The Art and Science of Supplier Relationship Management (Part 2)

Click here for the first post in this series from Shin-Wen Kuo, Director, Customer Experience and Governance, Hewlett-Packard.

Introduction to HP Global Procurement and our journey

At HP, Global Procurement (GP) manages tens of billions of dollars annually in indirect and services spend. Working with our suppliers, we support all HP business units and functions globally, including a significant spend for delivery of services and products to HP clients.

A few years ago, we recognized an opportunity to engage our strategic suppliers in a different way, moving beyond traditional procurement to foster greater collaboration and innovation to deliver growth to the business. We were very good at the sourcing, negotiating, contracting slice of the value chain, but we recognized that we had an opportunity to increase the value we delivered back to the enterprise and to our end customers.

We started this journey on the cusp of the largest acquisition in IT history -- when HP acquired EDS back in late 2008 -- and we had a few starts and stops. Then about two years ago, we decided to really make an investment in building a set of new capabilities, to focus on developing out what we call Strategic Supplier Development (the more common industry term you'll hear is Supplier Relationship Management).

We built a core team chartered with designing and implementing the approach to engage key suppliers. The SSD team developed the framework, tools, and processes to enhance supplier performance, drive innovation and collaboration, and build organizational capabilities -- and they manage the change associated with this large-scale endeavor.

As part of the investment to align suppliers more closely with HP strategies and business imperatives, and to deepen our key supplier relationships, we host an annual Global Supplier Forum. Strategic suppliers have the ability to connect with HP leaders, including the CEO and other executives, who share insights into our business. The event concludes with the highly anticipated announcement of the Supplier of the Year.

We're now augmenting the reach of the global forum with regionally focused events focused on innovation workshops. These have proven to be an excellent way to build relationships and catalyze game-changing ideas, valued by stakeholders, suppliers, and procurement alike.

Measurable Business Results and Value Creation

  • To date, we have implemented hundreds of new innovation initiatives delivering significant cost reduction, efficiency, and growth opportunities for HP and our suppliers.
  • While the financial value of these initiatives has been substantial, as important are the deeper supplier relationships which support our continued leadership in the global marketplace.
  • Suppliers have also benefited. In 2009, despite economic conditions, roughly 30% of participating suppliers realized increased spend from HP. That number more than doubled in 2010.

This has changed the way HP Global Procurement manages supplier relationships. Working with suppliers and stakeholders, we jointly plan and set goals, execute and assess performance, and importantly, set innovation objectives. Further, our systematic approach to innovation pipeline management is critical to identifying and implementing opportunities.

Through our investment in Strategic Supplier Development we've generated closer relationships with valued suppliers and stakeholders, enabling us to deliver significant results back to the business.

What the future holds
HP's business is complex, as are the global markets in which we design and deliver products and services. In the same way that HP must innovate to stay competitive and lead, driving greater business value for HP requires Global Procurement to continuously innovate -- the way we deliver programs, the way we manage supplier relationships, and the way we work across our business to support new revenue opportunities.

The top two near-term priorities for Strategic Supplier Development are to continue to scale and integrate. We will invest in capabilities that enable us to scale innovation -- developing capabilities deeper into our supply base, utilizing technology that better enables collaboration, and building and acquiring the right talent and skills into the team. We will also face new business challenges and will need to integrate new considerations into the business decisions we support. We expect to see opportunities driven by future business needs -- including those presented by growth in emerging markets, continued technology convergence, developing cloud capabilities, and sustainability challenges -- and will invest in the SSD capabilities needed to continue to lead in today's rapidly evolving global marketplace.

-- Shin-Wen Kuo, Director, Customer Experience and Governance, Hewlett-Packard

Footnote: Shin-Wen Kuo led the development and implementation of HP's Strategic Supplier Development capability for Global Procurement. She has recently taken a new role focused on enhancing the customer experience for HP's 300K+ internal customers.

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