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HP SPaM
Formation1989
TypeInternal consulting organization
HeadquartersPalo Alto, CA, USA

HP SPaM (Hewlett-Packard Strategic Planning and Modeling) is an internal consulting group that supports HP businesses on mission-critical strategic and operation decisions. SPaM's mission is to drive innovation and data-driven decisions in HP through assisting with analytics, consulting, and operations management. As evidenced by its publications and awards, SPaM has been a prominent example of the deployment and practice of OR/MS (operations research and the management science) in large companies. Together with HP Labs, SPaM represents HP at the INFORMS Roundtable, a group of organizations whose purpose is to promote OR/MS excellence in practice.

History

Contributions

SPaM pioneered[1] and leads innovation in supply chain and procurement practices.[2] They created dramatic improvements in manufacturing,[3] distribution,[4][5][6] procurement,[7] product design,[8] forecasting,[9] metrics,[10] and inventory control[11][12][13][14] efficiencies; leading to the publication and adoption of their methods outside HP.[15] Notable contributions include:

  • Popularizing and helping to drive the adoption of postponement in high-tech products, as a gain in efficiency in building responsive supply chains that support a high variety of product versions (SKUs or stock keeping units) and configurations[16][17]
  • Developing and popularizing the concept of using a single metric to measure the full end-to-end costs associated with carrying inventory, to support better supply chain decisions.[18]
  • The use of simple, practical spreadsheet tools to deploy the power of advanced statistical inventory target setting to a broad range of businesses.[19]
  • Popularizing the concept of product design for supply chain; leading product development teams to minimize end-to-end costs for design, production, distribution, and support instead of focusing solely on minimizing material costs and development schedules as was previously common practice.[20]

Founders

The team was established in 1989[21] by Corey Billington[22] (currently a Professor at IMD) who had recently joined HP and was working with Sara Beckman[23] (currently a Senior lecturer at UC Berkeley). Billington asked then HP CEO Lew Platt for $100K to start a team focusing on efficiency and inventory within HP. Soon after, Corey added Tom Davis, Paul Gibson, Steve Rockhold, Rob Hall, Marguerita Sasser, and Ed Feitzinger to the team and began a fruitful collaboration with Hau Lee[24] (then a young Professor at Stanford and currently the Thoma Professor of Operations, Information, and Technology at Stanford Graduate School of Business) and M. Eric Johnson[25] (then an HP employee 1988-1991 and now Professor and Director of the Glassmeyer/McNamee Center for Digital Strategies at the Tuck School of Business at Dartmouth).

The name SPaM came from HP internal location code (LOCXXXX STRAT PLAN MODEL) initially assigned to the group during the days of limited identification fields. SPM and SM were two initial possibilities but the group settled with the more pronounceable SPaM. This was the day before internet era where spam was not yet synonymous with unsolicited or undesired bulk electronic message.

Directors

  • Corey Billington (1989–1996)
  • Rob Hall (1996–2000)
  • Gianpaolo Callioni (2000–2003)
  • Scott Ellis (2003–2007)
  • Thomas Olavson (2007 - 2011)
  • Brian Cargille (2011 - 2013)
  • Ray Ernenwein (2013 - Present)

The triangles in SPaM logo represent inventory – the largest asset on the balance sheets of most consumer electronics manufacturers and certainly the largest asset of HP. The blue bell shape represents uncertainty (including bell-shaped normal distribution) which exists in most decision making situations. The combination of the shapes is meant to represent SPaM's intention of using analytics to enable decision making under uncertainty to improve asset management performance.

Inside HP

Locations

SPaM has been supporting HP businesses from 3 strategic locations;


Services

SPaM employs consulting engagement model where HP businesses pay SPaM for each engagement (project). Key practice areas include:

  • Supply Chain Strategy and Design
  • Operations Tools and Processes
  • Pricing Analytics

Members

SPaM members are Analytical Business Consultants (ABC) who share strong interests in addressing business decisions from analytical and data-driven perspective.[26] Typical members possess domain expertise as well as consulting and project management experiences from management consulting firms, or companies in their own industries. Most have earned MBA, Master’s, and/or Doctoral degrees in technical fields such as economics, engineering, management science, operations research, science, and statistics. Some individuals who are members of SPaM are also recognized both in the academic community and/or across various industries.

