HP Supply Chain Chief: ‘We Are Going On Offense’

‘We’ve got to think differently. What’s become the key is resiliency. I want to think of resiliency as insurance … it’s this idea of mitigating against potential points of failure,’ says Ernest Nicolas, HP’s new chief supply chain officer, at the partner-focused Amplify Executive Forum.

HP’s Ernest Nicolas (Photo by Shane Snider)

Ernest Nicolas may have only started his role at HP Inc. in May, but the supply chain veteran is already forging a bold game plan for the IT giant.

“We are going on offense,” Nicolas said.

HP executives spent a good chunk of time Thursday during the partner-focused Amplify Executive Forum 2022 talking about supply chain issues. It was a strikingly candid and rare public discussion about supply chain specifics from a major vendor. And Nicolas, in company’s newly created position of chief supply chain officer, appears to be HP’s secret weapon in the fight to maintain supply consistency.

The Palo Alto, Calif., powerhouse has struggled with supply chain issues along with every other tech company. In 2021, HP reported a $10 billion backlog because of pandemic-fueled supply chain disruptions.

The world’s supply chain has been snarled by intermittent COVID-19 lockdowns (especially in manufacturing hub and port-heavy China). Vendors have addressed the issue but stuck in the middle are solution providers, who often wait months for orders customers need now.

Enter Nicolas: A former General Motors supply chain guru, HP snapped up Nicolas from Rockwell Automation this spring to deal with an unforgiving supply chain nightmare. He told the audience at the Amplify event that everyone needs to change the way they think about supply chain.

“Even before the pandemic, there were some challenging macroeconomic conditions that were already telling us it’s time to change … to pivot away from what has been historically the lean supply chain … and companies want to get back to the way things were,” he said. “Well, quite honestly, that’s over and we’ve got to think differently. What’s become the key is resiliency. I want to think of resiliency as insurance … it’s this idea of mitigating against potential points of failure.”

Nicolas said agility, resilience and visibility should be used as weapons in the fight.

“I like to think about resiliency as essentially being the defense,” he said. “It’s being responsive and having a business continuity plan—that’s agility. That, to me, is going on offense. It’s being a bit more strategic. It’s actually working through a plan for these macroeconomic challenges that happen.”

Rene LaVigne, president and CEO of Iron Bow Technologies in Herndon, Va., said he was encouraged by HP’s supply chain discussion. “Being a diverse player in the space, I’ve seen supply chain issues across the industry,” he said. “And most vendors up to this juncture have not really communicated to the partner a robust plan of how they’re going to tackle it.”

HP’s willingness to discuss the issue was refreshing for LaVigne.

“And I’ll tell you, just on a personal note, over the course of the last 25 months, we have not been able to get credible supply chain information for our customers,” he said. “We totally understand this was the fault of the pandemic. But it created an over-dependency on foreign markets. And that dependency has been an albatross around our necks.”

Speaking of Nicolas, he said, “I thought his articulation of what’s happened, where we are, and where we’re going was really on point.”

Harry Zarek of Ontario, Canada-based Compugen was cautiously optimistic about HP’s supply chain effort led by Nicolas.

“I was very impressed that [Nicolas] spoke differently than some other folks about the supply chain,” Zarek said. “I think it’s brilliant that they brought in a supply chain chief. He sounds as though he has the right mix of background, and I think it’s great that he comes from outside the industry.”

Nicolas continued the supply chain discussion on stage during a panel session that included several executives, including acting Chief Commercial Officer Luciana Broggi and CEO Enrique Lores. Lores said improvements to ERP software systems are improving supply chain monitoring. “We need to remember that we had 11 ERP systems that were not connected … and now we have one that connects the whole company. It has been a Herculean job to make that happen,” Lores said.

Broggi said the company had to continue working on ways of forecasting supply chain issues by accessing more data to “predict and forecast in a much more effective way.”

Zarek said he hopes Nicolas and HP can keep in constant communication with partners about the state of the supply chain. “Let us hear what is happening more often,” he said. “And let us communicate that to our customers.”