Procurement Risk Management (PRM) at Hewlett-Packard Company

Authors:
Venu Nagali;Jerry Hwang;David Sanghera;Matt Gaskins;Mark Pridgen;Tim Thurston;Patty Mackenroth;Dwight Branvold;Patrick Scholler;Greg Shoemaker
Affiliations:
The Procurement Risk Management Group, Hewlett-Packard Company, Houston, Texas 77070;The Procurement Risk Management Group, Hewlett-Packard Company, Houston, Texas 77070;The Procurement Risk Management Group, Hewlett-Packard Company, Houston, Texas 77070;The Procurement Risk Management Group, Hewlett-Packard Company, Houston, Texas 77070;The Procurement Risk Management Group, Hewlett-Packard Company, Houston, Texas 77070;The Procurement Risk Management Group, Hewlett-Packard Company, Houston, Texas 77070;The Procurement Risk Management Group, Hewlett-Packard Company, Houston, Texas 77070;The Procurement Risk Management Group, Hewlett-Packard Company, Houston, Texas 77070;The Procurement Risk Management Group, Hewlett-Packard Company, Houston, Texas 77070;The Procurement Risk Management Group, Hewlett-Packard Company, Houston, Texas 77070
Venue:
Interfaces
Year:
2008

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Abstract

Supply chain risks related to product demand, component cost, and availability uncertainties can have a significant impact on a manufacturing company's revenue and profits. The Procurement Risk Management (PRM) Group at Hewlett-Packard (HP) developed and implemented a mathematical model, business process, and software to measure and manage supply chain risks on the procurement side. In 2006, the software-enabled business process helped HP to manage over $7 billion in spending; this resulted in material-cost savings of $128 million. Over the past six years, HP has realized more than $425 million in cumulative cost savings using the PRM approach.