When a company expands its line of products and markets, it is a pretty good bet that facility expansions will follow suit. That is the situation that personal computer (PC) manufacturer Lenovo finds itself in.
For years, the company has manufactured personal computers for the business market, and Jon Pershke, vice president of Americas Group Supply Chain for Lenovo, described this segment as “the sweet spot” for the company.
In 2005, however, Lenovo, which has its executive headquarters in Morrisville, N.C., near Research Triangle Park, acquired the Personal Computing Division of IBM, transforming the company into a global information technology (IT) competitor and the third-largest personal computer company in the world. With the acquisition, Lenovo began to increase its presence in the global consumer PC market.
With company growth comes the need for more manufacturing plants and distribution/fulfillment centers. Lenovo has embarked on an ambitious global facility expansion plan. It is opening five new facilities around the world, including in Legnica, Poland; Monterrey, Mexico; Baddi, India; and Whitsett, N.C., near Greensboro.
The philosophy behind these expansion projects is clear: To be closer to Lenovo’s growing number of end-customers, Pershke said.
“It is not too much more complicated than that,” he pointed out.
Company Decides on Greensboro Metro
That philosophy is evident in Lenovo’s decision to site its U.S. fulfillment center in Whitsett, which is expected to launch operations in January.
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“From a logistics perspective, we could hit our end-customers in North America in an efficient and timely manner from any of the sites. This was our primary objective. The tiebreaker was our commitment and foundation in North Carolina and the proximity to our headquarters.”
— Jon Pershke, Vice President of Americas Group Supply Chain, Lenovo
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The company’s original site location criteria had the plant going somewhere in a region encompassing parts of Tennessee, North Carolina, South Carolina and Kentucky. Any site in this region would put the facility in proximity to the large population centers of the Northeast U.S.
Since all potential sites were logistically sound and costs were similar, Pershke said the decision to site the plant in Whitsett came down, in part, to the fact that the community is less than an hour’s drive from Morrisville.
“From a logistics perspective, we could hit our end-customers in North America in an efficient and timely manner from any of the sites,” Pershke said. “This was our primary objective. The tiebreaker was our commitment and foundation in North Carolina and the proximity to our headquarters.”
Another important factor in the location decision was the skill sets needed by the work force. While it is being described as a fulfillment center, Pershke called the facility a “hybrid” between a pure distribution center and a manufacturing plant. Employees must be flexible to meet the needs of North American customers, he said.
The facility, which will encompass more than 200,000 square feet and be home to 150 to 160 employees, will support product configuration, distribution services, returns management and manufacturing.
In some cases, distribution might be the No. 1 issue for employees to handle; in other cases, it could be low-volume manufacturing or some light manufacturing that needs to be done closer to the end customer, Pershke said .
Employees need to be able to turn on a dime depending on the circumstances.
At each potential site, Lenovo found work forces that had both logistics and manufacturing components. However, in Greensboro, the company will find a work force that historically has been a quality manufacturing center (from decades of being one of the leading furniture manufacturing regions in the country) and one that is strong in logistics. The region is home to various trucking companies and FedEx is building its Mid-Atlantic Air Hub at the nearby Piedmont Triad International Airport. The facility will be ready for business in 2009.
“That combination of skills is good for us,” Pershke said.
And with Whitsett just a short drive from Morrisville, the company will transfer some employees from the headquarters operations to the new facility.
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“Greensboro met all the criteria and is within an hour of our headquarters. Our sales team can drive customers to the facility to see the fulfillment and manufacturing activities. We could have found comparable factors in other sites; proximity put Greensboro over the top.”
— Jon Pershke, Vice President of Americas Group Supply Chain, Lenovo
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“Greensboro met all the criteria and is within an hour of our headquarters,” Pershke said. “Our sales team can drive customers to the facility to see the fulfillment and manufacturing activities. We could have found comparable factors in other sites; proximity put Greensboro over the top.”
On the other side of the ledger, Greensboro-area officials believe Lenovo is an important component of a strategy to create job opportunities in technology in the metro.
“Successfully attracting Lenovo to Greensboro validates our strengths — a qualified, skilled work force, and a strategic location as an East Coast hub for logistics and distribution with superior infrastructure,” said Kathi Dubel, vice president of the Greensboro Economic Development Alliance, who helped recruit the company.
Giving Back To the Community
Despite the multi-disciplinary skills that will be required in the new facility and that North Carolina has one of the best work force training programs in the country (No. 6, according to an Expansion Management poll of site location consultants earlier this year), Lenovo has declined funding. In fact, it has declined incentives of all kinds for the Whitsett project.
The company withdrew its application for more than $150,000 in local incentives in the hope that Guilford County (where Whitsett is located) would apply the money to projects in the best interests of the community, such as the rebuilding of Eastern Guilford High School, which was destroyed by a fire in November 2006, Pershke said.
“We suggested that the county reinvest in its infrastructure,” he said. “We weren’t out [to site this facility] based on who would offer us the best short-term incentive package. We made a decision that was good for our customers and good for us. We want to be members of the community and help make it strong. In turn, they will make us strong.”
Pershke said Lenovo expects to see almost immediate results from the facility, both financially and terms of customer service.
Philosophically speaking, customer service will the No. 1 issue for the Whitsett plant, as well as at Lenovo’s other new plants around the world. The company is also expanding its internal operations and investing in information technology in the supply chain to support its products and deliver them reliably and quickly.
“Proximity to our end-customers is essential to our supply chain strategy,” Pershke says. “The combination of managing the physical and information flow through our supply chain is important to what we’re trying to accomplish on a worldwide bases.”
