HP launches Canadian PC manufacturing facility

Hewlett-Packard (Canada) Ltd. Thursday formally announced the opening of a new PC manufacturing facility in Toronto that executives said will help the company reduce order/delivery cycle times by 78 per cent.

Lloyd Bryant, vice-president

and general manager, Personal Systems Group, HP Canada, said before the facility the subsidiary had an order-to-delivery cycle time of 15 to 25 days. With this facility, that cycle time has been reduced to five to eight days.

The move is expected to help HP Canada’s distribution partners Ingram Micro Canada, Tech Data Canada, Synnex Canada and Multimicro, Bryant said.

“”This is a level one manufacturing site and we are building PCs in Canada. It gives us a competitive advantage, reduces order cycle time and puts us in a better position with inventory and helps to reduce mutual inventory costs across the value chain with our partners,”” Bryant said.

Inventory is a significant cost, Bryant added. When orders come in, HP Canada would ship PCs to distribution. If a customer changed its mind, HP and the distributor would be stuck with inventory no one wanted.

“”We can now decrease inventory in the channel on finished goods. We can drive cost out of the model and have increased flexibility,”” Bryant said. “”It’s easier with a local site to reconfigure (PCs) based on customer demand.””

Murray Wright, president of Ingram Micro Canada in Mississauga, Ont.cited improved inventory management the biggest from a distribution perspective.

“”The pressure is on margins in the marketplace, and inventory management become crucial to improving HP’s delivery,”” he said.

Wright said improved inventory management will also give everyone an opportunity to maximize working capital better, especially if HP can reduce its order/delivery times.

HP’s PC facility has been in operation only a month and has already produced 10,000 D530 commercial business desktops. The D530 comes in three models: small form factor, convertible mini-tower or ultra-slim desktop.

HP Canada, currently the market share leader in PC sales this quarter according to recent IDC Canada figures, will not use this new facility to manufacture PCs for outside of the country.

Bryant added that the new facility will help the subsidiary go after incremental business, but that incremental business was not part of the original business case for the manufacturing plant.

“”Any incremental business is just pure upside,”” he said.

Wright said the important message is time to market, and HP is focused on that. “”If they can shorten delivery cycles it will help them and will benefit distribution and the reseller,”” he said. “”If we all manage this process better they will get some leverage from this. Will they take more market share away from Dell? Well, we’ll have to wait and see.””

HP Canada has also made an investment in upgrading its software and hardware solutions for order management with Web-based forecasting, tracking and demand/supply matching tools.

Prior to its merger with Compaq Computer Corp., HP operated a manufacturing facility called CanBuild, which it closed in May of last year. Digital Equipment Corp., meanwhile, ran a facility in Kanata, Ont., which was such down after it merged with Compaq in 1998.

Bryant said he was unable to give the facility’s location and how much square-feet it has for security reasons, except that is was similar to the pre-existing HP warehouse in Toronto. Bryant also refused to say how many PCs the facility could produce in a day.

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