Thought Leader -- Reducing the Supply Chain Footprint

Thought Leader -- Reducing the Supply Chain Footprint

HP's Christian Verstraete brings a systems engineer's eye for the big picture to managing the supply chain's "ecosystem."

Wednesday, June 17, 2009
By Adrienne Selko

You might think that a person would run out of ideas after being at the same company for 30 years. Not the case with Christian Verstraete, who began his career with Hewlett-Packard as a systems engineer. These days he is pushing the lean frontier to see "how it can be incorporated into the wider view of the complete ecosystem." That view must extend beyond the boundaries of the enterprise and reach across the whole supply chain. For example, he warns, "Today companies must have a handle on risk management and mitigation across the supply chain while simultaneously reducing the variants. Rather than do Six Sigma within the company, do Six Sigma across the supply chain."

Q: How is HP able to continuously improve its supply chain?

A: Once we have identified potential improvements in our supply chain and before we implement the improvements, we develop a model. We inject multiple scenarios and variances and see how the model reacts. Simulation tools are relatively inexpensive and it is money that you can recoup very quickly by avoiding implementing the wrong thing.

Here's an example. In the mid '90s HP moved into the notebook business, and while they took off like rockets, we weren't making any money. We didn't understand why this was the case until we got our supply chain modeling people involved and discovered that there were a number of things that we hadn't taken into account. We revised our supply chain design and are now the largest notebook manufacturer in the world.

Q: HP won Wal-Mart's 2008 Home Entertainment Design Challenge. How did that happen?

Christian Verstraete Chief Technology Officer / Manufacturing & Distribution Industries Worldwide, Hewlett-Packard Co. Responsible for thought leadership and innovation Spends his time scanning trends and figuring out how to capitalize on them Is busy figuring out ways to quantify "green" efforts Proud of HP's efforts to help employees become environmentally conscious in their own homes

A: It was actually very simple. Wal-Mart asked its top 100 suppliers to reduce the amount of packaging material in an effort to be environmentally responsible. One of our employees was contemplating how to protect the laptop when it was coming from China or Thailand. He found padded bags that were made from recycled material. He designed one package that was able to contain everything that the PC needs. It reduces shipping material by 97%, and it conserves fuel and reduces CO₂ emissions by removing the equivalent of one out of every four trucks previously needed to deliver the notebooks to Wal-Mart stores.

Q: Looking forward, what "green" issues do you see?

A: First of all you need to measure the result of your green efforts. We are among the first companies to calculate the carbon footprint of the supply chain. While it's still in its early stage of development, we hope over the next three to five years we will be able to more closely calculate and express all of the aspects of an environmental footprint. We need to go beyond emission only and look at water and other resources. We are teaming up with research institutes and universities to ensure that we take a holistic approach.

From a manufacturing viewpoint we need to move environmental concerns up to the product development stage so that design takes into consideration the whole life cycle as well as the end use. For example, if we put the paint in the plastic rather than paint the end product, we can ensure proper recycling.

Watching out for the environment is a priority not only for HP but also for Verstraete personally. "A company is a community of human beings," he says. "Everyone is responsible for doing their part at work and at home."