Outside HP

Awards

  • In 2000, Wal-Mart named HP as its Supplier of the Year. HP's innovative supply-chain-management models developed by SPaM helped reduce the retailer's inventory-related stock outs.[27]
  • In 2002, INFORMS gave HP an award for effective integration of Operations Research/Management Science (OR/MS) into organizational decision making, attributed to partnership between SPaM and HP business divisions.[28]
  • In 2004, HP received Purchasing Magazine’s Company Medal of Professional Excellence. Product design for supply chain and procurement risk management -- two innovations developed by SPaM -- were mentioned as contributions that led to the receipt of this award.[29]
  • In 2009, HP won the INFORMS Franz Edelman Award, which recognizes outstanding examples of operations research-based projects that transform companies, entire industries, and people’s lives, for its successful product variety management initiatives. The innovations being honored were a result of a collaborative effort between HP Labs and SPaM, which have saved HP more than $500 million between 2005 and 2008.[31]

Publications

SPaM members have published more than 50 articles[32] on the applications of operations research and management science to solve HP business decisions. Many have appeared in widely referenced business journals such as Harvard Business Review and Sloan Management Review. Members have served as an editors to supply chain textbooks used in graduate school programs, and HP supply chain innovations developed by SPaM are cited in many supply chain textbooks.[33] Brian Cargille, currently a SPaM member, has served on the Editorial Advisory Board of Supply Chain Management Review, an industry magazine, since 2006.[34] Many MBA programs teach techniques created by SPaM members as part of their curricula.[35]

