Remembering Early Times at HP

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International Procurement Can Be Fun...!!!!
An autobiography of my working life..., by John Wastle

Part 6

Table of Contents:

Dedicated to:
Harris. The greatest Grandson in the world.
"The world is what you make it. It isn't fair, but it is good."

  • Part 1
  • Part 2
  • Part 3
  • Part 4
  • Part 5
  • Part 6
  • Part 7
  • Part 8
  • Part 9

  • Part 6

    36. Power Cord Wars...

    What we needed was a product that we could Market, Promote and Sell on a worldwide basis. A product that was universal across nearly every one of HP's multi-various Product Groups and one where the dominant supplier was in Europe. At first I didn't realize we had such a product right under our nose, but after thinking about it for a while, it suddenly stared me in the face, it was a product that at present was being supplied by many different country suppliers, and that product was... Power Cords. We had a supplier up and running, Volex Pencon in England about four hours' drive from us. It was also a product that did not have high visibility or attention, which meant we could quietly work away at it without it drawing any undue attention. Giving us time to get established and take full control before it started to appear on the radar screen of others.

    This was a product that had extremely difficult technical requirements, a product which demanded even stricter evaluation and testing requirements. It was also a product of high volume and of many country variations, all of which would and did act as a barrier to entry. If the commodity was managed by one central area, our IPO, we could pull it all together, which would create an even bigger barrier to entry.

    Our supplier Volex Pencon was already an approved supplier to HP for the UK Power Cord; they also had all the laboratory test equipment to ensure the testing of all the different country Power Cords that we would require.

    It wasn't that easy though, there were major challenges and roadblocks ahead that had to be overcome. The first of these was the Euro-Cord. The Euro-Cord was controlled by a German Division materials department and their supplier of preference was Feller in Austria, but they also had a facility in North Shields in England, about two hours' drive from us. Unfortunately, Feller's main laboratory was in Austria. From our IPO aspect, if Feller was the most competitive, then all the Power Cord business would have to fall under the GIPO ownership and management.

    The second of these challenges was the USA Power Cord; this was lazily controlled by Corporate Procurement, as was their current USA Supplier. However, as usual, HPP was asleep and was only operating in a reactive capacity. I couldn't, or rather didn't want to open up the procurement of Power Cords on too many different fronts. But I needed a strategy to address the challenges of making Power Cords an IPO operated, supplied and managed commodity on a global basis.

    I kicked it all off by setting up a meeting with Volex Pencon's top level management. As they were already supplying the UK Power Cord they were keen to increase their business globally with HP, so were all ears to what I had to say. My presentation covered all the various different country Power Cords that HP used and the volumes that were involved. I also went on to state that our strategy on how to attack it would have to be one bite at a time, with the first Power Cord being the Euro-cord.

    The qualification of Volex Pencon as a supplier of the Euro-Cord was only one step in the process, although Volex Pencon had the laboratory to evaluate and the means to test the Power Cord. They were already supplying some of their customers with every country specific cord-set, but I did not want, at first, to use the Volex Pencon laboratory to do that. We first had to prove that they were capable of doing it. To achieve that we had to get the HP German Division to evaluate the Volex Pencon manufactured Euro-Cord in the German laboratory. If we could do that, then we could use the Volex laboratory to test and evaluate and product the test results for every other country requirement.

    The one fly in the ointment, Volex Pencon's cost structures had to be globally competitive, and stay that way. It needed Volex Pencon to not look at each individual country Power Cord in isolation, but to look at the cost structure with all the global country Power Cord Volumes in mind. To make sure we appeared fair, I was going to offer the same opportunity to their main competitor in Europe, Feller in Austria, but via their facility in England and the same opportunity to manufacture the UK power cord. Feller UK though, as I knew would happen, had their Austrian HQ attend our meeting. They were really interested in getting the UK Power Cord and I felt they failed to see the bigger picture of what I was offering.

    Overall Volex Pencon over all the different world-wide counties Power Cord were the most competitive. I thought they would be as they took onboard the total size of the business that was on offer, plus they also agreed to test the Euro-Cord exactly to the letter laid down by the German engineers. Feller wanted to stick with their tests for the UK Power Cord. Volex Pencon test results met all the German Euro Power Cord specifications, but, Germany did not want another supplier, so they were finding all sorts of reasons, excuses more like, not to test the Volex Pencon Euro Power Cord. Excuses went from saying they were happy with the proven record of the current supplier Feller, to the cost of Feller's Power Cord.

    This reluctance by German to test the Volex Pencon Power Cord was now beginning to really annoy me. At the European Materials Managers meeting being held in Barcelona. I stood up and challenged the German Materials Engineering Manager in front of the whole assembly. I put them right on the spot, much to their discomfort. The German Materials Manager Ludwig Ott could see what was happening and stated to the German Materials Engineering Manager Helmut Wagner, that he should evaluate and test the Volex Pencon Cord. That wasn't good enough for me, I had the bit between my teeth and the momentum of making this happen. I pushed for a date that this evaluation would be completed and that I would be in attendance. If this date was not met, then we would accept the proven test results from Volex Pencon and set them up as another supplier of the Euro Power Cord. Basically Germany was told that the Volex Pencon results met all the specifications, so if Germany was not going to move on this, then the IPO would, whether Germany tested the Power Cord or not.

    I had boxed Germany into a corner and forced a timeline from them. Germany had the engineering responsibility for the Euro Power Cord, so getting their approval sealed Volex Pencon's ability to evaluate and test all future country Power Cords I would be channeling through them. Germany did evaluate the Volex Pencon Power Cord and approved it for HP use, but they added to me that they would not use Volex Pencon as a supplier, even though their current supplier Feller had a much more higher cost. This was to get even higher as their volumes dried up and the business came through our IPO. Feller would complain to the German Division about their lack of volume. By the time that happened, it was too late for them to recover. However, another battle in Germany would follow at a later date.

    To maintain a global worldwide price, Volex Pencon wanted as part of the cost reduction that all orders for Power Cords flowed through once source of contact, our IPO. This fitted exactly with our IPO strategy for Power Cords and it meant we were assured of generating IPO income from it. The European Divisions wanted to go direct to Volex Pencon to place their orders, the supplier was in Europe so they believed they had every right to do so. This was true, but those orders would be accepted as coming from different customers and they would not get access to the IPO global price.

    Volex Pencon time and again would say to those European Divisions, if you want the global negotiated price, order through the IPO. The divisions, in particular the German divisions, would not give in, they wanted a meeting in Germany with the IPO, Volex Pencon and their Zentraleinkaufen, Central Purchasing. Derek Kozer, Volex Pencon Marketing Director and myself, plus on my side Irene' Shirridan who managed our Order Processing and one of Volex Pencon Engineers attended the meeting.

    At the meeting, time and again the German Purchasing team demanded that they get direct access to Volex Pencon and they also demanded they get the IPO price as they were part of HP. Time and again Derek Kozer stated the benefits to Volex Pencon of dealing with one point of contact, the IPO and the subsequent benefits to HP in much reduced part costs. Germany refused to acknowledge that with Volex Pencon Dealing with one single point of contact, it allowed them to achieve greater economies of scale, particularly when it came to volume forecasting. Our IPO could pull all the worldwide forecasts together and balance out all the ups and downs that each division would bring, so making it easier for Volex Pencon to balance their production requirements. Volex Pencon clearly stated it cost them more to manage all the orders if they were received outside the IPO ordering channel. It didn't make economic sense for Volex Pencon to manufacture Power Cords at a loss to supply some divisions, when there was a much more cost effective order process channel already in place.

    I went onto state that it was not in HP's best interest for our suppliers to take a loss, HP expected them to make a profit, and that was exactly what Germany was asking Volex Pencon to do. Centrale Einkaufen didn't want to hear that, especially from me an HP employee. Centrale Einkaufen was more or less told, "That's the deal, take it or leave it." If Germany Central Purchasing wanted to go direct to Volex Pencon with their orders, they would be accepted, but not at the IPO global price. Germany's Central Purchasing just refused to accept that the benefits were being achieved by both HP and Volex Pencon.

