Future-Proof the Supply Chain With Lenovo’s SVP, Che Min Tu

Hello, my name is Thomas O'Connor and welcome to another episode of the Gartner Supply Chain podcast where we sit down with some of supply chain's best thinkers, innovators and leaders to share with you the most up-to-date strategic insights and tactical tips you need to drive supply chain success. And joining us today is Xie Min Tu, often referred to by his friends as Jamie, the Senior Vice President and Group Operations Officer at Global Technology Leader, Lenovo. Jamie, it's great to have you with us today. Yeah, thank you, Thomas, for having me here. Thank you. My absolute pleasure, mate, and it's great to have you with us today as we're talking about a topic in terms of the turbulent world of supply chain that I think is really important and really relevant for Chief Supply Chain Officers and other supply chain leaders across the world. And it requires us as supply chain leaders to really think about both our short-term responses but also, and importantly, where we're going to focus more about discussion today on how to future-proof our operations. We, of course, need to recognize that, yes, we do need to tackle those challenges as they arise in the short term, but we also need a clear strategy for the future. And Jamie, can you share how Lenovo's supply chain is strategically investing to future-proof your operations and thereby ensure your business can effectively deliver value both today and into the future for the wider organization? Yeah, thank you, Thomas. I think the supply chain is constantly evolving in today's geopolitical climate. And as you probably know, our goal as Lenovo is to build a very solid customer-centric and open-minded supply chain and work in cooperatively with all our ecosystem in the supply chain. And as you know, we also use a tool like Continuing Investing on the Digital Transformation and a lot of generic tool in order to provide this kind of resilience, a forward look in the supply chain. Makes absolute sense, mate, and I really like how you framed it around being open-minded as part of this effort, because that's, of course, something which is strategically important for us as we think about where we may need to pivot, how we need to adapt. And that agility that comes with it is really important to future-proofing operations. And there's a topic that I've associated with Lenovo for some time now that I'm hoping we might be able to dig into a little bit more deeply. And that's this idea of global local production, something that you've been talking about in your business for some time. And it sounds great in theory, but for many supply chains, they struggle to figure out how to actually execute it or to plan it out to actually make it real for their business. So can you share with us how it's delivering impact as well as maybe some of the challenges it might be bringing at Lenovo? Thomas, I mean, today, if you see most of the technology giant in the world, right, they do have a global supply chain capability. However, for Lenovo, we are very different in the sense that we also own our own manufacturing footprint globally, not only rely on our partners. So our global supply chain leverage is a global local strategy that allow us to even enhance our operational efficiency, that put us very different to our competitors. If you see today that we have operated globally about 30 manufacturing sites, and we are also serving more than 80 plus global market and handle more than 2000 global suppliers. What is different to Lenovo is that we are not only handle the tier one supplier, which most of our competitors are doing, but also we handle the tier two suppliers where our competitors leverage the ODM to handle the revenue. So we are very different in that sense. So by diversifying our manufacturing and the supply chain hub worldwide, we really bring the manufacturing even closer to our customer, which meet our goal, right, to have a more customer-centric kind of a supply chain. And at the same time, this strategy also enable us to mitigate the risk to meet customer need, even when we see a lot of uncertainty like today. So I think we are also spending continuously our local reach, as you probably know that we are strategically, we have been announcing the cooperation was a lot. And through the a lot, we can accelerate even ongoing transformation, diversifying our manufacturing footprint, strengthen resources and also establish a manufacturing hub even in Saudi Arabia. And in February last month, we celebrate our official groundbreaking of our new manufacturing site in Riyadh, Saudi Arabia. And this is a 200,000 square meter site that were manufacturing in the future, millions of Saudi made a PC, desktop and even server a lot of other product. And also the goal of this new facility is to further nanobots presence in the region, Middle East and Africa and especially in Saudi Arabia. And extending the company's extensive manufacturing footprint, which we already have a facility like in Argentina, Brazil, China, Germany, Hungary, and so on and so forth, and Mexico and even US. And we are also established a regionally coded data in Saudi Arabia and the flagship a retailer space as well. And we will continue to expand our investment in R&D marketing in KSA and also the Middle East region. And therefore, I think our supply chain strategy is very simple and clear, right? And we will go beyond the manufacturing for global and local, but also we are continue building our global local ecosystem with the supplier in the key market. As you know, we cannot build the entire ecosystem by our own. So we need to be very cooperative with all our suppliers and whether through the optimizing the distribution center location or ensure the most efficient and logistic routing, we are