7 Supply Chain Lessons from Lenovo

Lenovo Supply Chain has been consistently ranked on the list of supply chain top 25 by research and advisory firm Gartner Inc for more than 4 years in a row. However, the majority of Lenovo's supply chain case studies focus on the use of information system and the benefits of the acquisition of IBM’s PC business in 2005. In this article, we will show you 7 elements of Lenovo's supply chain operations from the book "The Lenovo Way: Managing a Diverse Global Company for Optimal Performance".

Lenovo Supply Chain

1. Empty Your Cup
When people think they know a lot or they have "been there done that", they tend to stop listening to new ideas. If you behave like you are an empty cup (so it can be filled with more knowledge), there will always be a room for learning and development.

Inside Lenovo, this principle is called a "Zero Mindset". If you only hang on to the past achievement, you will never learn a new thing or you will lose your motivation completely.

2. Observe and Ask
This is a basic scientific method. You need to see what happens around you and ask questions.

At Lenovo, asking questions like "why, why not, what if" is part of the innovation process. According to them, they value ways to do things differently and asking questions help to identify root causes of problems. Then, products can be streamlined and operations/services can be improved.

3. Clarify Corporate Culture
They believe corporate culture should be something actionable, not just a vague documentation. Then they translate corporate culture into 4 key actions, namely, Plan, Perform, Prioritize, and Practice. These Four Ps serve as the roadmap to internal integration.

4. Foster Trust
Another way to enhance internal integration is, of course, the trust building. As you know very well, "Build Trust" is the biggest supply chain management buzzword of all time. However, this principle is easier said than done. To build trust the Lenovo way, they make it clear that,

- People should state their intentions before presenting and communicating new ideas (in the meetings) so everyone doesn't have the wrong impressions

- Side conversations are not encouraged

- Be respectful to those who are unable to attend the meetings

- Inter-departmental conflicts should be kept within the leadership team

- Presentations should have clear objectives and they should be sent to other people 24 hours before the meetings

5. Avoid Jargon
Lenovo feels that the extensive use of jargon, technical terms and abbreviations among cross-functional team makes communication less effective. For example, people in accounting department may not be familiar with the words used in sales team such as DOI, FGI, APLA? Then, they create a list of common terms so people can share the same understanding.

6. Use Lean Six Sigma
To improve the operational efficiency and reduce time to market, they implement lean six sigma concept. They also install a daily business management system in shop floor so everyone knows their goals and what to do to achieve the goals everyday.

7. Simplify KPIs
After the acquisition of IBM PC business, Lenovo found out that IBM has more than 100 KPIs to track on regular basis. Then they reduce the KPIs down to 5, namely, cost, quality, delivery, performance, cash conversion cycle. These high-level metrics are monitored and controlled by a cross-functional team.

The driving force behind Lenovo's supply chain excellence lies within the basic principles in supply chain management such as internal collaboration and trust building. Do you think these are things that you can use to improve your supply chain?