In 2016, Lenovo held a 21.1-percent share of the P.C. market, according to director of global operations strategy John Kagan. Now it's looking to bump that number up to 30 percent. But the goal isn't reachable without a whole new approach to serving the customer, he said.
China-based Lenovo has been a major force in global computing ever since it acquired the P.C. division of IBM in 2005. Since that time, it has steadily increased sales and market share, snatching the number-one spot in P.C.s away from Hewlett Packard in 2013. Along the way, it also acquired IBM’s server business and the Motorola Mobility division of Google.
It hasn’t been a completely smooth ride. Lenovo’s mobile-phone business has flagged in recent years, even with the Motorola deal. It dropped out of the top five smartphone vendors, and top ten mobile-phone makers, in early 2016, suffering a 33-percent decline in global smartphone sales, according to Gartner.
Lenovo chief executive officer Yang Yuanqing isn’t taking any of this lightly. A year and a half ago, he announced a shift in the corporate culture “from product-centric to customer-centric,” according to Kagan.
Given that virtually every business today declares itself to be “customer-centric,” it was hardly an earthshaking announcement. Yet considering the huge changes in the customer experience that have been brought about by the internet and e-commerce, it was an essential one.
Lenovo has assigned itself the task of discovering the customer’s “pain points,” said Kagan, speaking at the recent 9th annual Hi-Tech Supply Chain Summit USA in San Jose Calif., presented by Eyefortransport Ltd. Again, that would seem to be an element of Business 101. But in the age of the omnichannel, it’s becoming an increasingly difficult goal to nail.
It requires attacking the problem on a number of fronts, including constantly monitoring review sites, scouring the internet for additional comments on the company’s products, conducting surveys, and even making customer visits. The idea, said Kagan, is to create a “closed-loop” process, whereby Lenovo undertakes improvements in its global supply chain based on the input it receives from that multitude of sources.
Specific pain points to be revealed include time to quote, product quality, on-time delivery and technical support (does anyone ever feel anything other than pain in that last category?). At the same time, Lenovo needs to know what it’s doing well – when its products are living up to buyer expectations and considered good value for money, and when account teams are successfully building strong relationships with customers.
No single initiative or information system can achieve the lofty goal of becoming “customer-centric.” In Lenovo’s case, it means the implementation of integrated planning for supply and demand across the P.C. business. Previously, said Kagan, the company was juggling a variety of tools and processes, which “degraded” planning efficiency and accuracy.
Targeted for redesign is the company’s order visibility portal (OVP), its primary means of communicating order status to customers. Planned ship date logic (PSD) is also being retooled, in order to improve accuracy and align factory planning with fulfillment requirements. At the same time, Lenovo is strengthening its sales and operations planning (S&OP) process, and developing a new set of supplier-collaboration tools in order to achieve end-to-end visibility of supply. (Yet another capability that is fast becoming a ticket for admission, rather a competitive advantage.) The venerable Collaborative Planning, Forecasting and Replenishment (CPFR) model is playing a key role in Lenovo’s linking up with major retail accounts and business partners.
On the delivery end, Lenovo is seeking improvements in speed, accuracy and communications with the end customer, pursuing individual projects for each metric. It’s adopting “aggressive” delivery targets, expressed in calendar days instead of business days. (That means coordinating weekend work across the supply chain, to preserve ship and delivery targets.) And it’s looking to increase the percentage of automated orders, with an eye toward eliminating the delays caused by manual orders and the need for human intervention. The goal, said Kagan, is to provide a first promised ship date within 24 hours, with 100-percent accuracy.
All of this is supposed to lead to a more accurate forecast, reduced order errors and fewer days of inventory – with the ultimate intention, of course, of boosting customer satisfaction.
It’s all part of a plan to shift into “attack mode,” said Kagan. But what exactly is the company attacking? Not so much rival P.C and mobile phone makers as the relentless efficiency and dominance of Amazon.com, the benchmark for e-commerce service. “We want to ensure that we’ve got an Amazon-like experience,” he said. That means executing flawlessly on immediate orders, as well as those deliberately postponed by the customer.
Lenovo is, of course, just one of countless traditional manufacturers that are striving to bring their supply chains into line with the demands of modern-day e-commerce. Such a transition is never easy, especially when the innovators have opened up a commanding lead. Any company today that announces its intention to become “customer-centric” is essentially admitting that it failed to meet this most basic of metrics in the past. No one, after all, has set a goal of providing a “Lenovo-like experience.” Even the most successful businesses can suddenly find themselves playing catchup.
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