Sourcing & Procurement Award Winner 2008: Hewlett Packard CDs

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The Sourcing & Procurement category came down to a shortlist of three companies – British Ceramic Tile, Haldex and Hewlett Packard CDS.

British Ceramic Tile manufactures a wide range of wall tiles using the latest Italian and Spanish technology to achieve high quality yields through a traditional twice fired process. The management realised that while production and design facilities were state of the art, the business approach to the supply chain and procurement functions were disjointed and so it engaged in applying sound procurement practice centred around minimising the amount of tiles ordered to keep inventory in balance. Whereas the judges recognised that significant advancements had been made, these were viewed to be from a low base.

Haldex is a Sweden-based vehicle component manufacturer. Back in 2005 the company’s sourcing and supply organisation was decentralised, driven by each individual business unit purchasing on a local basis. Since then things have changed to an organisational structure that supports global sourcing, procuring material in the region with the lowest lifecycle cost for the given quality. This has been achieved through the development of common processes and supporting policies for everything from a common code of conduct to early supplier evaluation and inventory management, creating a saving of 2.5 – three per cent in annual purchasing spend.

The principle area of focus for Haldex was the centralisation of procurement activities and systems over a two-year period. The company’s objective was to create a centralised planning system across three different countries and across its various business groups, which were all accustomed to buying or sourcing product in different ways. The company had to look at process flow, the way it plans, co-ordinates and manages suppliers and how it rationalises its supply chain across those three countries. Haldex achieved significant savings through the initiative, overcoming some major obstacles. Impressive though it was, the prize had to go to the hi-tech contender.

Hewlett Packard CDS employs in excess of 3,000 people across EMEA, with 1,600 being based in the UK and Ireland. Every month the company ships nearly 30,000 parts and manages somewhere in the region of 17,000 return transactions. Recently HP CDS developed and implemented an EPO solution that has revolutionised its order processing activity. The solution has been integrated with key suppliers, enabling the company to seamlessly produce and electronically transmit orders directly from its procurement system to suppliers. The system provides for fully automated ordering process and includes e-invoicing.

In the past 12 months Hewlett Packard CDS has launched a number of initiatives to improve procurement processes: full electronic integration with suppliers, automated order processing, supplier performance measurement, dedicated inventory at vendors, a capped pricing structure, and flexible supplier hours. These initiatives were launched as part of a supply chain-wide logistics enhancement programme that led to a £10 million stockholding reduction and a 22 per cent reduction in logistics costs. In addition, the company benefited from improved parts availability, improved service fulfilment, reduced inventory levels, competitive pricing, improved productivity, dedicated vendor inventory, price stability, and overall efficiency in sourcing and procurement.

HP has adopted the approach of building long-term relationships with key partners who have proven capability to support the company’s requirements and its longer term procurement strategy. The company has also developed an enhanced suite of supplier KPI measurement criteria, which directly meets the requirements of the business and drives continuous improvement. This has enabled HP CDS to standardise its vendor management processes across all contracted vendors.

The judges say, “where they won out was through their commitment to the changes, their dedication to collaboration and ultimately, the results.” And so, Hewlett Packard CDS was the judges’ choice for the Sourcing & Procurement Award.

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