Upgrade delays HP delivery

By PETER GRIFFIN

Teething problems with a new inventory system appear to be behind a series of delays in PC shipping times at Hewlett-Packard that have left some retailers and customers stranded without computers.

Long known for its excellent supply-chain management, HP introduced an upgraded system on February 15 that initially resulted in orders being lost.

A number of HP business partners spoke of the problems to the Herald but did not want to be named for fear of hurting their relationship with the computer heavyweight.

"A lot of business partners kept logging orders. Nothing was turning up, orders just disappeared," said one industry source.

HP's resellers were reportedly told of problems with the "Fusion" inventory system in mid-February and asked to temporarily avoid putting orders for PCs through the system.

One computer retailer had a back-order for 60 computers that was yet to be filled.

One frustrated purchaser placed an order in mid-February and has now been given an arrival date of March 15. "Every time [the laptop] reaches its [estimated time of arrival], they push it back a fortnight," he said. "I'm supposed to be in Tokyo on March 11."


Robin Paterson, operations director at Hewlett-Packard, played down the problems, which he said went with "any large and complex implementation".

"We did go through a major systems change in mid-February. It was the last major piece of systems integration to come out of the HP-Compaq merger."

Paterson said the upgrade had "created some delays but they were days rather than weeks".

Fusion is based on an SAP core and is used around the world by HP divisions and tapped into by its manufacturing plants.

HP New Zealand sent a team to Singapore to observe the system's rollout there.

Supply chain problems aside, HP and other computer vendors continue to be hit by a shortage of liquid crystal display (LCD) panels, which are increasingly in demand by the computer industry for monitors and now by the consumer electronics industry for flat panel TV screens.

"The long-talked-about migration to portables has happened in the past 12 months. It has caused sustained shortages in LCDs," said Paterson.

But HP had been able to manage demand reasonably well.

"The average backlog has been pretty consistent over an 18-month period," he added.

HP customers can expect to wait two weeks for a PC to arrive, though the timeframe varies depending on the availability of models.

There has been a recognised shortage of LCD panels since the middle of last year, pausing for a period the steady drop in price for LCD screens.

Harvey Norman's general manager for computers, Luke Naish, would not comment about HP's inventory system but said the market was "deficient" in a number of areas, LCD screens being the most important.

The inventory hiccup comes as fears rise among HP resellers that the computer maker is increasingly interested in direct sales over partnering on deals.

"Big accounts will increasingly go direct. For the next level of customer down [HP] will partner," said one.

Some resellers point to a recent computer tender put out by Massey University. HP put in a bid with a channel partner but also a separate bid on its own. It won the bid alone. IBM put in a bid with reseller Computerland but missed out.

Computerland's marketing manager, Michael Friedberg, said the trend was "a fact of life" and had not been repeated as strongly by the likes of laptop vendor Toshiba.

Paterson said HP did more than 80 per cent of its business with channel partners, going direct to customers on only a handful of accounts. The level of channel business had remained steady for several years.