    The whole German Centrale Einkaufen argument was stupid really, they were happy that the IPO negotiated a global price, they just wanted to order direct. In fact it was Volex Pencon that stated "It must be easier for them to order via the IPO as it was an internal order as opposed to an external order, so they could free up resources to work on other issues." I could hear my inner self laughing at that sucker punch just landed on the Centrale Einkaufen chin by Volex Pencon.

    It was during my turn when presenting the IPO viewpoint; I was about halfway through the presentation, explaining all the benefits our IPO brought to the table, with all the global volumes, global co-ordination, order balancing etc. I started to listen to them muttering to each other. I had been studying the German language along with my team.

    In Germany they always had a rude habit of conversing round the table with each other in German, knowing full well that others around the table did not understand what they were saying. My schooling had taught me enough, that I could pick up and understand parts of the conversation. This time I picked up something they didn't want me to hear! I heard three of them discussing that the IPO was in the supplier's pocket. At that point I said, "Was ist das?" I slammed my book shut, stood up, "You speak German" one said, and I said, "I understand it enough, and I am not going to sit here and listen anymore to what is being said behind our backs. We are leaving, this discussion is over, and I am now going to submit a complaint against all of you for stating that our IPO was in the supplier's pocket! The IPO is in no one's pocket!" Their faces changed immediately. Attitudes instantly changed and there was a vigorous attempt to apologise for their behaviour. We stuck to our guns, the meeting was over and as we were leaving, I said, you can do what the hell you want with your Power Cord requirements, but if you want your Power Cords at the global IPO cost, then place your orders through us via the internal purchasing order process. Battle number two with Germany was over and in our favour. I could have sworn I heard the tune to 633 Squadron in the air!

    Germany did place some of their orders via our IPO, but they still ordered some via Feller in Austria.

    If you sell a million Inkjet printers a month, you need 1 million power cords.
    Imagine the total global HP demand. This is the Roseville Powercord Sourcing Team
    in Indonesia.

    Back in our host division, they also approached Volex Pencon to order direct at the IPO price, they were told, you can order direct, but not at the IPO price. The Host Division Purchasing Manager, Duncan Turner beat path to my desk. I told him to place an internal order on our IPO, I explained all the benefits the IPO brought to the party, he humphed and walked away. Their orders for Power Cords were placed through our IPO.

    The next stage in our IPO strategy was to set up all the other country Power Cords, with the exception of the USA Power Cord, we intended to leave that one till the last, for one major reason, that Power Cord fell under the control of Corporate Procurement, and that battle could wait a little while longer.

    Malcolm Newlands had by now joined our IPO team, Malcolm was another key player who would, with his skills and abilities bring lots more business to our IPO. Malcolm took ownership of the Power Cords, they couldn't have gone into more capable hands. Malcolm also saw the benefit of the global business channeling via the IPO. Now our IPO was stronger than ever on Power Cords, so it was now time to evaluate, test and approve the USA Power Cord from Volex Pencon, which we duly did and at a much more reduced cost that the present USA supplier.

    The USA supplier started to realize that their volumes were dropping rapidly and contacted Corporate Procurement. They had now been awakened from a deep sleep to wonder what was happening. Eventually they got around to contacting the USA outlet for Volex Pencon and were told they couldn't help as the business was managed by the HQ in England and the IPO. HPP then contacted me about who had approved and evaluated the Volex Pencon Power cord. At this point we sent HPP all the evaluation and test documentation. It shut them up for a little while, not much they could do as our price was so competitive and they tried to get the USA supplier to match it but couldn't.

    It was about to get even tougher for the USA supplier as we wanted to reduce the costs even further and make the price be a major 'barrier to entry' from any competitor.

    During one of our IPO Volex Pencon Management meetings, Volex Pencon was telling us of their plans to manufacture more Power Cords in Singapore and Indonesia and that they had also bought a facility in Shenzhen in China. Malcolm Newlands and I accompanied by Derek Kozer from Volex Pencon set off to evaluate those new potential Asian supply bases. Volex Pencon in the UK was also undergoing major changes in the manufacturing structure to meet the changing requirements of lower and lower costs. They were adding automated production lines for their UK and Euro Power Cords, this meant of course a painful downsizing and redundancy of staff. Likewise in their Singapore Manufacturing Plant, it was becoming expensive, so automation was being installed.

    It was a different story in Indonesia and China, labour costs were extremely low, with the lowest costs of all coming from China, it was really 'bums on seats' production. On our visits we had a good look at the Singapore facility, it was very modern and up market, but costs were going to be a problem, even with automation. Batam in Indonesia was totally different, though their cost structure was low, it was not as low as what could be achieved in China. That was where we needed the USA Power Cord to be manufactured. Malcolm Newlands and I thoroughly audited the Volex Pencon Shenzhen facility. It was different that was for sure. Labour was in great abundance, all of which were girls from the hinterland. They would come to the factory and live in the factory dormitories, and they had kitchens for cooking. They ate, slept and worked on the factory premises. They would do this for about four years, then go back to where they came from with a pocket full of money that would keep them for the rest of their lives, or be used as a dowry. It was not really our issue, as long as the people were being respected properly and were treaty fairly. It definitely was nothing that we in the western world was used to, but it worked!

    The Chinese method of production, because labour was so cheap, was 100% inspection at every stage of production. An operator would do her little bit of the assembly, pass it to an inspector, who checked it, if it passed, it moved onto the next operator, who passed her work onto the next inspector, and so on down the line till they had the final 100% inspected Power Cord. Needless to say this Chinese manufactured USA Power Cord passed the tough technical evaluation of the Power Cord. In fact it sailed through all the tests! Both Malcolm and I agreed that this form of manufacture would just never work in the western world, the cost structures would be too excessive! It sure worked though in a low cost labour environment like China.

    Our sales of the USA Power Cord and all those other country power Cords, grew rapidly. In about a year our IPO was supplying the HP worldwide divisions the lions' share of all the volumes available. It was also around this time HPP really did start to make greater rumbling noises. The USA supplier restated that nearly all their volume for HP had all but dried up. HPP at Corporate contacted me about it, they said they had engineering responsibility for the USA Power Cord and they planned on auditing the Shenzhen Volex Pencon facility. I stated there was no real need for them to do that, as our IPO had carried out a full audit and evaluation and that they were in possession of all that information. In eight weeks' time Malcolm Newlands and I were going back to carry out the annual audit of the company and its total manufacturing processes. HPP said they would come with us. I thought it seemed a waste of money and resource as our IPO had it all covered.

    HPP Corporate had by now felt that they had been usurped; our IPO had replaced them on a commodity they felt was theirs, even though they brought zero added value to the party. It didn't matter to them that the IPO's were part of HPP Corporate, they always looked down on the IPO's as second class citizens of Corporate Procurement and never really accepted our existence. This was going to be no different with what they were going to try and do next. I didn't know it then but we were moving head first into a (expletiving) contest with HPP Corporate.

    We had spoken to Volex about HPP Corporate wishing to take part in the audit and with Derek Kozer's help, organized the visit and to make sure all the appropriate people would be in attendance. With two weeks to go, HPP informed me they couldn't now work to our agreed and planned timescales, and that they planned on going on their own the next week without the IPO and Volex Pencon UK HQ management. There was no way I, or Malcolm or anyone else in Volex Pencon could fit that change in plan around our hectic schedules.

    I could only pre-warn Derek Kozer of what I thought they were up to so he could forewarn his management team in Shenzhen to expect them and to look after them on their rushed visit to China. The HPP Corporate visit to Shenzhen went ahead but un-chaperoned. It wouldn't have mattered either way as they had a hidden agenda, which I would later turn around. That would be HPP's downfall in managing the Power Cord business.

    HPP Corporate visited the Shenzhen facility, the week before we were going there to do the annual audit. The Volex Pencon Management in China seemed to believe that the visit went very well indeed. I wasn't that convinced! Two weeks later, when we were in Asia, I was proven correct, the contest on who could pee the highest was about to begin in earnest.

