Hewlett-Packard Restructures Supply Chain

In an effort to improve the efficiency of its supply chain, Hewlett-Packard is restructuring its internal organization. HP hopes by integrating its global operations division into the imaging and printing, personal systems and technology solutions units, it will realize substantial savings.

Each main business group will now have "have greater accountability over the full range of their operational activities. At the same time, each function that moves into the businesses will retain a company reach so that it retains maximum efficiency," says HP. Each group will have responsibility for supply chain, procurement, logistics, order-fulfillment and certain marketing functions, such as HP.com and customer relationship management.

The new structure is part of HP's overall efforts, announced in 2005, to streamline its operations. By the end of fiscal year 2006, 15,300 jobs will be eliminated.

AMR Research analyst Kevin O'Marah gives his take on this restructuring."The logic is to push maximum accountability for all functions to the business unit level while still retaining the scale benefits of centralization. It is all part of CEO Mark Hurd's effort to turn HP into a lean, mean competitor."

In his June 20 article, Kevin points out some advantages of this change. "If this reorganization delivers, it will give HP more supply chain agility and should also improve margins."

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