Congratulations to Hewlett-Packard
Jim Carbone, Executive Editor, Electronics -- Purchasing, 9/2/2004 2:00:00 AM
Hewlett-Packard is the 2004 winner of PURCHASING Magazine's Medal of Professional Excellence, becoming the first company to win the award two times.
When HP first won the award in 1992, it was a different company. It was smaller, very decentralized and much more vertically integrated. Today HP is much larger due in part to its merger with Compaq Computer. The company has a more centralized purchasing structure and it outsources most of its manufacturing. The company has changed with the times and its willingness to change is one reason it won the award again.
There are other reasons. The company involves purchasers in design to make sure preferred suppliers and standard parts are used whenever possible in new designs. While HP wields considerable buying clout because it is the largest purchaser of many production materials and services, it treats suppliers like partners, not adversaries. It involves suppliers in design, tapping into their technical know-how and working with them on technology roadmaps.
It has an executive sponsor program in which high-level HP executives meet regularly with supplier executives to discuss new business opportunities, technology trends and other business issues.
Perhaps the single biggest reason HP won the award is its willingness to admit mistakes and its ability to correct them. An example of this is in the 1990s when HP decided to outsource more of its manufacturing to electronics manufacturing service (EMS) providers, it also outsourced much of its strategic purchasing. It gave up its relationships with many key suppliers and lost visibility into the supply chain. "That was wrong," says Dick Conrad, senior vice president global operations, supply chain. "Maintaining supplier relationships is a critical differentiator."
HP took back the supplier management responsibility from its EMS providers and has forged new partnerships with key suppliers. Those relationships will be even more critical in the years to come. HP will be under pressure to further reduce the cost of its equipment while making sure it has access to the latest and greatest technology developed by suppliers.
Now Playing: 