    HPP Corporate, without giving me and our IPO the common courtesy of contacting us about their visit. (This was a clear example of what they thought of the IPO.) Issued a memo on their visit to every worldwide division in HP who were using the USA Power Cord supplied by the IPO. They stated that after their HPP Corporate audit, their recommendation was that the divisions who were using this supplier via the IPO, were putting at risk their shipments of final products and even a possible safety stop shipment issue and that the divisions should switch back to the previously approved USA supplier. Their memo was further supported by what they believed was their hard evidence, that evidence was that there was not one piece of Statistical Process Control visible throughout the whole Chinese manufacturing process.

    That memo to the world, typically emphasized HPP Corporate total lack of understanding the manufacturing processes in China when compared to western manufacturing processes. HPP Corporate didn't see fit to involve me prior to issuing that memo, they were out to shaft me and our IPO and get the business back to their much more expensive USA supplier. Because of their arrogance, I intended to do likewise and nail their (expletive) in such away it would undermine their authority on Power Cords once and for all. They would later try another backdoor approach, but that door got firmly slammed in their face.

    I issued a memo of rebuttal to the exact same distribution that was challenging everything that HPP Corporate had said in their memo, and unfortunately for them, it would highlight HPP Corporate incompetence in understanding the differences between the Chinese and the western manufacturing processes. There was no way I could avoid the embarrassment this would cause them, not that I wanted to. In fact I was reveling in the fact, I was embarrassing HPP Corporate. My memo of rebuttal, was fact based and focused on highlighting the difference between East and West manufacture.

    The western manufacturing processes put a lot of misguided trust and faith in Statistical Process Control in manufacturing production, which helps to reduce the high labour costs in manufacture, but its biggest failing is, it means the process can and does accept faulty parts. I went on to explain, that the manufacture of parts in any manufacturing process, follow what is known as a 'Normal Distribution' and when parts fall outside the set parameters of acceptance, they can be accepted as the process never captures 100% good parts. SPC can only warn when a process is moving out of control, so adjustments can be made, but by then, faulty parts can be in the system. I then moved onto describe that the Chinese manufacturing process was 100% inspection at each individual manufacturing operation and that the component part was handed from the operator, to an inspector who inspected the work, then passed it onto the next operator to carry out their part of the production operation. They then passed it to another inspector who checked the work out before passing it onto the next operative, and so on down the line until the product was completed. The end result being that not one faulty part would reach their end customer.

    Needless to say after I issued my memo there was no drop off in orders for the USA Power Cord, in actual fact they increased. There were subsequent emails from HPP Corporate to myself and not the HP world. They had lost this war and they hated it and they didn't think too highly of me either, like I was going to lose a lot of sleep over what they thought.

    HPP Corporate in their emails to me, would highlight the mountains of scrap parts at the supplier in China and they would tell me that it was HP who was paying for all this mountain of scrap. I responded by saying that I totally agreed, but at this juncture I couldn't care less, we had a worldwide quality Power Cord at a worldwide cost that no one could even come close to matching. Somewhere down the road a bit, that scrap mountain would reduce as Volex Pencon got more and more control of its processes and that in turn would either give us stable prices, or a further cost reduction.

    HPP Corporate tried one last approach. They contacted the Volex Pencon outlet in the USA, told them that they had engineering responsibility and that they would be the organization that would negotiate with on the worldwide pricing. They were told by the Volex Pencon outlet, we don't have that authority, they would have to contact the Volex Pencon HQ in England. HPP Corporate knew where that would get them and from then on whenever I was in town at Corporate they were always somewhat cold towards me.

    37. PAFC Winds of Change...

    HP was growing fast and expanding its markets, it needed more manufacturing divisions and operations around the world, but there was also a far greater competition from HP competitors and an even bigger need to cut costs. Customers could be choosy and they wanted much lower cost products. HP couldn't just keep on adding more and more divisions, particularly as the company was making more acquisitions of other companies. HP's customer base increased, and led HP into newer markets. To continue adding more divisions for its current product range would just add even more cost. What was needed was new thinking when it came to increasing internal total manufacture. The previous process of making everything from the raw material upwards into finished product, had to be changed to enable the lowering cost of manufacture. HP's costs were high; HP was a high benefits company, all which added costs to be paid for in higher prices.

    Our IPO was instrumental in helping to drive some of these costs out by the use of external subcontracting. It was only natural that we would meet stiff resistance to change as many of those changes would inevitably lead to loss of jobs, people being retrained and redundancies through downsizing. Right sizing was a word that was more acceptable in the higher HP management circles. But HP's need for external subcontracting was about to explode.

    MCG or Test and Measurement had been the founding business for HP, right from those early start up days. Bill Hewlett and Dave Packard, in Palo Alto, had their own internal sheetmetal and machine shop to make everything that they required. It had grown and grown and MCG had its own Manufacturing Fabrication Centre called PAFC, Palo Alto Fabrication Centre, which made everything from the raw material upwards and across all types of manufacturing. They had pressure Die casting, Plastic Injection Moulding, Cable Assemblies as well as the standard Machine Shop and Sheetmetal shop and metal finishing activities. HP would have its own raw Printed Circuit Board Manufacture and Printed Circuit Board Population centers, all of which would undergo major upheavals in the years to come as HP struggled to find the right balance between internal fab and outsourcing.

    New HP divisions were sprouting up around the world and those fabricated parts were being shipped all over the world, with the shipping costs, import duties and HP's accounting practices adding further to the cost of those manufactured parts. This was leading to those worldwide divisions becoming less competitive. They had to make their own parts to remain competitive. In a way this was the start of resentment between PAFC and those divisions which had internal low level part manufacture making those parts. That very same resentment arose with our IPO which was pushing to have more of the lower level part manufacture, pushed outside to external subcontractors and suppliers, many of whom had much more up to date equipment than most of the HP divisions. That was how those companies made their living, they just had to be more cost competitive than HP would be.

    Not all divisions were resentful. The relationship our IPO had with SAD Fabrication Centre was really interesting, but it caused issues between SAD and PAFC as well as with NMD fabrication shop. This led to PAFC and NMD losing manufacturing business, and SAD getting much lower cost parts. The knock on effect to PAFC and NMD was that their cost structures would rise with less parts flowing through them, The writing was on the wall, but no one seemed to read that wall.

    The winds of change were about to blow through those two behemoths and many other HP divisions around the world.

    38. System II Vinyl Clad Covers...

    This shows the vinyl-clad covers for the popular HP System I and II cabinetry
    designs. The vinyl material offered a nice texture to the product, and was a
    "warmer" brand image, than painted aluminum.

    Our IPO compounded the issue for PAFC with the local sourcing of the raw Vinyl Clad aluminium sheet, John Thomson recognised that shipping into the country tons of Vinyl Clad aluminium was adding considerably to the cost of all the thousands of Vinyl Clad sheetmetal covers we were producing, even though our prices were competitive. If we could locally source this special clad material, we could reduce the costs even further.

    PAFC recognised this material as a barrier to entry and so maintained their hold over the manufacture of these System I/II covers. One of the major stumbling blocks was the pebbled finish applied to the Vinyl during the rolling process. As a result PAFC was totally against us setting this material up locally. John Thomson spoke with Andrew Murray, Marketing Director of Murray International Metals (MIM), who was our major supplier to HP in the UK, and our suppliers, about the possibility of them manufacturing this special Vinyl Clad Aluminium. He presented them with the estimated usage of our needs, and then the potential level of business available, if we could reduce our costs.

    MIM were very interested, they took away samples and eventually came back with a proposal. The only real expense was the special roller that was needed to roll on the Vinyl to the aluminium. They had tested the adhesive to be used and could obtain the exact same, the Roller was the crucial element. This was going to be another flyer, but there was one fly in the ointment! There was a tooling charge for the roller, the supplier wouldn't pay it as it was a risk and they didn't want left with a roller of no use to them or any of their other customers. Our IPO had no tooling dollars in our budget, and as we were a support organisation, we never would have a tooling budget. I had thought, why don't I just go ahead, who would know, but sure as anything the auditors would stumble on it and I'd be in deep doo-doo! We had to find another way.

