HP Supply Chain Challenges

In relation to this week’s topic about supply chain challenges my blog is about the HPs initiative to ship their product from central china to Europe, and highlight the challenges they face underway.

The labor in the coastal areas of china is seasonal. People come for job from the central regions to coastal parts generally at the end of a lunar year. They live in dormitories and have all the diversity in cousins and dialect. As they are away from home it adds to workplace stress.  They usually work until the spring break and go back to their families for holidays. They may or may not come back. And consequently labor becomes a challenge for coastal companies. To address this challenge instead of putting the people on train HP put the PC on train and take the manufacturing facility closer to the labor making it less stressful and more convenient for them.

The problem with Trans-Siberian railroad was that to get to Europe all the way from Russia through central china was happen to be a very long route. The logistics at HP worked with china’s ministry of rails, Kazakstan railway, and Germen Rail Company to develop a new route. HP was pioneer in developing this route. They have 33 trains, 1 every week that delivers the laptop and printers to European market in 21 days. The one way transportation could not have been feasible for anybody. So on a return route, BMW (BMW), Audi, and Volkswagen (VOW) are shipping auto parts produced in Germany east to their assembly plants in China.  

The third challenge before them was the environmental sustainability. The sea transportation as per there calculation of carbon intensity is 57 times less carbon intensive than air transportation. Trucking are the most at 72 times intensity, and rail being half way at 25 times is the second preferred environmental friendly mean for HP after sea. Shipping one container by train costs one-third the price of air transit.

To sum it up, 21^st century supply chain challenges such as environment concerns, labor availability, transportation will continue to force the companies to maneuver their tactics in the future years ahead. 

http://www.businessweek.com/articles/2012-12-20/the-silk-railroad-of-china-europe-trade