Lenovo stepping up to meet surging demand

Updated:Feb 03,2021 10:33 AM China Daily

Every second, a new personal computer flies off the assembly line at LCFC (Hefei) Electronics Technology Co Ltd, a production base of Chinese tech giant Lenovo in Hefei, Anhui province. It is the company's largest PC factory in the world. The goods are then automatically packaged, scanned, sorted and shipped to more than 126 countries and regions, as well as sold domestically.

"On average, we have to process more than 5,000 orders per day, 80 percent of which are customized products," said Bai Peng, who manages the factory.

Through the digital and intelligent management of each link, within four hours after receiving orders from all over the world, more than 2,000 kinds of raw materials can be transferred from warehouses and automatically sorted and transported to computer motherboard production workshops, Bai said.

Lenovo has invested over $100 million into the digital management of its supply chain over the past three years, with more than 2,000 core suppliers around the world. Workers can now access the real-time status of orders and production lines of other factories as well as monitor the manufacturing situation of suppliers in the intelligent supply chain platform system in order to coordinate production and supply.

The Hefei plant offers a peek into how Lenovo's factories in more than 30 locations around the world are running at full throttle to meet pent-up demand for personal computers, as the new global norm of work, learn and play from home drives long-term growth.

Gianfranco Lanci, president of Lenovo, said: "The COVID-19 pandemic continues to impact both supply and demand. Lenovo, however, has and continues to fare better than many in the industry given our operational excellence and global/local model."

The world's largest personal computer maker recorded a 29 percent year-on-year growth in its global PC shipments to over 23.1 million units in the fourth quarter of last year. The robust performance has helped Lenovo further dominate the global PC sector with a market share of 25.2 percent, a new high for the company, said International Data Corp, a market research firm.

"Lenovo's operational capability, timely response to the work and learn from home trend and focus on high-growth and premium segments drove the record performance," Lanci said.

He said the company's strength and competitive advantage have been its truly global supply chain and manufacturing footprint with more than 30 locations around the world.

Looking ahead, Lenovo sees more long-term total available market growth opportunities as customers want one device per person to fuel a "remote revolution" of working, learning and playing from home, and there is an acceleration in the PC replacement cycle to address people's growing needs for productivity, education and entertainment.

"Take hybrid learning as one example. Students and teachers will require not just the right hardware devices for performance and connectivity, but also the right software solutions and platforms to manage a remote classroom and maintain security," Lanci said.

"At the same time, in mature markets where affordability is not an issue, I believe in one PC per person, instead of one PC per household," Lanci added.

Moreover, IT spending is going to recover this year, and corporate demand could potentially rebound. In the commercial sector, companies will need to continually adjust to meet employees' IT demands, such as moving from desktop PCs to more portable PC solutions, or new devices and technologies, such as in security, to better enable a new workspace setup and layout, the senior executive added.

Worldwide IT spending is projected to total $3.8 trillion in 2021, an increase of 4 percent from 2020, according to the latest forecast by market research company Gartner Inc.

John-David Lovelock, research vice-president and an analyst at Gartner, said: "While there have been unique stressors imposed on all industries as the ongoing pandemic unfolds, the enterprises that were already more digital going into the crisis are doing better and will continue to thrive going into 2021."

Lanci highlighted that the pandemic has triggered unprecedented disruptions in work, school, social connections and many industries from healthcare to entertainment. As a result of the disruptions, an accelerated digital transformation transpired in record speed and created radical shifts in the new "everything-from-home" environment that will forever affect how people live, work and use technology. Such changes will profoundly shape the PC sector.

"We will also see a greater convergence between consumer and commercial use cases. The convergence will bring together the durability and reliability of commercial PCs like the Think-Pad, for instance, with the multimedia and gaming features of consumer PCs," he said.

According to Lanci, Device-as-a-Service and Software-as-a-Service will also develop for both commercial enterprises and small-and-medium-sized businesses to reduce capital expenses and move to real time agile solutions.

Device-as-a-Service and Software-as-a-Service are offerings that deliver the entire IT package in one bundle-device hardware, including periodic upgrades, operating systems and applications, and end-user support.

"The evolution from one PC per household to one PC per person will continue," Lanci added.