    I approached Bill Oliver and Jimmy Queen with the proposal to reduce QMD's costs on the System II Vinyl Clad Aluminium Covers. Both Divisions on site used thousands of them and I explained the extra costs we were incurring by shipping tons of the raw metal sheeting into our suppliers, and as they were buying it from the USA supplier, they were applying a markup of around 15%. Our IPO calculations showed massive saving that could be made if we purchased the Roller, but to make that happen, QMD had to come up with the tooling dollars. The numbers spoke for themselves and the tooling dollars were made available.

    I had intentionally, only mentioned the benefits to QMD and QTD, but there was also going to be a lot of business for our IPO. Later on we would be able to let the QMD engineers deal with supporting the roller, which saved us some engineering support.

    PAFC tried all ways to stop our supplier from being approved, they could see what was happening and that they would lose more business to the IPO as we went after the other System II Cover business to the other division users. PAFC failed in their attempt to stop our supplier getting approval, and we knew they were in for more headaches as we approached the other user divisions, we would even send parts as far as Japan.

    Our IPO couldn't capture all the Vinyl Clad Cover business, there were still a few divisions with their internal fabrication shops who would want to buy the raw material from our supplier, I didn't make it widely known that it was available, as there wouldn't be anything in it for the IPO as we didn't own the tooling, we just wanted to supply finished covers as a product. It came out in a discussion I had with Karl Heinz Hartmann regarding what we were doing on the System II Covers. Unfortunately he let it slip to the manager of the German in-house Fabrication shop. They knew they might have trouble with me, so they lobbied their Manufacturing Manager Robert Hofgaertner. Robert was a friend of our IPO as he had supported us, along with Jimmy Queen, in getting the System II Pressure Die Casting business into our UK supplier.

    This was slightly different in as much as the German Fabrication Shop could just order the raw material and make its own covers. Really there was nothing I could do and as Robert Hofgaertner was helping us in another key area; it was time to repay that support. In a way though, the German purchase of the raw material, still helped us in the IPO, as the volume usage went up, so costs stayed fixed. It also meant that PAFC had to pay more for their raw Vinyl Clad Aluminium, as their volume usage declined, they did of course have the option of buying the material through our IPO, or even to buy the raw material from our supplier. There was no way our IPO could create a road block to them to do that, but with their mindset, they refused, preferring to stay with their current supplier. Myopic decision on their part as their costs would increase further for their finished products, making our IPO even more competitive. It was no surprise that this was another situation that would lead to the downfall and eventual nonexistence of PAFC. They always failed to put the HP division customer first.

    Our IPO had lower cost metal fabrication subcontractors and now a lower cost raw material supplier, but still PAFC were arrogant enough to keep with the same old way. Their management had a lot to learn, but never would.

    PAFC current HP division customers gradually came more and more to our IPO for their needs. The covers were standard parts, once they were set up for one user division, the other divisions could buy from us almost immediately, this gave us access due to increased volumes, and of course yielded cost reductions.

    The standardized System II cabinets harmonized ALL HP products, and provided
    enormous savings by avoiding unique designs for the cabinetry of new products.
    In addition, the product styling was a brand image that projected quality.

    PAFC resentment towards our IPO would continue to grow. They had a complete mind block towards our IPO, they saw us as the enemy, and not part of HP, which we all were. They had a chance to embrace the IPO and what we had to offer, and be seen as trying to meet the changes their customers were demanding of them. They were too focused on what I and our IPO was doing. In the future they would even try to get me fired for blowing the whistle on them, without much success, I had too many friends in the divisions on my side.

    Their resistance to change would cost them even more!

    39. PAFC System II Pressure Die Castings...

    All of Test & Measurement Products were designed around a family of standard packages, originally System I and now the new design, System II. These designs were able to cover various packaging options to cover the different sizes of finished Instrument Product. The basic box frame, before the inclusion of the electronic assemblies filled the box, consisted of a Pressure Die Cast Front Frame, a Rear Frame, and Side Frame or Side Struts, along with the Vinyl Clad Aluminium Top and Bottom Covers. Our IPO was well on our way to supplying the Top and Bottom System II Vinyl Covers.

    It was time to turn our IPO attention towards those System II Pressure Die Castings. We had the ideal Pressure Die Casting supplier in JV Murcott who was currently making the 'Scrumpy' Pressure Die casting, along with 'Precision Machining' who was finishing off the completed article. John Thomson and I decided it was time to get both these suppliers to look at these Pressure Die Cast parts, and in particular to quote on first the Side Frames and Side Struts, and the Rear Frames. The Front Frames we could leave for present as they were much more involved. It's best to learn to crawl first before walking, it was also the quickest route into supplying these parts and would be readily acceptable by the other user divisions.

    Once again we proved that those two suppliers, JV Murcott and Precision Machining, were extremely competitive. In most cases the tooling costs could be written off in a matter of a few months. I put the feelers out to my contacts in the other user divisions, whom we were already supplying parts to, they were all very interested, in particular, Germany. One of their Manufacturing Managers, Robert Hofgaertner, got into bed with Jimmy Queen on what we were trying to achieve. PAFC would soon have to sit up and take good notice of our IPO and this new threat to their domain, especially as other divisions had now shown their interest and in Germany's case, active participative support at Functional Management level.

    PAFC had their heads buried in the sand and was trying to ignore what was going on around them. For that reason they were ripe for the picking. I could pick and choose which parts to pick them off on, they were too busy trying to defend their corner, rather than address their problems. I lobbied Jimmy Queen and said we have to go this alone, PAFC are paying zero attention. Jimmy replied that there was going to be a Test & Measurement Manufacturing Managers Meeting held in South Queensferry the next month. Carl Nale would be in attendance, along with Robert Hofgaertner. Jimmy Queen was organizing the meeting and said, I'll clear a spot for you to raise the issue, and then we'll see what the outcome is before we make any decisions on where we go from here.

    This was a smart move on Jimmy Queens's part, if we could get PAFC commitment, then they would have to fund the tooling dollars. I made my presentation to Carl Nale, who was obviously not a happy camper. But the savings were too great to ignore, and of course there was lobbying going on in the background that I was not party to. PAFC could no longer ignore us, so they made a concession, they wanted to keep control over what was happening. That involvement meant they had to spend their tooling dollars. So they agreed that after supplier evaluations, our IPO could set up and supply some Rear Frames and Side Frames firstly to the non USA divisions. I knew this was the thin edge of the wedge, but I was also fully aware that it would be only a matter of time before our supply would escalate as the other divisions within the USA, demanded access to the lower cost parts.

    PAFC thought they would complicate the process by stating they wanted to see what was available throughout Europe, but I had that all covered. No problem, I thought and immediately pulled together and organized a supplier evaluation programme of supplier visits which covered, UK, Germany, Switzerland and Italy supplier bases. I was able to also call on the support from both the German and French IPO's. Karl Heinz Hartmann, who wanted Robert Hofgaertner to see he was supporting our IPO endeavors, and also Pierre Lavissiere our IPO Manager in Grenoble. Pierre and I were great buddies, so I knew we could put on a good show.

    40. PAFC Euro Trip...

    This trip was to turn out to be so much fun and not as stressful as I thought. Attendees from PAFC were Carl Nale Manufacturing Manager, who saw himself as an expert in the finer things in life such as Opera and fine wines! Bill Sullivan, who also saw himself as a man of the world, whom I found out later was a submariner on a nuclear submarine but quit as his conscience wouldn't let him push the nuclear button if he had to. The other attendee from PAFC was Walt Menge, a straight, really nice guy who always put a balanced look on things. From our side would be myself and Duncan Turner from QMD. Duncan was QMD Purchasing Manager. When in Germany, we were supported by Wilhelm Boeckler, a nice but quiet sort of lad and Hartmut Wuerfel, a quiet sort also. Both worked for Robert Hofgaertner, who had instructed them to give us all the support we needed. When in Italy, Pierre Lavissiere would help organize things. The trip was to cover not just Pressure Die Castings, Sheetmetal Fabricators and Machine Shops, PAFC also wanted to look at Plastic Injection Moulding companies.