See also

References

  1. ^ Davis T. (1993) Effective supply chain management, Sloan Management Review, v34, 35-46 and Lee H. L. and C. Billington. (1992) Managing supply chain inventory: Pitfalls and opportunities, Sloan Management Review, vol, 65-73 and http://www.purchasing.com/article/CA195292.html
  2. ^ Visions of a supply chain crusader: Corey Billington sets the standard of efficiency at Hewlett-Packard and beyond. | IIE Solutions|Find Articles at BNET.com
  3. ^ Feitzinger E. and H. L. Lee. (1997) Mass Customization at Hewlett-Packard: The Power of Postponement, Harvard Business Review, vol, 116-121 http://portal.acm.org/citation.cfm?id=172478
  4. ^ Johnson, M. Eric and Tom Lofgren (1994) Model Decomposition Speeds Distribution Center Design, Interfaces, vol 24, No 5, 95-106
  5. ^ Waller, Matt, M. Eric Johnson, and Davis, Tom, (1999), “Vendor Managed Inventory in the Retail Supply Chain,” Journal of Business Logistics, Vol. 20, No. 1, 183-203.
  6. ^ HSOR.org: Case Studies
  7. ^ HP cuts risk with portfolio approach - 2/21/2002 - Purchasing
  8. ^ Olavson T. and C. Fry. (2007) Value Driven Variety Management, Sloan Management Review. Vol 48, No. 1, 63-69 http://www.scmr.com/article/CA629939.html, Cargille B. and C. Fry. (2006) Design for Supply Chain; Spreading the Word Across HP, Supply Chain Management Review, July–August, 34-41, and http://www.purchasing.com/article/CA451858.html
  9. ^ Kakouros S., D. Kuettner, and B. Cargille. (2002) Measure, Then Manage – improving forecast accuracy at HP, American Production & Inventory Control Society (APICS), October, 24-29 and Burruss J. and D. Kuettner (2002) Forecasting for Short-Lived Products: Hewlett Packard's Journey, The Journal of Business Forecasting, v21, 9-14
  10. ^ Johnson, M. Eric and Tom Davis (1998), “Improving Supply Chain Performance Using Order Fulfillment Metrics,” National Productivity Review, Summer, 3-16.
  11. ^ Johnson, M. Eric, Hau L. Lee, Tom Davis, and Robert Hall (1995), “Expressions for Item Fill Rates in Periodic Inventory Systems,” Naval Research Logistics, Vol. 42, No. 1, 57-80.
  12. ^ Johnson, M. Eric, Tom Davis, and Hau L. Lee (1996), “Robustness of Order Reliability Models with Applications to Order Aging,” International Journal of Production Research, Vol. 34, No. 12, 3499-3514.
  13. ^ Callioni, G., X. DeMontgros, R. Slagmulder, L. Van Wassenhove, and L. Wright. (2005) Inventory-Driven Costs, Harvard Business Review, March, 1-7, http://sloanreview.mit.edu/smr/issue/1992/spring/6/ and Cargille B., S. Kakouros, R. G. Hall. (1999) Part Tool, Part Process: Inventory Optimization at Hewlett Packard, Operations Research/Management Science Today, October, 18-24
  14. ^ Tay S. and A. Detwarasiti. (2009) Battening down the Hatches, Supply Chain Asia, May–June, 26-28
  15. ^ SpringerLink - Book
  16. ^ Feitzinger E. and H. L. Lee. (1997) Mass Customization at Hewlett-Packard: The Power of Postponement, Harvard Business Review, vol, 116-121 http://harvardbusinessonline.hbsp.harvard.edu/b01/en/search/searchResults.jhtml?userView=CORPORATE&Ntx=mode%2Bmatchallpartial&Ntk=main_search&N=0&Ntt=fetizinger
  17. ^ Johnson, M. Eric and Emily Anderson (2000), “Postponement Strategies for Channel Derivatives,” International Journal of Logistics Management, Vol. 11, No. 1, 19-35.
  18. ^ Callioni, G., X. DeMontgros, R. Slagmulder, L. Van Wassenhove, and L. Wright. (2005) Inventory-Driven Costs, Harvard Business Review, March, 1-7 http://harvardbusinessonline.hbsp.harvard.edu/hbsp/hbr/articles/article.jsp?articleID=R0503J&ml_action=get-article&print=true
  19. ^ Olavson T. and C. Fry (2008) Spreadsheet Decision Support Tools: Lessons Learned at Hewlett-Packard, Interfaces, Vol. 38, No. 4, July–August, pp. 300-310. http://interfaces.journal.informs.org/cgi/content/abstract/38/4/300
  20. ^ Cargille B. and C. Fry. (2006) Design for Supply Chain; Spreading the Word Across HP, Supply Chain Management Review, July–August, 34-41 http://www.allbusiness.com/company-activities-management/product-management/6327517-1.html
  21. ^ Lee, Hau, Corey Billington, and Brent Carter. "Hewlett-Packard Gains Control of Inventory and Service through Design for Localization," Interfaces 23, no. 4 (July/August 1993): pp. 1-11. Members of SPaM discussing their own goals.
  22. ^ Professor Corey Billington
  23. ^ http://www.haas.berkeley.edu/faculty/beckman.html and http://www.atypon-link.com/POMS/doi/abs/10.5555/ijop.2005.14.2.115
  24. ^ Faculty Profiles - Bio Main
  25. ^ [1]
  26. ^ Olavson T. and B. Cargille (2008) OR Inside, OR/MS Today, October. http://www.lionhrtpub.com/orms/orms-10-08/franalytics.html
  27. ^ HP Press Release, January 2000
  28. ^ INFORMS Prize Past Winners - INFORMS: The Institute For Operations Research and The Management Sciences
  29. ^ Hewlett-Packard wins for the 2nd time - 9/2/2004 - Purchasing
  30. ^ SupplyChainBrain: The Library
  31. ^ HP Wins 2009 INFORMS Edelman Award for Operations Research Breakthrough
  32. ^ see reference section of this article for numerous examples
  33. ^ During his time at SPaM, John Neale edited "The Practice of Supply Chain Management: Where Theory and Application Converge http://www.amazon.com/dp/0387240993 Other textbooks citing SPaM innovations include "Designing & Managing the Supply Chain" by Simchi-Levi http://www.amazon.com/dp/0072845538
  34. ^ Editorial Advisory Board - Supply Chain Management Review
  35. ^ Examples include UC Berkeley Haas School of Business MBA 247.1 taught by Professor Artale, the Rutgers School of Management Supply Chain Strategies course taught by Professor Yao Zhao, MIT's Sloan School of Management New Product Development course taught by Professor Dahan, core MBA operations course at IMD taught by Professor Billington, and MGT 472 taught by Professor Dilts at the Owen Graduate School of Management, Vanderbilt University
  • [2] a Harvard Business Review article in .pdf form, Building an Innovation Factory, about knowledge-brokering in several organisations, such as IDEO, which mentions HP SPaM on pages 163 and 164.
  • [3] a book The Knowing-Doing Gap by Harvard Business School Press which mentions many businesses including HP SPaM (as in Hewlett-Packard's Strategic Planning, Analysis, and Modeling group) for knowledge-brokering management within Hewlett Packard.
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