Canon and Hewlett-Packard: Modern Supply Chain Management

Introduction

Companies need an effective supply chain design (SCD) to satisfy their customers’ needs and increase their competitive advantage. The SCD embodies the structure of the processes and relationships within the supply chain (Zhao and Feng, 2020). Typically, at the bare minimum, a company’s supply chain will have at least three organizations: the company, the supplier to the company, and customers. Essentially, these organizations are linked by supply chain flows, namely, information flow, product/material flow, and finance flow (Koot et al., 2021). This paper will compare Canon and Hewlett-Packard’s supply chain design, procurement, and product strategies. It will also evaluate the external macro factors that influence the companies’ decision-making. A good supply chain design can give a company a competitive advantage in the market.

Supply Chain Design

Hewlett- Packard (HP) and Canon companies have excelled within their niche markets arguably because they have successfully implemented effective supply chain management strategies. The supply chain is crucial to any company as it involves ensuring each process or activity is efficient. This process starts from material production until the products are delivered to the customer through appropriate distribution networks. Am SCD refers to the methods by which an organization has structured its supply chain to balance its manufacturing, inventory, and transportation costs (Elsaleiby, 2019). Simply put, an SCD is a framework that a company’s information and products travel to and from the supplier and customers.

Canon and HP operate in different industries and have adopted various strategies to help supply their goods and services to the market. Canon deals with imaging and optical products. Its core products include computer printers, photocopiers, cameras, and medical and broadcast equipment (‘Making the case,’ no date). On the other hand, Hewlett Packard Enterprise (HP) provides cloud services, IT infrastructure, technological services, and software. It delivers its products and services to small, medium-sized businesses and large enterprises in the public and private sector.

Physical or material flow refers to how quickly inventory flows within the supply chain with minimal stops. HP has adopted technology specializing in shipping inventory directly to customers via regional gateways that allow intermodal exchanges (‘Information management,’ no date). Shipping merchandise directly to consumers is a disintermediation strategy that involves cutting off the ‘middle men’ to keep costs as low as possible. The organization’s transport management system has hardware capabilities and software solutions to capture inventory data at the entry or exit port. The system captures the relevant data at each logistics step, including invoices, packing lists, picks tickets, delivery documents, and stores in the company’s cloud system. This way, the logistics team and distribution partners can access the data and benefit from real-time solutions from its cloud technology.

While HP personally undertakes its product flow, Canon outsources these processes to subcontractors. Outsourcing refers to the process where a company contracts an outside supplier to conduct operations that would otherwise be undertaken in-house. Canon outsources its manufacturing and distribution system and invests in technology that supports these activities. Like HP, Canon also uses technology to maximize its supply chain activities (‘Information management,’ no date). For example, Canon uses technology to create an integrated warehouse and distribution system. The technology also mediates the company’s information flow process. Another outstanding feature about Canon’s supply chain is that it has adopted the green 3PL model.

Canon’s Environment, Quality, Cost, and Delivery (EQCD) concept focuses on producing quality goods and services to customers, creating good relationships with suppliers, and considering its impacts on the environment. The supply chain design has been modified in some circumstances, but EQCD principles generally guide them. The company cannot conduct business with manufacturers incapable of maintaining environmental assurance and producing quality products. A study conducted by Evangelista, Santoro, and Thomas (2018) demonstrated that companies with green/eco-friendly 3PL activities could achieve profitability and long-term competitive advantage. Although HP also upholds the principles of eco-friendly activities, they are not integrated into its supply chain.

Being a web-based company, Canon uses technology to create and facilitate efficient information flows within its supply chain. It capitalizes on the internet to develop a strategic and economic value for its customers. Traditionally, supply chains (SC) were operated independently; managers at each stage would make decisions in isolation on how to optimize operations within their areas. However, technology has allowed for efficient information flow between echelons, enabling an integrated supply chain. Managers no longer have to make decisions in isolation in an integrated supply chain.

