{"id":22067,"date":"2017-11-13T22:55:03","date_gmt":"2017-11-14T03:55:03","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/lenovo-utilizing-the-cloud-to-build-the-cloud\/"},"modified":"2017-11-13T23:00:03","modified_gmt":"2017-11-14T04:00:03","slug":"lenovo-utilizing-the-cloud-to-build-the-cloud","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/lenovo-utilizing-the-cloud-to-build-the-cloud\/","title":{"rendered":"Lenovo: Utilizing the Cloud to Build the Cloud"},"content":{"rendered":"

Competitive Landscape <\/em><\/strong><\/span><\/h2>\n

Hardware development is inherently challenging due to rapid product obsolescence, largely outsourced supply chains, high levels of competition and low margins.[1]<\/a> \u00a0Late to the PC game, Lenovo faced an uphill battle as they entered the market through the 2005 acquisition of IBM\u2019s PC business. [2]<\/a>\u00a0 Lenovo\u2019s early adoption of a cloud based platform for supply chain management proved to be a differentiator. The end to end visibility of a digitalized supply chain drastically improved decision management and agility, both key to their success. From 2006 to 2013 Lenovo cut costs by over 50%, improved product delivery 167%, and increased asset utilization 10%, all while doubling unit shipments and maintaining product quality.[3]<\/a> As early as 2013, only 8 years after acquiring the PC business, they were named one of Gartner\u2019s Top 25 Supply Chains Worldwide[4]<\/a>; by 2015 they were the number 1 PC manufacturer in the world.[5]<\/a><\/p>\n

Supply Chain as a Differentiator<\/em><\/strong><\/span><\/h2>\n

By introducing cloud platforms such as GT Nexus, Lenovo is continuing to innovate to achieve full supply chain visibility and use data analytics to cut costs.\u00a0 Tracking all inventory both at the factory and in transit allows Lenovo to minimize inventory costs and shift to data driven procurement. Similarly, step by step digital tracking of finished goods allows for measurable and actionable performance data on logistics partners and direct visibility of customers into expected arrival times.[6]<\/a> \u00a0The digitalization of Lenovo\u2019s supply chain enables them to utilize data driven decision making to respond quickly to changes in both supply and demand.\u00a0 This agility distinguishes them from their competitors in an industry where consumers demand the newest technology immediately and at razor thin margins.<\/p>\n

From PCs to Data Centers<\/em><\/span><\/strong><\/h2>\n

As PC sales are continuing to decline, down 4.3% in 2017 from a year ago, Lenovo is looking to apply similar innovative techniques that worked in the mature PC industry to their new, fast-growing datacenter division.[7]<\/a>\u00a0 By introducing additional cloud platforms such as Elementum to act as \u201cMission Control\u201d for the server supply chain Lenovo is betting on their ability to again differentiate themselves through a highly transparent and agile supply chain. [8]<\/a> Although Lenovo has proven their technological innovation in server performance, receiving 88 #1 World performance Benchmarks in 2017, they are facing an increasingly commoditized market.[9]<\/a> \u00a0Competition for servers is based almost entirely on performance and cost, with little room for brands to differentiate.<\/p>\n

In the short term, Lenovo should leverage opportunities of scale between PCs and servers to improve margins and stay competitive. However, as others move to digitize their supply chains, Lenovo will need to find additional ways to differentiate. One recommendation is for Lenovo to extend their supply chain upstream to include corporate partners in the heavily B2B datacenter industry.\u00a0 By linking their supply chain directly to cloud operators, Lenovo may be able to offer an improved service where large corporate customers can place orders for failing server components automatically. \u00a0Lenovo should utilize existing datacenter management heuristics and machine learning algorithms to identify degrading hardware and trigger an order of replacement parts before failures even occur. \u00a0With datacenter storage market growth estimated at over 14% annually through 2021, this will provide a long term competitive advantage for Lenovo.[10]<\/a><\/p>\n

Potential Obstacles<\/em><\/span><\/strong><\/h2>\n

Will large corporations like Amazon and Microsoft be open to deeper partnerships with their hardware manufacturers? Or will security concerns keep them from aligning a shared digital supply chain with hardware providers like Lenovo?<\/p>\n

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 <\/p>\n

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[1]<\/a>\u00a0“Lenovo expands commitment to supply chain visibility with GT nexus” Noticias Financieras, 2015, Jun 10,\u00a0URL<\/a>, ABI\/INFORM via ProQuest, accessed November 2017.<\/p>\n

[2]<\/a> Tim Bajarin. \u201cHow Lenovo Became a Global PC Powerhouse After IBM Deal.\u201d\u00a0Time, Time, 4 May 2015, time.com\/3845674\/lenovo-ibm\/.<\/p>\n

[3]<\/a>\u00a0“Lenovo named among gartner’s top 25 supply chains worldwide”\u00a0Entertainment Close \u2013 Up, 2013, Jun 12,\u00a0URL<\/a>, ABI\/INFORM via ProQuest, accessed November 2017.<\/p>\n

[4]<\/a>\u00a0Ibid.<\/p>\n

[5]<\/a>\u00a0“Lenovo expands commitment to supply chain visibility with GT nexus”\u00a0Noticias Financieras, 2015, Jun 10,\u00a0URL<\/a>, ABI\/INFORM via ProQuest, accessed November 2017.<\/p>\n

[6]<\/a>\u00a0Ibid.<\/p>\n

[7]<\/a> King, Rachel, \u201cChina’s Lenovo to Reboot After Losing PC Crown to HP.\u201d Wall Street Journal, 12 July 2017, URL<\/a>, via Factiva, accessed November 2017.<\/p>\n

[8]<\/a> \u201cLenovo boosts supply chain visibility and performance with elementum.\u201d Business Wire, 2016, Nov 17, URL<\/a>, ABI\/INFORM via ProQuest, accessed November 2017.<\/p>\n

[9]<\/a> \u201cLenovo Seizes 88 #1 World Performance Benchmarks.\u201d Dow Jones Institutional News, 9 Nov 2017, URL<\/a>, via Factiva, accessed November 2017.<\/p>\n

[10]<\/a> \u201cGlobal data center storage market is expected to reach US$ 29 billion till 2021; finds new report.\u201d, M2 Presswire, 2016, Nov 24, URL<\/a>, ABI\/INFORM via ProQuest, accessed November 2017.<\/p>\n

[Picture]\u00a0\u201cData Center.\u201d\u00a0Pulse, 4 Sept. 2015, www.pulse.ng\/news\/tech\/tech-launch-lenovo-launches-enterprise-data-center-solutions-id3638741.html<\/p>\n","protected":false},"excerpt":{"rendered":"

Can Lenovo utilize the digital supply chain that enabled their success in the PC industry to become a leading datacenter hardware provider?<\/p>\n","protected":false},"author":10010,"featured_media":22068,"comment_status":"open","ping_status":"closed","template":"","categories":[2123],"class_list":["post-22067","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-digitalization","hck-taxonomy-organization-lenovo","hck-taxonomy-industry-electronics","hck-taxonomy-country-china"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"\nLenovo: Utilizing the Cloud to Build the Cloud - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/lenovo-utilizing-the-cloud-to-build-the-cloud\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Lenovo: Utilizing the Cloud to Build the Cloud - 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