I just returned from Chicago after attending the Council of Supply Chain Management Professionals 2009 Annual Conference. In my last live posting from the conference, I penned summary comments from what I thought was one of the most interesting of the sessions I attended, which was titled Wall Street’s Perspectives on Supply Chain. The sum total of that session was that Wall Street has indeed recognized the value of supply chain, especially in this rather difficult economic climate.
No sooner had I penned that commentary, that the very next day, the Wall Street Journal provided ample real-time evidence of the value of supply chain capability in business strategy. One article, H-P Wields Its Clout to Undercut PC Rivals (subscription may be required), notes that Hewlett Packard has been successful in supporting Wal-Mart’s back-to school promotional efforts by offering a laptop priced at $298. These laptops sold-out within two days and a second batch sold out the following weekend. The article attributes a lot of the success to H-P’s efforts in leveraging an improved supply chain to quickly re-design and deliver the new, less expensive promotional laptop. Todd Bradley, head of H-P’s Personal Computer division attributes these new capabilities in agility to improving operations and investing in new product innovations and manufacturing capability. According to the article, H-P’s PC division is currently operating at 4.6% profit margin, but that exceeds competitor Dell, which is estimated to run at 4.3% margin. Readers may recall that H-P de-centralized all of its supply chain capabilities to each of its individual operating divisions at the time that Mark Hurd assumed the CEO role of the company.
The second article, Decline in Commodity Prices Helps Boost General Mills Profit, (subscription may be required) notes that this company has boosted its profits by 51% and has raised its earnings forecast for the remainder of the fiscal year. The company benefiting from lower commodity costs, but is also boosting the efficiency of its manufacturing and distribution. John Church, Senior Vice President of Global Supply Chain is quoted regarding his organization’s investments in inventory optimization, which increased the number of plants producing Honey Nut Cheerios from two to four, but saved on distribution fuel consumption and overall inventory. Other initiatives mentioned were new software to keep trucks fuller and innovative planning and development processes to overcome inefficiencies in ordering and manufacturing processes.
In one day, two ample evidence points on the value that Wall Street places of supply chain capability in today’s economically challenged economy.