H-P, Eastman Chemical,

and Others: The

Benefits and Challenges
of SCM Systems

Presented by
Titto Rohendra

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Company History
„ Hewlett Packard „ Eastman
… Founded in 1931 by
Bill Hewlett & Dave
Chemical
Packard Company
… First product made … Founded in
by H-P was a
precision audio 1920 to supply
oscillator basic
… Acknowledged by photographic
Wired Magazine as chemicals
the producer of the
world’s first PC in … Eastman was
1968 once a part of
… Introduced world’s the Eastman
first handheld
calculator in 1972 Kodak
… In 1984, H-P Company
introduced both ink … Became
jet and laser printers
for the desktop independent in
January 1994

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 Hewlett-Packard
„ CEO of H-P is Carly Fiorina
… First woman to ever serve as CEO
of a company included in the Dow
Jones Industrial Average
„ In 2003, H-P had 142,000 employees
„ Sales for 2003 were over $7.3 million.
„ H-P is a leading industrial supporter of
Open Source and Linux.
„ Products include HP-UX operating
system, PA-RISC processor
architecture, IA64 processor
architecture w/ Intel, Utility Data
Center, and the Open View family of
management software.
„ Competitors include Sun, Microsoft,
and International Business Machines. 4
„ CEO is J. Brian Ferguson
„ Has approximately 15,800 employees
in more than 30 countries
„ Sales for 2003 were approximately
$5.8 million
„ Supplies billions of pounds of
chemicals, fibers, and plastics to
customers around the world
„ Plastics products are used in
packaging for soft drinks, credit and
debit cards, vending machines, and
many other products.
„ Competitors include BASF AG,
Celanese, and Dow Chemical

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 RWC 4: Page 215: “H-P, Eastman Chemical, and Others: The Benefits and
Challenges of SCM Systems”

Definition: Supply Chain Management (SCM)

SCM helps a company to get the right products to the right

place at the right time, in the proper quantity and at an
acceptable cost. The efficient management of these
processes is the goal of SCM. SCM contains that companies
must controlling inventory, restructuring the network of
business relationships, and increasing the communications
among the business partners.

H-P linked together all the companies whose

products go into making its computer monitors. H-P
handles the purchasing and gets a bulk rate.

► The number of H-P staff required to manage the supply

chain for its monitors has been cut in half because the
communication an cooperation among the supply chain
members has been improved.
► H-P is no longer losing orders because it could not deliver
the right product at the right time.

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 RWC 4: Page 215: “H-P, Eastman Chemical, and Others: The Benefits and
Challenges of SCM Systems”

“You do not have to

be a goliath
like H-P to see the Statement of
benefits. We believe Bernard Cheng, CEO of Advanced
in the technology International Multitech Co.;
Manufacturer with $ 70 million annual revenue
to get involved with – invested $ 3 million in IT solutions.

businesses.”

Manufacturer, which generates revenue of

$ 5.3 billion a year and orders huge
quantities of raw materials on a daily basis.

► Eastman Chemical Co. invested $ 10 million on its e-

procurement system and extranet.

► The company asks its software partners to make

presentations to its suppliers pointing up the advantages
of going digital.

► The purchase department handles orders and other

exchanges of data electronically (supported through web
connections).

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 RWC 4: Page 215: “H-P, Eastman Chemical, and Others: The Benefits and
Challenges of SCM Systems”

W. W. Grainger Inc. says that a fast growing

piece of its business likely could not exist
without online connections.

The company deals with 14,000

► For suppliers hawking more than five
example: million products (mainly oddball
items).
Notice:

SCM is often executed by very huge companies which

generate billions of revenues. However, smaller companies,
which make up 95 % of the 6.6 million businesses in the US
are afraid of SCM implementions.

► They are concerned about the cost of the new

Why? systems.
► They think about classic supply chain issues in
simple terms and can not handle the often
impenetrable technical jargon.

The smaller Statement of Bill Burke,

suppliers The president of First Index,USA
feel threatened by (core competence: online
Marketplaces)
the whole thing.

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Case Study Questions

1. Why can both large and small

businesses cut costs and increase
revenues by moving their supply
chains online? Use the companies
in this case as examples.
2. What is the business value to
Eastman Chemical and W W
Grainger of their initiatives to help
their suppliers and customers do
business online?
3. Why are many small suppliers
reluctant to do business online with
their large customers? What can be
done to encourage small suppliers
online?
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