continue going to drive the cost optimization and enhance our service ability. And I think this is a strategy will continue to ensure we will position in any of the global environment. Yeah, absolutely makes sense. And that proximity to customer, the agility that that must provide you is a huge advantage. But I totally also understand the complexity that must exist around the localized supply that you've been talking about there and the challenges that that really does bring forward. Is there maybe any other components around the challenge side of this global local production strategy that you'd be able to highlight for us? I'm really aware that, you know, these things are tough to execute and that ecosystem management component definitely sounds like a component which you obviously have built a great skill at. But to get to that point of executing, there must have been a number of challenges along the way. Yeah, I think Thomas clearly to diversify the manufacturing footprint globally, right? One, we need to make sure we are able to mobile manage our inventory well. As you know, if you are going to build one more factory, then you need to manage one side of inventory even more. And then the inventory build up will cost you a cost of capital. And that's why we are very, very careful. And luckily, as you are aware, we continue to invest on digital transformation and then continue to invest on the AI, the generic traditional AI capability has even we continue to expand our manufacturing footprint globally, we are able to reduce even our inventory lower. And then if you see the result in the previous couple quarters, right from the PC point of view, the inventory level we have is probably the lowest, however, the serviceability is probably by far the best. And this further prove our capability to manage even the further spread of the footprint of manufacturing globally. The second for sure is the talent. You know, nowadays, there's always a shortage on the talent everywhere, but from the local point of view, we continue to leverage our strengths and then we build global local, not only on the manufacturing, but continue to build the talent pool everywhere. And therefore, we continue to leverage our resources local and to fulfill some of the gap there. So I think from the talent point of view, from the technology point of view, are the two key areas that continue to support our global local kind of footprint manufacturing capability. It makes absolute sense. And I'd love to dig in a little bit more, especially on that technology side. As of course, you know, almost every organization has some form of digital transformation going on. There's numerous investments that are going on in terms of artificial intelligence, whether that's traditional artificial intelligence, generative AI, a combination of the two. And so how does that component, especially around AI, how does that fit into your future proofing your operations component? You started to hint at it a moment ago, but I'd love to just dive a bit deeper if that's okay. Sure. I think the leverage AI is not the new theme in many of the companies, especially in the technology or supply chain operation companies, right? However, for NELOBO, we have been using the traditional AI for a long time already. The famous one is the SCI, so the supply chain intelligent, where we use the machine learning and AI technology to analysis, and even to propose the solution to automatic control and the daily supply chain operation. And this has been a result of very good improvement on the on time fulfillment. And at the same time, we have been able to connect and leverage more than 75% of the information from the key suppliers and almost all the audience partners information into the platform. And then if you see today, right, more than 80, 85% of the supply chain data is already consolidated in this SCI, and this has been helping us to reduce the decision-making time by more than 60%. And therefore improve the productivity, but also improve the customer satisfaction there. So in addition to the traditional AI capability, we are not also start to use the gen AI capability, right? So last year, we officially introduced the iChain, which is the first kind of a supply chain AI agent. And then this clearly put us a step further to compete with our competition and even provide a better service on the supply chain side. So the iChain connect the cross-functional teams, global suppliers carriers, and even the customers within the supply chain ecosystem. And this further improve our supply chain capabilities. And even going forward, right, the iChain will even target more complex scenarios and then the user cases, and they will provide even more up there and then automatic solutions to the supply chain. I think very important to mention not only all these technology or AI capability, but I think what is unique in NetLogo is that in the geo organization, we are also able to connect the end-to-end. I think in the global operation in NetLogo, this group really enabled the end-to-end cooperation with partners. I think by leverage the diverse team across group operation organization here, I also want to share a little bit more on the group operation here in NetLogo. In addition to supply chain global supply chain, we also have a sales operation. We also have a very famous NetLogo experience group. And then we also have alliance team. And most importantly, we also have a NetLogo group, these two transformations set into the group operational organization. And that's why we are able to have a more end-to-end cooperation. And probably you are also aware in NetLogo, we have a solution in the service group, SSG, and we are also famous for NetLogo power by NetLogo. And therefore, as you can imagine, our excellence in the supply chain