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Building the Supply Chains of the Future

Ernest Nicolas, Chief Supply Chain Officer

September 23, 2022

One of the pandemic’s clearest lessons to business is that global supply chain strategies must be more flexible and agile. For the past several years, macroeconomic-driven business dynamics have forced global supply chains to be redefined and reshaped across every industry.

Many supply chains are still designed extremely lean to maximize efficiency. While lean supply chains strive to constantly reduce lead times and inventory, incentivizing a race to the lowest-cost option, the pandemic exposed the importance of building resilience into these historically lean supply chain models.

Cost is, and always will be, a critically important consideration, but supply chains must find the right balance of efficiency and resilience to mitigate future disruption. In many ways, supply chain resilience can be viewed like insurance. The idea is to minimize the impact of potential points for failure in the supply chain. At the same time, more customers have heightened requirements for sustainability. They want manufacturers to reduce end-to-end lead times and emissions while designing eco-friendly products with extended lifecycles and reuse in mind.

In some instances, businesses will need more geographically diverse footprints. Building resilience while advancing sustainability may require organizations to shift portions of their supplier ecosystem, as well as their manufacturing and distribution footprints, to be closer to their customers. At HP, our ambition is to build a flexible and resilient supply chain—a supply chain that is more adaptable to changes around us, and more sustainable for our customers and the communities we serve. Our design and supply chain teams are working in close partnership to take action.

For example, we have shifted from designing products with single-source components to designing products with multi-source components, wherever feasible. We continued to secure longer-term supply agreements with close partners to put us in a better supply position for capacity-constrained components. And we have further strengthened our business continuity planning capabilities to both predict potential disruptions and take pre-emptive measures to mitigate them.

In the face of volatility, we are also becoming more agile by transforming processes and deploying new digital tools that provide real-time visibility across our value chain. At this point, we have only scratched the surface. In coming years, our investments to build a new digital backbone will enable a supply chain digital transformation that will reap compounding benefits for us and our customers. Our goal is for HP to be faster, more accurate, and more agile when responding to dynamic market conditions. For our customers and partners, this translates directly into improved delivery and shipments.

But it’s not just what we are doing that’s important. It’s also how we are doing it. Across our entire value chain, we have set an ambitious goal: net zero emissions by 2040, with a 50% reduction by 2030. The only way we will meet these goals is by working with all our suppliers to drive continuous progress. In short, our suppliers are critical partners in building the world’s most sustainable and just technology company.

I’m proud of the way our supply chain teams are rising to these challenges. We have manufacturing hubs and supplier ecosystems around the world, and each of our teams wake up every day and look for ways to better serve our customers and partners.

A great example is our manufacturing ecosystem in Mexico, where we have produced desktop PCs for a number of years. HP believes PCs are at the heart of hybrid work and remote learning — two areas where we see significant growth. Our desire to be more resilient and respond to this growth opportunity have put us in a position to expand this regional hub to produce our notebook PCs. To that end, we have entered into an agreement to expand PC manufacturing operations in Mexico.

This expansion also supports our broader environmental and social impact agenda in a number of ways. For example, shorter transit times to North America will reduce CO2 emissions. The new location is a part of HP’s efforts to meet our ambitious 2030 sustainability agenda. As a next step, we will explore opportunities to extend product circularity through regional takeback operations at the site.

We can view the future of HP’s supply chain through the lens of this site — a supply chain that is more flexible and resilient than ever, while also becoming more sustainable, in service of a net zero carbon, circular economy.

Now is the time to turn the supply chain challenges of the past few years into opportunities by building the stronger, more resilient, and more sustainable supply chains of the future. I could not be more excited to work with our manufacturing partners, suppliers, and governments around the world to extend our footprint in a way which benefits our people, our companies, and our shared planet.

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