Collaboration in the Cloud: Lenovo and E2open Achieve Valuable Supply Chain Innovations

The cloud-based solutions offered by E2open have added significant value to Lenovo’s global supply chain operations in a number of key areas. 

• First, the any-to-any platform extends value to trading partners immediately. This platform has also cut costs associated with testing and infrastructure maintenance. 

• Second, the streamlined procurement processes have enhanced automation and collaboration and have helped to protect the confidentiality of pricing agreements. 

• Lastly, the E2open solution has enabled the convergence of physical and digital supply chain networks to enhance control over operating system software activation keys and to reduce the risk of error or fraud.

David Gillon, Executive Director, Global Supply Chain speaks:

How is Lenovo innovating and improving its supply chain strategy with E2open?

Taken together, these innovative cloud-based solutions promise to improve Lenovo’s operational performance—particularly from the customer perspective—with significant potential to drive lower costs.

Key Objectives & Lenovo's Global SCM Strategy

Lenovo identified the following key objectives as part of its overall strategy to build a world-class global supply chain:

Leverage cloud-based systems to reduce operating costs, improve IT flexibility, and deliver superior customer experience

Reduce the cost and time to onboard new trading partners

Enable a real-time, consolidated view of processes and operations, providing a “single version of the truth” for Lenovo and its partners

Eliminate the need for manual intervention

Enable collaborative execution of key supply chain processes, including order-to-cash, procure-to-pay, and inventory management

Achieve convergence of physical and digital networks to increase cost savings and service levels

Consistent Strategy:

A Focused Plan:

Advanced Cloud Platform Simplifies Supplier Management and Facilitates Collaborative Supply Chain Execution

"The cloud platform provided by E2open is part of the solid IT foundation we are putting in place to realize our vision through better visibility and control across the end-to-end global supply chain."

-Gerry Smith, Senior Vice President, Global Supply Chain, Lenovo

To begin, Lenovo deployed E2open’s any-to-any cloud platform, enabling the company and its partners to exchange data in any preferred payload format and protocol (regardless of technical sophistication). In this way, Lenovo has automated manual processes and buyers now can operate in a real-time, collaborative manner. E2open’s optimized on boarding methodology extends value to trading partners immediately, offering them self-configuring connectivity options and eliminating costs associated with testing and infrastructure maintenance.

Business Benefits:

By leveraging E2open’s cloud platform and deployment resources, Lenovo has realized the 

following business benefits to date:

• Reduced on boarding time by 85%
• Reduced IT costs by 53%
• Reduced IT management costs associated with supplier integration by 70%
• Faster supplier adoption due to lower costs and ease of doing business
• Global availability with reliable performance and rapid change management

Next, Lenovo’s supply chain organization and E2open designed solutions to extend the value of the cloud to two important areas of its operation: centralized procurement and software license management.

Centralized Procurement

By leveraging E2open’s solution, Lenovo now has direct control of strategic components purchasing using automated procurement processes from a single hub in Hong Kong.  The solution offers the following functionalities:

• Complete automation and tracking of the order-to-cash and procure-to-pay processes
• Elimination of the need for manual touches and data aggregation 
• Support for discrete orders and blanket orders/scheduling agreements
• Purchase order (PO) collaboration between Lenovo and its suppliers and contract manufacturers
• Confidential pricing agreements with key suppliers

The Lenovo procurement solution also provides support for its global service network, enabling post-sale, warranty, and service providers to purchase their materials at lower, pre-negotiated prices. Specfically, Lenovo’s procurement solution has yielded the following benefits:

• Improved cash conversion cycle
• Strengthened market competitiveness through reduced purchasing costs of core commodities 
• Improved supply assurance and supply allocation abilities
• Cycle time on supplier responses reduced from hours to minutes

Software License Management

Lenovo leveraged E2open solutions to enable the seamless and rapid flow of license key data between the company and its software partner, a capability necessary for digital key ordering, build reporting, and centralized tracking. The E2open cloud-based database provides a single point of visibility across the life cycle of the digital keys, including real-time tracking of all digital transactions, and reporting on deliveries and consumption by location. Further, the solution monitors the write off of unusable keys and gives Lenovo the ability to trigger investigations at non-conforming locations.

“The E2open solution enables us to buy and track digital keys from our global operating system provider—eliminating the need for manual intervention and allowing us to significantly reduce the risks of error and fraud for both Lenovo and our partners,” Gillon explains.

The combined excellence achieved by both the companies was highlighted when they made it to the Gartner Supply Chain Top 25 list for 2013.

With this optimized and cost-friendly direction that Lenovo has decided to take to excel in its Global Supply Chain Management principles, are we heading towards a cloudy environment? 

Please leave your comments and thoughts.

Sources:

http://info.e2open.com/rs/e2open/images/E2open_Case_Study_Lenovo.pdf

https://supply-chain.org/f/Zapko-Inside_Lenovos_Hybrid_Supply_Chain_Strategy.pdf

http://www.gartner.com/technology/supply-chain/top25.jsp

http://www.industryweek.com/articles/lenovo_can_see_more_clearly_in_the_cloud_27361.aspx