing. To keep up with these expectations, quality has to be continuously increased, cycle time consistently kept in check and customer satisfaction always assured (Atkins, Dykes, Hagerty & Hoye, 2002; Nahm, Vonderembse, & Koufteros 2003). Lenovo on innovation The company’s platform for engagement with manufacturers, suppliers and customers across the globe has been Electronic Data Interchange, a legacy from IBM. When it came to engagement with suppliers and manufacturers under EDI communicating with suppliers was a complex affair with over ten messages required just to confirm tendering of a load. This was too expensive and slow for the company to meet its objectives. EDI further complicated supply chain management by requiring a certain level of technological sophistication on the part of the supplier. As a way of advancing towards the company objective of being a global market leader, they migrated to the B2B platform. This platform provides speed and also lowers the threshold of the required technological sophistication without compromising on quality; this provides great flexibility enabling any supplier to fit in. Instead of bringing into the company a new logistical service provider, the service was outsourced to IBM. This outsourcing reduced the amount of time that would have been needed to set up the system from the six months that would have been necessary to bring in a new logistics service provider to just about five weeks (Lin et al 2011). Apart from process innovation, explained above, Lenovo has increased the capabilities of the ThinkPad continuously to come up with some of the most powerful and reliable laptops in the world; from the original ThinkPad designed by IBM to the most recent ThinkPad X1 carbon. ThinkPad X1 carbon can therefore be said to be a product of incremental innovation. Apart from this the company has also come up with radical, ground breaking innovations. The eye controlled laptop which was developed in 2011 is the most prominent product of Lenovo’s radical innovation. This laptop can zoom maps depending on your area of interest which will be interpreted based on where your gaze is, give more information on icons, dim windows at which the user is not looking, switch between windows depending on which you are looking at (Eaton 2011). Q3 Supplies for product delivery Being a computer company, Lenovo depends mainly on supply of parts from different companies. The assembly of a notepad requires almost thirty parts, each supplier provides only one, in some instances, and many suppliers are engaged to ensure certainty in delivering the product at the required time. The first category of supplies is hardware supplies. Other types of supplies include software suppliers; these are those who provide Lenovo with programmes to be used in the manufactured computers e.g. Microsoft. The other type of supplies needed is service supply in which computer service companies sign deals to offer services of a certain agreed standard with to Lenovo customers. To reduce costs and offer quick services to their customers, the company can borrow a leaf from its competitor Dell who have implemented the Just In Time model to great effect (Kraemer & Dedrick 2001; Flynn, Sakakibara, & Schroeder 2005; Nahm, Vonderembse,& Koufteros 2003). Q4 Supply chain and sustainability In the recent past there has been growing environmental and public health concerns. This has inevitably given rise to process-derived pollution. Global warming has now been recognized as one of the key societal issues of our time (Ball 2004). For these reasons sustainability has become a concept to be integrated in all processes. Supply chain looks at the product from raw materials to delivery to the customer it must incorporate other issues to ensure sustainability. In the case under consideration, three issues are relevant: (i) Product design This involves use of methods like life cycle assessment. The methods are meant to decide on how the product design will minimize its negative impact on the environment over its lifetime through assessment of changes over time (Guide & van Wassenhove 2003). (ii) Manufacturing by-products Cleaner process technologies lead to elimination of byproducts as does quality and lean production techniques (King & Lennox 2001; Narasimhan, Swink & Kim 2006). By products in the computer assembly plants like waste heat generated from making one product may be used for shaping certain parts of another product. (iii) Product life extension Extension of the life of a product boosts sustainability by avoiding depletion of resources that would have been used to manufacture other products to replace the current one had its life been shorter (Linton & Jayaraman 2005; Jayaraman 2009: Guide et al 2000) Lack of interest in some companies to take measures in project life extension; there has arisen remanufacturing businesses (Arndt 2005; Guide 2000). Lenovo reports among its objectives the ability to operate with balance and is involved in various initiatives to enhance sustainability (Lenovo Group Limited 2010). The company has an Environmental Management System (EMS) that is ISO 14001 certified and is applied in all company establishments in the world (Kitazawa & Sarkis 2000). According to Lenovo (2011) the company has also implemented, local manufacturing which has reduced shipping requirements. However, the company’s activities can be made even more sustainable by use of by products in the manufacturing process to make other products. References Atkins, R, Dykes, P, Hagerty, J., & Hoye, J 2002, ‘How customer performance partnerships can sharpen your competitive edge’. The Journal for Quality and Participation, 25(3), 22. Arndt, M 2005, ‘Cat sink its claws into services’. BusinessWeek 3692 (December 5), 56–59. Ball, J 2004, ‘As Kyoto protocol comes alive, so do pollution permit markets’. Wall Street Journal A2. Boyer, K & Verma, R 2010, Operations & supply chain management for the 21st Century, South-Western Cengage Learning, and Mason, OH. 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