October 31, 2007

Carly goes deep

By DC Velocity Staff

Could integrated supply chains provide a model for governments and other institutions on how to collaborate on initiatives to thwart terrorists or respond to disasters? Former Hewlett-Packard CEO Carly Fiorina suggested as much last week in the opening keynote address at CSCMP's annual conference.

"What you folks do in the supply chain is tough," she told her audience. "Companies and organizations are naturally oriented vertically. Supply chains have to be horizontal, so what you do cuts across the grain of the entire operation."

Fiorina noted that she firmly believes horizontal thinking is critical to business success in the 21st century, and she went on to point to successful supply chains as the best example of that. She explained that when she took over at HP, it had 87 separate business units, each with its own supply chain. "I don't know how the company could have thought 87 different supply chains was a good thing," she said. "It not only kept us from being able to focus clearly enough on the customer, but it also meant we couldn't leverage the scope of our company."

Under her stewardship, HP boiled down its operations to five supply chains. That improved customer service and saved the company upwards of $1 billion annually. It also taught Fiorina a lot about the difficulty of change and the importance of collaboration.

"I've been the subject of change in an organization, and I've been the leader of change," she said. "It's never easy. It's naturally resisted. That's one of the reasons I have so much respect for what goes on in logistics and supply chain. The supply chain cuts across all aspects of a business. As a result, logistics and supply chain represents one of the principal drivers of change in the business world today."

Integrating 87 disparate supply chains into just five also required a good deal of internal collaboration. "We had a wonderful set of products and services that were available to offer the customer an integrated solution to their needs," she explained. "But because of our supply chains, we could not get the integrated solution to the customer in a simple, unified, and integrated fashion. Essentially, our customer service performance didn't match the capabilities of our products. We were not paying attention to how our internal processes benefited—or more often, didn't benefit—our customers."

Fiorina believes the lessons HP learned about the value of collaboration can be applied beyond the world of business. She pointed to Hurricane Katrina and the 9/11 attacks as cases in which government agencies' failure to collaborate resulted in less than desirable performance. In the case of 9/11, for example, there was a notable lack of coordination among organizations like the FBI, the CIA, and local and state law enforcement agencies, she said. "Because all these entities were operating in their own operational silos, we missed some clues as to what may be coming and we may have missed a chance to stop it."