    Germany wanted us to visit a Pressure Die Cast Company in Germany called Stotz and their Machine Shop, which was in Switzerland. Although their Machine Shop in Switzerland was very good, there was no way Stotz could handle the Pressure Die Casting side of the business. This rather annoyed me, as I felt Germany knew exactly what was required to make those System II Pressure Die Castings, unless of course this was deliberate on their part. We also visited Plastic Moulders who were making parts specifically for the Automobile Industry, not exactly a good fit. However, our American colleagues from PAFC enjoyed their visit to Germany, but complained that it took too long to pour a glass of Pilsner and that there was too much meat to eat! They were somewhat tickled though, by the automatic flushing of the urinals and the automatic switching on and off of the wash hand basin taps! They obviously didn't get out much!

    It was similar on the visits in Switzerland, but in this case we visited Machine Shops of extremely high volume using Swiss Auto's, again not a good fit. One of the reasons for doing this was that this Swiss supplier had a USA company just down the street from PAFC and they were a supplier to HP. It was as if the PAFC folks were on a touring holiday, they wanted to see some of the sights.

    Next stop was Italy. Pierre Lavissiere had done us proud, he got HP Italy Marketing involved. Pierre had lined up a number of companies around the Milan area in the North Wast of Italy and in the North East of Italy around the Venice area. He set up visits to Zanussi, Europe's largest 'White Goods' manufacturer, which did subcontract work. We flew into Milan where Pierre met us and took us to the hotel. He drove one car and I drove the other. Straight away the PAFC guys liked the hotel Pierre had chosen, I knew he would do a good job. That evening before dinner we gathered in the bar, they had the best olives I have ever tasted, I guess the PAFC guys thought so as they kept going up to the bar to get the bar man to keep filling up the dish. So he ran out of those olives, they cleared his jar full. Pierre said that next morning the Italian Marketing guy would join us and he would show us the way to all the suppliers.

    The PAFC, Palo Alto Fabrication Center, team visits Italy.

    Next morning sure enough, our HP Italian support Giuseppe turned up right on the dot and was raring to go, we didn't really need him as everyone we met spoke better English than we did! However, he would be a great guide, and teach us how to drive in Italy! As I was just about to find out! We left the hotel in a convoy of three cars, Giuseppe in front, me driving the second car and Pierre bringing up the rear driving the third car. We were only two minutes on the road and we hit the Milan rush hour traffic, so we were ground to a halt waiting to access the Superstrada. I could see Giuseppe ahead of me looking at the traffic jam and looking around him to see if there was an alternative, we could see the Superstrada across a field to our right. The next minute, Giuseppe, turned his car into a field towards the Superstrada, so I immediately followed, and close on my heels followed Pierre. I thought to myself, what on earth is this guy up to?

    Giuseppe, draws up at the edge of the Superstrada, I thought to myself again, 'He's waiting for a clear space and then he'll quickly turn right and we'll shoot off down the motorway.' Oh boy, how wrong was I, he was waiting for a clear space alright, but on the far side going in the other direction! We shot straight across the motorway, onto the motorway on the other side and turned left going up it in the correct direction. I just about (expletive) myself as I followed him, I could hear the expletives coming from the PAFC folks in my car as I was too busy concentrating on what the (expletive) was going to happen next!

    We arrived at the first supplier, safely I may add, I said to Giuseppe, "What the hell was that all about? "Ahh John, we were running late, we would have been much later if we had waited in that line to get onto the Superstrada!" I soon learned to drive like an Italian with Giuseppe as my teacher over the next few days!

    The first visit went very well, very good plastic Moulding Company, though their main business was in support of the Italian automobile industry. They took us all for an excellent lunch to be appreciated with good Italian wine. Carl Nale, who saw himself as an expert in this (wine) field, enthused about the wine and talked about the Opera in La Scalla in Milan. Pierre knew each supplier visit would take a day, as lunch was part of the programme and could not be rushed. We eventually made our way up to a hotel on Lake Garda for our meeting next day at a Sheetmetal Fabrication supplier.

    Lake Garda is a beautiful part of Italy set in a mountainous area, Driving the narrow roads were a bit of a challenge, but it was funny how the PAFC guys in my car were suddenly very appreciative of my driving ability. The visit that day was to another Plastic Moulding Company and their Toolmaker. Once again, both were excellent companies, and again we were off for another long business lunch in an absolutely beautiful restaurant with panoramic scenic views out the windows. Once again our PAFC wine expert was soon singing the praises of the wine our host had ordered, whilst boasting at how knowledgeable he was. Nale said, "The wine yesterday was superb, but the wine today, surpasses that!"

    Next day we had to drive a little way to Breccia, again in such a beautiful part of the country. This supplier had an internal Machine Shop and was another Toolmaker, their main line of business was making parts for guns! Pierre had picked the companies well. They also were excellent hosts and tour guides. After the business side was competed, they issued each of us beautiful hard backed Italian books, either on guns or, Italian history and the beauty of the region.

    This time though, we were to leave our cars and they would take us for lunch. The company cars were Maserati! I got in beside the Managing Director; he had the top of the range model. Wow! What an automobile, he and his staff drove us to his Private Club for lunch. As soon as we entered the Club, we were treated like royalty and shown to our seats; our host snapped his fingers, as almost immediately the wine was being poured.

    Our host was deep in thought and reading the one and only menu, as we started to sip on our wine. As before, our travel along American wine expert, sipped on his wine, and gave his now usual spiel, "This wine is unbelievable, the first day the wine was superb, and yesterday it was even better, and today, I've just never tasted wine as good as this anywhere." Carl Nale had no sooner finished his sentence, when our host had just tasted the wine, and immediately spat it back into the glass and shouted, "This wine is awful, take it away!" He hadn't been listening to our pet wine expert. The waiter quickly removed to wine from the table to be just as quickly replaced with another that met our host's approval. We all sort of looked at each other, trying to hold back from bursting out laughing at Nale's expert advice on the wine. Carl's expertise in this (wine) field had suddenly turned into his (mine) field! After that Carl never uttered another word about the wine that was placed in front of him. Pierre and I, almost split our sides later reminiscing about the story over a beer back in the hotel.

    It was a bit of a long journey, when we left Breccia, we had to head east towards Venice on Italy's busiest Superstrada, but I was an expert by now! We were on our way to visit Zanussi, a massive White Goods manufacturer, which was also doing subcontract work to help feed their massive fabrication capability. They could do everything from Pressure Die casting, to Plastic Injection Moulding, to Sheetmetal, to Machining. Although they were very impressive, their main business was for White Goods and the Automobile industries, they were not really an ideal fit. Unlike the other Italian companies we visited, they were quoted on the Stock Exchange so had shareholders to report to, the other companies would have been so much easier to work with.

    With those visits on the continent over, it was time to travel to the UK and show the PAFC guys what I had lined up to do the work on their System II Pressure Die Castings, as well as those who were making other parts for us, including the System II Covers. First stops would be Fry's and JV Murcott in England and both doing Pressure Die Casting. Fry's was the first stop, a big company again quoted on the Stock Exchange, although PAFC saw what they wanted to see, I could see they were not switched on to them.

    JV Murcott's was next. The whole team visited both Pressure Die casting Facilities as well as their own Toolroom, so not only did the PAFC folks get to see the Die casting shops, they also saw where the tools would be made and the equipment on offer. Needless to say, some considerable time was spent going over the 'Scrumpy Die Casting'.

    As was usual when visiting JV Murcott, lunch was always set in the boardroom and as always was excellent in choice. As we were staying two days at JV Murcott's we all went for dinner that evening.

    Dinner that evening was to turn out to be a huge laugh, at Walt Menge's expense. Walt had this raging thirst, the minute we sat down at the table, Walt asked for a glass of water, it was no sooner poured and the waiter starting on the next person's glass, when Walt requested a refill, his glass was refilled four times by the time the waiter had worked his way around the table. As soon as the first order was being served, Walt asked for another refill of water, and a few minutes more, requested yet again another refill. This time the waiter disappeared and returned with what looked like an enormous flower vase, full to the top with water and ice, the waiter promptly deposited it in front of Walt, I'm sure he was saying to himself, "Now drink that sucker!" Walt looked at the huge flower vase, then looked at the waiter, and said, "Now why didn't you bring that to start with?" The whole place erupted in laughter, and Walt's thirst was at last sated!