The ease of information flow has become extremely important in supply chain management success. Technology allows for ‘forward’ information flow and a two-way flow of information in the supply chain (Kersten, Blecker, & Ringle, 2017). Forward information flow includes advanced shipment notice, strategic communication, knowledge of suppliers, order status information, etc. While HP uses technology to facilitate its product flow, Canon uses it to maximize its supply chain’s information flow. Technology reduces variability in the SC, allowing suppliers to forecast changes better. It also allows effective coordination between manufacturing and distribution systems. With technology, Canon can offer its customers tools that can help them locate desired products on its web store and also allow them to react to supply problems rapidly.

Operational management theories assert that businesses can implement practices that increase production efficiency while using as few resources as possible. Traditionally, logistics companies relied on paper-intensive processes to conduct supply chain activities. These processes were labor-intensive, prone to errors, and required heavy administrative oversight that incurred high costs to the company. However, the use of technology to facilitate inventory transportation can help a company realize significant cost savings. A survey conducted by Ishtiaque, Siddiqui, and Ahmed (2020) revealed that the best way a company can optimize its operational performance is by investing in technology that enables integrative capability and operational responsibilities. Canon’s use of technology to allow for two-way communications and integrate information flow along its supply chain aligns with this recommendation. Therefore, it is reasonable to argue that Canon technology-mediated supply chain integration is responsible for its operational performance.

HP’s use of technology to support product flow along the supply chain is based on the reconfigurable manufacturing system theory. The theory states that production systems can accommodate the accelerated change in structure, hardware, and software. These systems allow the company to quickly adjust to a capacity that will enable optimal production processes and business operations. Its DfSC design has helped it achieve uniformity in its production methods and, most importantly, ensure consistency in quality. The design has helped the company avoid making decisions that aim to reinforce efficiency in inventory, which could, in turn, lead to risks of increases in prices by the different suppliers. The strategy has also been crucial to the company since it makes it easier to launch a variety of products in a short time. These new products are introduced within a short time but at affordable costs while positively impacting consumer experiences.

Decision-Making Strategies/Processes

The macro factors that affect decision-making include technological disruption, talent shortage, environmental concerns, political/regulatory factors, economic issues, and sociocultural factors. Political instability and regulatory factors can create a ripple effect, increasing the need for higher capital preservations. Environmental concerns have directly influence Canon’s supply chain management. The enterprise’s supply chain activities are guided by a strict environmental sustainability policy or procedure. Economic conditions can create market uncertainty, which drives decisions to expand into new markets.

Decision-making is a critical function that the management of a company cannot avoid making, and the impacts of these decisions affect the company. In both HP and Canon, the decisions on the supply chain departments’ day-to-day operations are decentralized. A senior executive at HP revealed that the company was negatively affected by the centralized government. The executive claimed that the central government would analyze things for too long that they ended up not making any decisions. A decentralized relieves the senior management of the decision-making burden as the power is delegated to middle-level managers, giving them more autonomy and control within the specialties. The decentralized system is significant for both companies considering they are multinational corporations, i.e., they operate beyond their regional borders. With decentralized management, the managers can capitalize on their expertise and local-level knowledge to adapt to the business environment.

Procurement Strategy

Canon company supply chain focuses on a global perspective in purchasing quality materials that meet the standards established by its central government. During the purchase process, both the quality and product prices are considered. The company does not engage with companies that do not meet their minimum quality requirements. Canon’s supply chain department guarantees that the merchandise is procured and delivered at the right time and delivered as required to ensure continuous production. The company also buys merchandise from different suppliers and sells them to the consumers. Quality and prices are the significant areas of concern for the company.

Likewise, HP maximizes its product quality and cost to optimize its strategy. HP pays critical attention to costs and only accepts suppliers that meet their cost requirements. This strategy helps the company to reduce the costs of production. Like Canon, HP also capitalizes on quality to meet customer demands (Kakhki and Gargeya, 2019). The supply chain also ensures that goods are delivered at the right time and quality to the different global markets at affordable prices to suppliers (Chen and Chiu, 2014). The company has developed various strategies to evaluate the quality of its suppliers’ merchandise

Production Strategy and Operations

Canon and HP are both aware of the impacts of what they will have to deal with if they do not comply with government rules and regulations in production. The two companies comply with all laws and policies that the different authorities have passed. HP’s corporate ethics may differ from Canon’s differences due to the differences in what the company stands for. These ethics help guide employees not only in the supply chain department but also in the entire organization. Production strategies in HP and Canon are aimed at ensuring efficiency and effectiveness in the use of resources.

