7 Lessons from Lenovo Supply Chain

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 the information system and the benefits of the procurement of IBM’s PC business in 2005. In this article, we will show you 7 elements of Lenovo's operations management.

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 room for learning and development.

Inside Lenovo, this principle is called a "Zero Mindset". If you only hang on to past achievements, 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 to 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 ask questions to help to identify the root causes of problems. Then, products can be streamlined and operations and customer service can be improved.

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

4. Foster Trust
Another way to enhance internal integration is, of course, 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 teams makes communication less effective. For example, people in the accounting department may not be familiar with the words used by the sales team such as DOI, FGI, APLA? Then, they create a list of common terms so people can share the same understanding which is good for project management.

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

7. Simplify KPIs
After the acquisition of IBM's PC business, Lenovo found out that IBM has more than 100 KPIs to track on a regular basis. Then they reduce the KPIs down to 5, namely, cost, quality, delivery, performance, and 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 of supply chain management such as internal collaboration and team building. Do you think these are things that you can use to improve your supply chain?

- Qiao, G., & Conyers, Y. (2014). The Lenovo way: Managing a diverse global company for optimal performance. McGraw Hill Professional.

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Last review and update: July 5, 2022
About the Author and Editor:
Ben Benjabutr is the author and editor of Supply Chain Opz. He holds an M.Sc. in Logistics Management with 10+ years of experience. You can contact him via e-mail or Twitter.