    We all moved back to Edinburgh, and spent time at Precision Machining. I had asked for working lunch as I wanted to focus on what they were going to do, the Euro holiday trip was past, now it was serious, as it was in JV Murcott. PAFC could see that Precision Machining had all the equipment required, they also had internal electro-plating and painting facilities, so the finished product could be easily achieved.

    Next we took PAFC to Livingstone Precision where the System II covers were being made, along with other HP parts, they also saw they too had Plating and Painting facilities as well as Front Panel Silk-Screening, which is a tough HP standard to meet.

    41. PAFC Aftermath...

    The Euro trip was over and at a meeting in South Queensferry PAFC totally agreed with my choice of suppliers. We had all the volume numbers on all the Pressure Die Cast parts, there was no way we could allow the PAFC folks to just go home and deliberate on what they had seen on this trip, I was impatient to get parts identified and to start to get the ball rolling. At the meeting PAFC, in particular Carl Nale could see the push was on and he didn't want to be seen as being negative, they had already discussed this amongst themselves, so PAFC proposed a plan where we would first address a Rear Frame and a couple of Side Struts. That met with my agreement, but I also wanted a follow up plan that would list the next stages, for more Struts and Rear Frames, and we got full agreement with those also. Part of that agreement was that PAFC would not replace Die Cast tooling that had been planned for those parts for their internal machines, but for it to be spent at JV Murcott for their needs.

    Having now got agreement on what parts were going to be manufactured in Europe, I also stated it was important for those suppliers to get an in-depth understanding of the manufacturing process in Palo Alto in the PAFC fabrication shop, as this would be a big help in foreseeing any production problems that may arise throughout the full manufacturing process. To my amazement everyone thought this would be a good idea to carry out.

    I set about and organized that our identified suppliers, JV Murcott and Precision Machining along with me would spend time visiting PAFC in Palo Alto. The suppliers were amazed at being able to do this, but signed up immediately, they also thought that seeing the actual production up front on how to make the parts, should allow them to avoid any pit falls or snags and hopefully make it easier for them to manufacture the parts in their own plants.

    It all went smoothly after the visit to PAFC, and the parts were soon up and running without too much hassle or problems. We were supplying the non USA divisions with some of the System II Die Castings. However it wasn't long until the parent divisions of QMD also wanted access to those cheaper System II parts, they wanted to lower the costs of their products. End result was our IPO was soon supplying the worldwide demand for those parts, it also helped speed up the transfer of more Rear Frames and Side Struts and Side Frames, much to PAFC's dissatisfaction and resentment. They were being forced into exiting some of their business, long before they really wanted to give up control.

    What they should have done in PAFC, was to start reorganizing and planned downsizing, but not them, as business was booming, any thoughts to downsizing was pushed out of mind into the background, a decision they would regret and not that far into the future either!

    There was another growing problem, PAFC resentment started to grow apace, they didn't like seeing their work and jobs starting to disappear and move overseas. They didn't think that the reason for this was due to their uncompetitiveness, nor did they even try to address that issue, PAFC should have been looking at focusing on where they brought added value and not at doing everything at any cost. That myopic thinking would hit hard in few more HP divisions. Their actions always were defensive, where they would try and protect what they had, they were all in for a major shock to their system.

    The resentment grew in PAFC, and at one point I got a private call from a friend in Stanford Park Division in Palo Alto, to make sure I always watched my back when visiting PAFC. There were people there who didn't like what was happening and I had a good possibility of coming up against some violence. From then on in, whenever I was visiting PAFC, I did not let anyone know on the PAFC site any of my planned details or schedules or even the whereabouts of where I would be staying or traveling to. I didn't even park my car in the PAFC car park, I would park it a block or so away and walk into the facility, using a different route on each visit.

    42. PAFC Failure to Change...

    The arrangement for our IPO to supply the worldwide HP divisions with high volume Rear Frames, Side Struts and Side Panels Pressure Die Castings, was highly successful during all the boom period for the Test & Measurement Divisions. This was about to change as the boom times were coming to an end, and the Test & Measurement Product lines were having a bad time due to market down turns and stronger price competition within the marketplace, by major competitors. Although the Test & Measurement products were in nearly every case the market leaders in technical capability, they were nevertheless starting to feel the pinch of the market downturn.

    Throughout the Test & Measurement Organisation, this downturn included PAFC, who were now beginning to realize the error of their ways by not addressing the affects that out sourcing would have on their organisation and manufacturing capability. By not downsizing or right sizing, when they had the proper opportunity to do it, that led them inevitably to being over staffed and unable to manage effectively the sudden work load changes being thrust upon them. The result was PAFC Management were about to make yet another ill-considered management decision.

    PAFC Management made the decision, without even considering discussing with the IPO, or their HP customers, or thinking of the impact their decision would have on HP external subcontractors, that they intended to repatriate all those lower cost external manufactured, subcontracted Pressure Die Cast parts. The intent was for in-house PAFC manufacture, to keep their employee's working. One of the PAFC management team, who totally disagreed with this negative backward step, let me know on the quiet what was being planned.

    It was obvious that PAFC were giving no thought to the downstream effects that this crazy decision would have down the line. It would affect not only the other HP worldwide divisions, but also the severe damage it would cause to supplier relationships. No way was I prepared to let something of this nature happen without a fight. I issued an e-mail to all the HP worldwide division customer users, whereupon I blew the whistle on what PAFC were planning on actioning. Boy, the (expletive) soon hit the fan in a big way; I hadn't realized just how much support I had with those user divisions. To a man, they all kicked back against PAFC, and all told them they should be addressing their over-staffing issue and leaving the low cost parts with the current subcontractors.

    The pressure was so great on PAFC, they had to leave all the high volume parts with our IPO subcontractors, and PAFC would only take back the much lower volume parts, but they also had to supply them to the worldwide divisions, at the IPO cost! PAFC may have kept a few people working, but it was now costing them even more to do that, creating a further financial loss at PAFC.

    I was able to work that decision outcome to the IPO suppliers as a benefit to all. It was easier to sell that decision to the suppliers as spreading the workload during difficult times between both HP and the suppliers. But also I pointed out it was even better for the suppliers, as they would still have the higher volume parts and removing the lower volume parts from them would ease their inventory levels and improve costs.

    The suppliers viewed this approach as a true example of good customer/supplier partnership. The worldwide HP user divisions had also won a breakthrough. They still had IPO pricing, no matter where the parts came from, and an understanding from PAFC that when the markets improved, PAFC would return those parts to our IPO suppliers for manufacture back via the IPO. There was also a commitment on PAFC's part that they would also fully address a downsizing programme to get the balance correct.

    It has to be recognized that when I issued the whistle blowing e-mail, PAFC management were not just absolutely furious, they were fit to be tied! To state they were mad and angry at me, just doesn't cover it. They would have liked to have had me fired for causing them all that embarrassment, but by then they were too late, I also had powerful allies lined up behind me defending my back. Jimmy Queen was one of them, Thomas Hofgaertner in Germany was another. I also know that Spokane got on the phone to PAFC the minute my e-mail hit their in-trays. This meant of course that PAFC just could not muster the forces to damage me; they paid dearly for their arrogance and by not informing me about their internal issues and their crazy solution to deal with them.

    Looking to the future PAFC knew full well that they would have to keep an eye on me and not try any more stupid decisions that just did not make economic sense. They wouldn't underestimate me again in future. I also was more acutely aware that I had to watch my back whenever in PAFC's back yard, or elsewhere that I came in contact with them, though I was already doing just that.

    43. IJBU Filters...

    Our IPO, in this case John Thomson, received a request to try and source a mesh Filter, The request came from Ken Rick in IJBU (Ink-Jet Business Unit) Corvallis Oregon. IJBU were currently buying this converted mesh filter from a supplier close to their facility. IJBU's supplier was converting the raw mesh material into the finished Filter product. Their supplier was buying the raw mesh from a supplier in Europe and he refused to reveal which company and from which country that raw mesh was being supplied from. This business was a cash cow to him, so why would it be in his interest to give up the name of his source of material. Personally I think that was a mistake on his part as it drove a wedge between his company and IJBU. If he had been more open, I doubt if IJBU would have contacted our IPO, and he would have kept the business.