HP Company has managed to use procurement risk management strategies to help deal with changes in demand created by external forces. HP has managed to adopt the use of services such as reverse auctions and e-sourcing. In some cases, production is carried out basing on historical data and projections on what is expected to happen in the market. This may lead to variations and costs being incurred that can be avoided. Canon produces products depending on what has been demanded and tries as much as possible to expand on the market share in different countries in the world.

Canon focuses more on the production, assembly, and manufacturing of some components it manufactures. Some given features are specially made at the company’s sites and industrial facilities. These features help ensure consistency in quality and cut down the costs incurred in the production process. HP, on the other side, may buy a product from the suppliers and resell the products to different clients. E-sourcing has helped the company meet the changing and unpredictable demand for the goods and services they sell to their clients.

The supply chain departments in the respective companies have managed to come up with ways to maximize revenue and improve clients’ experiences. Fairness in competition is promoted to encourage the suppliers to deal with the company to provide quality goods and services. The competitive environment among suppliers benefits both the suppliers and consumers in terms of affordable prices for quality services. Canon and HP have managed to ensure continuous cooperation with the different stakeholders, ensuring that operations are run efficiently and effectively.

Conclusion

An adequate supply chain can give a company a competitive advantage and increase its profitability. Canon and HP supply chains use technology to facilitate information flow and product flow within their supply chains, respectively. Both companies’ procurement strategies leverage on cost and quality of products. They both have decentralized decision-making system that expedites decision-making at the local level. Unlike HP, Canon’s supply chain is centered on 3PL and environmental sustainability.

Reference List

Chen, Y.M. and Chiu, Y-P. (2014) ‘Enhancing business intelligence for supply chain operations through effective classification of supplier management’, Uncertain Supply Chain Management, 2(4), pp. 229–236.

Chopra, S. (2019) Supply chain management: strategy, planning and operation. New York: Pearson Education.

Making the cases for integrated warehousing and distribution solutions. Web.

Elsaleiby, A. (2019) ‘An integrated strategic-operational supply chain network design: a case of consumer goods supply chain’, International Journal of Supply Chain and Operations Resilience, 3(4), pp. 275–295.

Evangelista, P., Santoro, L. and Thomas, A. (2018) ‘Environmental sustainability in third-party logistics service providers: a systematic literature review from 2000–2016’, sustainability, 10(5), pp. 1–34.

Information management: HP managed enterprise solutions for transportation and logistics. Web.

Ishtiaque, S., Siddiqui, D. A. and Ahmed, W. (2020) ‘Impact of technology-based integrated responsive supply chain on operational performance: a case of a volatile market’, International Journal of Logistics Systems and Management, 35(3), pp. 387–409.

Kersten, W., Blecker, T., & Ringle, C. M. (2017). Digitalization in supply chain management and logistics: smart and digital solutions for an industry 4.0 environment. Hamburg: HICL.

Kakhki, M. D. and Gargeya, V. B. (2019) ‘Information systems for supply chain management: a systematic literature analysis’, International Journal of Production Research, 57(15-16), pp. 5318 – 5339.

Koot, M., Mes, M. R. K., Lacob, M. E. (2021) ‘A systematic literature review of supply chain decision making supported by the internet of things and big data analytics’, Computers and Industrial Engineering, 154, pp. 1 – 28.

Zhao, J., J. M., and Feng, B. (2020) ‘Smarter supply chain: a literature review and practices’, Journal of Data, Information and Management, 2, pp. 95–110.

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NerdyRoo. (2022, June 19). Canon and Hewlett-Packard: Modern Supply Chain Management. Retrieved from https://nerdyroo.com/canon-and-hewlett-packard-modern-supply-chain-management/

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