also give us a lot of opportunity to sell to our customers. And therefore, NetLogo power by NetLogo strategy, I would say pretty successful by leverage our capability on supply chain. And therefore, even in his own capability to leverage even more AI technology there. I absolutely understand where you're coming from here, mate. And it sounds like the AI solutions that you've been deploying for some time are really driving business impact. The AI agent approach, this agentic AI, sort of a buzzword from the last, we'll call it six plus months, is already in deployment at Lenovo, which is fantastic. One of the challenges that a lot of supply chain organizations do face, of course, when it comes to artificial intelligence is trying to find the right way to integrate it amidst legacy processes and change and adapt to those legacy processes. So it starts to tie in on some of the talent and process angles here. How have you been thinking about that as you've been deploying these new solutions? Maybe this generative AI agent that you've just been referencing would be a really interesting piece to understand how you're thinking about integrating that with traditional ways of working in the business. Yeah, sure. I think Thomas, since 2017, we have been on our digital transformation journey in the supply chain. And to be honest, it's not only in the supply chain by an entire company. And now we have entered into our so-called the digital transformation 2.0 phase. And this is a center on our vision of creating a connected intelligent human machine ecosystem. And this is another very important piece of our digital transformation 2.0 journey is the hybrid AI. And hybrid AI combines traditional and the gen AI to achieve even a better performance, adaptability and even efficiency in the complex programs. And when we see this kind of a huge potential with AI, and as you already pointed out earlier, we know this powerful technology will require a very effective management. And this is why we prioritizing hiring the best talent to create teams and committees that understand an opportunity as well as challenge of AI. And our chief security and the AI officer, Doug Fisher, also play a very, very important role here in AI governance across the company to safeguard the process when we deploy the AI. Got it. I really think that collaboration that you just started to talk about at the end there is fundamental to this sort of the effective deployment across wider supply chain organizations. Now, Jamie, we do try to keep these podcast episodes relatively tight in terms of the length of podcasts. And so as we're coming towards the end of it, I'm hoping we might be able to close with you providing a couple of pieces of maybe practical advice for our listeners. As we come back to that idea of future-proofing the supply chain, so we've heard from you about the global local strategy as a key pillar. We've heard about technology as a key pillar. But if you were to give some practical advice to our listeners, chief supply chain officers, other supply chain leaders across the globe are looking to tackle this challenge of future-proofing their supply chains, what sort of advice would you give them? Yeah, I think as I mentioned, at the start of our conversation, the best operational leaders are open-minded, as we mentioned, and then they keep customers knit at the center of every strategy. And to be honest, our goal is very simple. And our goal is to place the global customers both direct and indirect at the center of our supply chain, and by fostering an open, cooperative ecosystem, and at the same time leverage the digital transformation investment and integrating GNI and hybrid AI technology to build a resilient, high-quality and adaptive supply chain. So I think that is our goal, and I believe that will be a good kind of guidance for the entire supply chain available moving forward. Brilliant. Thanks for sharing that, Jamie. That's really great advice for our supply chain listenership here that are joining us today. We really do appreciate your time. I get how busy you are. And hopefully it gives our audience some useful insight into how they can effectively future-proof their own supply chain driven businesses. Yeah. Thank you very much, Thomas, and it's my pleasure to join the broadcast of Gartner, and I hope I can share the information to our colleague in the supply chain community. Thank you. Fantastic. And thanks again for my inmate. And of course, to our audience, a huge thank you to you as well for joining us for another episode of the Gartner Supply Chain podcast. And as you expect from us here at Gartner, we have a lot of research time to the topic of future-proofing supply chains. In fact, some of you may recall a recent episode that looked into the future of supply chain, which is quite helpful when it comes to this topic. Gartner clients, if you'd like to further explore insights into the future of supply chain and how you can adapt your operations, you can do so via our enquiry service, access our research by going to Gartner.com, or simply click on the links in the show notes. Finally, if you've enjoyed our show today, please be sure to go to Gartner.com, Apple podcast, Spotify, or wherever you've listened to our episode, and give us a five star rating as well as subscribe to make sure you're notified once our next podcast is released. My name's Thomas O'Connor, and I can't wait to be speaking with you all again real soon on a future episode of the Gartner Supply Chain podcast. Bye for now. You can learn more at Gartner.com. All content in Gartner podcasts is owned by Gartner and cannot be repurposed or reproduced without Gartner's consent. Gartner is an impartial independent analyst of business and technology. 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