    IJBU's request was to find a source capable of producing and converting this extremely very fine mesh for use as a Filter in HP's Ink Jet Printer Cartridges. The quantities were mind-boggling. John Thomson contacted a few suppliers in the UK. It turned out that this mesh material was used in the aircraft industry in relation to controlling airframe fuel. It had the capability not only to act as a Filter, but it had a flame restrictive action which could stop any blow back from the flame down the fuel line into the main fuel areas of storage. The company John Thomson had identified was GKN, a large well known supplier of components to many industries, particular in the areas of Sintered Products. They did not manufacture the Mesh material, they were converting it into other parts for their customers, but they would turn out to be a much more open supplier than the current one in the USA.

    Initially GKN were a little hesitant to get into the business with us. Their sales lady, Frances Horne, was keen, as it was a new business development and her Marketing Director Boss Barry, was prepared to listen. GKN was listed on the Stock Exchange, so trying to get a decision meant it would have to go in front of their Board. Both John Thomson and I went down to Sutton to meet with Frances Horne and Barry and give them a presentation of this new HP IJBU business. We explained that HP was in the throes of overturning the Computer Printing world with its relatively new invention of Ink-Jet printing. Barry was impressed and immediately switched on to our request, and agreed to champion it at the next Board Meeting. He met some resistance, but convinced the other Board members that GKN should get into this new extremely high volume Ink-Jet Printer Cartridge business.

    We were off, GKN, identified who all the main players were in the wire mesh industry; there were only two areas where this material was woven, Germany and Switzerland. The good news was that GKN already had contact with all the major Wire Mesh players in this industry. With Frances in tow, both John Thomson and I set off to give the suppliers a preliminary audit; we would later carry out further audits with the IJBU Procurement Teams. On our first preliminary audit we were pleasantly pleased. We would stay with GKN, as we needed a converter to convert the raw mesh into finished product, plus they had years of experience in working the wire mesh into other shapes.

    We requested a quotation from GKN on the finished Mesh Filter. The current USA supplier had been supplying IJBU with Filters at a cost of 38 cents each. Overnight we were able to go back to IJBU in Corvallis with our GKN cost of 18 cents each. IJBU couldn't believe it; you don't have to be a rocket scientist to realize that millions of these Filters were being used each and every month, with newer models for new Printer coming on the market. IJBU was now a strong ally of ours.

    Introducing the Singapore and Corvallis Filter Team. The filters were crucial
    to proper operation of the inkjet cartridges.

    IJBU, wanted to audit the suppliers, not a problem with GKN, though the Mesh suppliers were very protective of their business, but in the end all but one agreed. The one that was really hesitant, turned out to be the worst of all the suppliers. The audit team from IJBU Corvallis was Ken Rick Buyer and Bart Hunter Engineer. Both John Thomson and I accompanied by Frances Horne would visit three mesh suppliers, Bopp in Switzerland, Paul in Germany and Haver and Boechler in Germany. The volume of mesh we would be requiring would be high, and the timeline to weave extremely fine Mesh was considerable. A weave of a certain size could be on the one loom for many weeks, which meant we would require a number of looms in operation at the one time. It turned out we would have a number of looms in operation ALL the time. We decided on using two suppliers, Bopp in Switzerland and Haver and Boechler in Germany, they were by far the undoubted leaders in their field, it took a while to earn their trust, but they came round to knowing that HP would not share anything from either company with the other company.

    We would have numerous visits to both companies and to GKN in the months and years to come. Both the Mesh weavers and GKN would eventually build a unique section, just for our HP IJBU parts, it was most noticeable in GKN, who created a clean room environment to ensure no contamination took place. The level of business with all three companies quickly grew into millions of dollars. Every time we would visit, they would all lay out the red carpet!

    There was also a World-wide Filter Team from CVD, San Diego, Puerto Rico,
    visiting the UK supplier, GKN.

    Ken Rick and Bart Hunter, like Steve Slover before, moved onto other projects and the managing of the suppliers and the IPO fell to IJBU San Diego and Karen Kuchar. Karen had been involved and taken part in visits and she assumed the management role. Karen Kuchar was also a strong IPO ally and supporter.

    Although each and every raw Mesh supplier went out of their way in showing us excellent hospitality, GKN always seemed to go just that bit further. They believed in HP and wanted the partnership developed at all levels, GKN would organize a dinner in the evening where all parties at all levels would be invited on different occasions to join with us to enhance the communications. Those were fun evenings and the IJBU teams really appreciated the special efforts. Over time we also had the IJBU Procurement teams from Puerto Rico and Singapore join us on visits. I arranged the reciprocal of this with supplier visits to the IJBU plants around the world, Corvallis, San Diego, Puerto Rico and Singapore, and eventually Ireland when they came on board.

    When we visited GKN in Sutton, they would make a block booking of rooms, but we paid for our own rooms. In the Riber Hall Hotel, a very old hotel with creaky floors and rafters, on one occasion, Karen Kuchar was given the room that overlooked the Secret Garden. She just couldn't believe what was outside her French windows, and she really enjoyed it. The dinners were always exceptional, and GKN always made arrangements that none of us would have to drive, which was very helpful after a few glasses of wine and a Gin & Tonic or two!

    JaydaTan, a Buyer and Beatrice Yung an Engineer came on a visit from Singapore. Beatrice had been in the UK before, where she earned her engineering degree; it was Jayda's first trip, so we had to make it especially exciting for her. When the two Singaporean girls arrived in Edinburgh, they were frozen, not used to our colder weather. I had organized a Witchery Tour; it's a walk around the dark old streets of Edinburgh Old Town talking about the witches and ghosts that walked the streets. It started off at Edinburgh Castle, where our tour guide Adam Dalgleish (Deceased) would start his walking tour. The first part was to demonstrate thumbscrews and he need two volunteers, at which point I pushed both Jayda and Beatrice to the front, to be fitted with thumbscrews. They were told they would be left there till the next morning.

    Another IJBU Filter team meets at Haver & Boeckler, a German filter supplier.

    Once freed, we all started to walk through all the old closes' and vennels of Edinburgh's Old Town, where every now and then an actor would suddenly appear and carry out an unsuspected act. On at least three occasions, both Jayda and Beatrice let out the loudest screams as some ghoul or other leapt out at them, at one point we had to go and retrieve Beatrice who was half way down the street and refusing to come back! They soon forgot all about the cold, but the looks on their faces from the last bang as the tour ended, said it was time to go and eat some warm food in one of Edinburgh's creepiest and oldest restaurants, "The Witchery".

    The IJBU visits both in the UK, Germany, Switzerland, Puerto Rico, Singapore, Corvallis and San Diego were amongst the best memories of all. It's a pity the same could not be said for when IJBU Ireland came on board.

    44. IJBU-Ireland...

    It's worth mentioning, it was not always IPO versus HP Divisions. A big percentage of divisions were extremely supportive of the IPO and the work we did for them, even though there were lots of times when new men and women would join their new division. One of these events was with the Irish Dublin IJBU facility.

    IJBU-Ireland came onboard years after we had set up all the Filters and the other sheetmetal parts. As usual with a new start up in a new country, it was staffed full with so called bright young university graduates, all green behind the ears and pushing hard to make their mark on everything that came across their path. They thought that as they were in Europe, they had nothing better to do than take over completely the control of all the Filter business. They hadn't even added one piece of added value to the whole Filter programme business. They were in Europe, so why shouldn't they take it over, or so they thought!

    Unfortunately the stronger commodity management leaders like Ken Rick and Karen Kuchar had moved on to other commodity management positions. The baton was passed to Gary Starr, from Corvallis, to be the IJBU Commodity Manager. Although Gary had always followed in Ken Rick's shoes, he was not made of the same stuff and IJBU Dublin just rode roughshod all over him.

