Supply chain considerations cause HP to retain PC division

     

In a demonstration of how important the supply chain can be to a company's success, HP recently reneged on its earlier assertion that it would shut down its long-running PC division. The company announced that it reached the decision after thoroughly investigating its potential impact.

As it turns out, the PC division is too ingrained within HP's supply chain and procurement programs to be eliminated. The investigation revealed that the cost of taking the PC division out of these areas was too much to justify selling it off or closing it altogether.

describe the image

"I have a lot of confidence we've made the right decision and now we're going to go back to work and go execute," new HP CEO Meg Whitman told the Associated Press.

Whitman recently took over for the now-departed Leo Apotheker, who first announced the plan to shutter HP's PC division in August. Whitman added that removing that area of the overall company "makes no sense," according to the AP.

"The fact that Meg pushed this decision very quickly is absolutely cleaning up the mistakes of the past," Gartner analyst Mark Fabbi, told the news provider.

Ultimately, analysts and industry experts said that HP made the right decision to keep the division under its wing. For one, the enormity of its operations would make it difficult to separate it from the rest of the business, Steve Diamond, an associate professor at Santa Clara University School of Law, told the AP.

He compared the effort to the difficult surgery for separating conjoined twins.

"It's very, very difficult to do and you don't know how it's going to come out," he said, according to the AP.

Overall, this shows what supply chain management can mean for a company. In essence, HP decided against its original announcement because it would prove too damaging to the community of business partners it no doubt built through tireless efforts.

That's because when supply chains run smoothly, companies are better equipped to deal with certain issues, and they can use their relationships with other organizations to foster business growth.

A strong supply chain is one of the reasons that many experts believe Apple will continue its high performance even without Steve Jobs at the helm. Earlier this year, market research firm Gartner recognized Apple as having the top supply chain as part of its Supply Chain Top 25 for 2011.