    At one of the meetings held in the IJBU facility in Dublin, we were discussing the transfer of a new production line for a new family of Ink-Jet cartridges to be assembled in Ireland. I enquired about the forecasted volumes over the next few years. This Irish university greenhorn, of at the most nine months service with HP said to me, "We can't tell you that! It's confidential HP knowledge that cannot be shared with anyone!" Boy did she (expletive) me off big time; I immediately responded with, "Tell me, how long you have been an HP employee?" "Nine months," she replied. To that I responded, "Well, I've been an HP employee for over 25 years, and have had full access to the most sensitive and secretive of HP confidential information, with a multitude of Divisions R&D departments as well as HP Labs! So tell me again, what makes your information just so special?" She hardly uttered a sentence after that, and from then on, all the volume numbers were always laid out on the table, for all HP parties to discuss. I had little time for the likes of her and the other greenhorns after that.

    IJBU Dublin Ireland, wanted to run the whole global IJBU Filter management, and failed. I was wise enough though, to realize they were so green, they would always be a pain for us to support, as they were in Europe and they wanted to deal direct with the European suppliers. John Keogh, who was now managing the commodity for our IPO team, and I discussed with the suppliers the problems that they would meet by agreeing to what IJBU Dublin requested in their agreement. This was to let IJBU Ireland buy direct, with all the other IJBU divisions still working via our IPO network.

    It wasn't long though before the suppliers started to complain to our IPO about the chaos IJBU Dublin was causing them and asking us if we could revert back to the single point of contact through our IPO? I told the suppliers that it was too late, and that we had previously warned them that this would happen, but the suppliers in their enthusiasm to please the customer in Ireland, signed up to supplying and dealing with them direct, against our better judgment. It was a problem of their own making, so they had to live with it. IJBU Dublin just could not get a handle on the volumes they would need or not need, they were ordering all the wrong parts and in the wrong volumes. I told the suppliers that you do not stop any of the orders that the IPO places to fit in a screwed up IJBU Dublin rush order. Neither I nor any member of my IPO team was going to get involved in any of the IJBU Dublin screw ups.

    What IJBU Dublin didn't know was, that over time, their inexperience in supplier management was being reflected in a slightly higher unit part cost and that their erratic volume parts planning, meant that the IPO would always get priority of parts, just as well those parts were unique to IJBU Dublin and not going to the other IJBU divisions, otherwise our IPO might have found it difficult to explain.

    IJBU Dublin's inexperience would show up again on another high volume commodity.

    45. IJBU Springs...

    Our IPO, got more involved with IJBU Corvallis. This time it was with sheetmetal parts. Springs that fit inside the Ink-Jet Cartridge Pens. When IJBU Dublin eventually came onboard on this commodity, the greenhorns in Dublin could never understand why we chose a company in Birmingham called Brandeur that made extremely high volume, in the multi-millions of metal Pen Nibs. This, in Dublin's eyes, was not a fit for the types of metal parts that IJBU needed. Once again their immature level of manufacturing experience came to light. They even, behind our IPO backs, stated to Corvallis, that this was not a good-fit supplier for this type of business. Corvallis just ignored the IJBU Dublin inputs and told them this is a Corvallis project and has nothing to do with IJBU Ireland. Seemed to me that the other IJBU divisions who had lots of experience had finally found out what IJBU Dublin was like.

    IJBU Dublin just failed or lacked the experience to look below the surface at what supplier capabilities were available there. John Keogh and I as well as the Corvallis engineer, who had worked with us on the Filters and was well aware of our IPO capability, and could see what was needed from the supplier. Brandeur took onboard every detailed input we gave them. They built a clean room type environment well away from their other production lines, to manufacture our parts. They were doing exactly what GKN had done before them with Filters.

    Brandeur was a long experienced company with an equally long experienced Tool Room. They excelled in the art of Fine Blanking, a specialist sheetmetal process, and one that recognised the opportunity of moving their business into another discipline.

    When Brandeur had our production line up and running, they took great pride in showing it to other potential customers, as long as those customers were not direct competitors to HP's IJBU business. From the outside of the Brandeur Victorian building, one would never have guessed that deep in the bowels of that old building, lay an ultra-modern production line, manufacturing parts in a clean room environment for state of the art Ink-Jet printers for the computer world. The Brandeur Managing Director said to me over lunch one day that the company had started back in the days of quill pens and moved to pen nibs, so it seemed a natural progression to him and his company to move onwards to the latest invention of Ink-Jet Printers... I liked his style!

    Our IPO also asked Brandeur to refrain from doing business with any other company that was a direct competitor to HP's Ink-Jet Printer business, that included Printers as well as Ink-Jet Cartridges, which Brandeur fully agreed to do. With our ever increasing volume and new parts, we could more than keep them occupied.

    46. IJBU Chip Contact Strip...

    It's not always the green behind the ears straight from University types that display high levels of immaturity, lack of foresight, experience and understanding of the world of supplier management and procurement, whether at home or internationally. On one occasion Malcolm Newlands and I just couldn't believe a decision made by IJBU Functional Management, this time within Corvallis. Corvallis was the parent division in the IJBU global organisation.

    IJBU Corvallis on this occasion, clearly demonstrated that those not directly involved in Supplier Management and Procurement, should be kept well away from the decision making. They should have sought out the advice from their in-house experts within their own Procurement and Materials Department, instead of accepting some glorified highly biased intellectual illogical thinking. This had previously been supplied by their peers within the supplying subcontractor high level management.

    Our IPO had been contacted by IJBU Corvallis Procurement Department. They wanted us, after past successes, to see if we could identify a European supplier capable of manufacturing their needs for an extremely high volume Chip Contact Strip, which they had sole sourced to 3M in the USA. I asked Malcolm Newlands to see what he could find. True to form, Malcolm identified a supplier in France. What's more the cost of the finished part from that supplier in France would have saved mega millions in dollars to IJBU.

    Corvallis Procurement were over the moon at this major breakthrough in cost savings and cost reduction and made a presentation to their Functional Management team. What a huge mistake that turned out to be! It appeared that members of the Functional Management Team had previously been involved in the negotiations with 3M, so there was an immediate resistance to any thought of moving to a new supplier, particularly one that was based in France!

    But the savings now on offer via the French supplier were just too big to be ignored. There was no way 3M could even come close to matching those prices. Unfortunately it was members of the IJBU Functional management that set up the previous arrangement, so they decided THEY would contact 3M and the people at their level who they worked with before on the initial set up. Another huge myopic mistake. 3M management stated they could not manage the prices our IPO quoted from the French supplier, so they tried another tack to apply pressure on IJBU.

    3M stated they had invested millions of dollars in their R&D to support IJBU, and they needed to cost their parts to reflect this investment, particularly if IJBU would require this 3M R&D support and expertise with IJBU's new product developments in the future.

    3M however, recognised that IJBU did have a valid opportunity to reduce their costs, so to make it sound like 3M was playing their part in the partnership; they offered a small cost reduction on their parts. IJBU Functional management swallowed that line, hook, line and sinker. They should have stated that as these parts were now available in the outside market at a much more competitive cost, then 3M were no longer offering a state of the art product. Functional Management couldn't think logically along those lines, so they stHowever, IJBUated that IJBU would remain with 3M as the primary supplier for all the IJBU production needs.

    An extremely bad Functional Management decision. They had within their grasp, the means to control and manage their supplier, 3M. Rather than doing that, they had now basically decided on subsiding their supplier, instead of maximizing the profit to HP and its shareholders and employees. This IJBU Functional management decision had missed the opportunity to manage their supplier and instead allowed 3M to manage them. At the very least they should have come to an arrangement, where they placed the old cartridge pen requirements via our IPO and with the French supplier. With that move, it alone would have clearly put IJBU in the driving seat with 3M, and 3M would have known it, instead, 3M were laughing all the way to their bank and their shareholders!

    It had yet to be proved that 3M had some technological advantage in their involvement in new R&D Products.

    If ever there was a clear example required to highlight, that non Materials/Procurement decisions should ever be allowed to be made by those types of people, including Functional Management, then surely this was it.

    Unfortunately that will always be the case, there are many Functional Management groups who have delusions of grandeur when it comes to their decisions or capability in a Materials/Procurement environment. Their mindset seemed to be; everyone's a buyer, after all they do it every weekend when the go to Wal-Mart!

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