Lenovo's Strategy Includes No Global HQ, More Vertical Supply Chain

By all accounts, Lenovo appears to be having a great year so far.

Shortly after deciding its PC business was going well enough for it to drop the IBM logo from its machines two years ahead of schedule, Lenovo launchedan ultra-thin laptop that has most tech reviewers salivating.

So some observers were surprised when the company decided to tweak a global business model that appears to be working well. According to vnunet.com, Lenovo will no longer have a global HQ. Instead, its executives will simply convene on an as-needed basis. Says Milko van Duijl, the president of Lenovo EMEA (Europe Middle East Africa),:

Headquarters drive the kind of behavior where people wait for a decision before they move, and we do not want that. We call it world-sourcing. It lets us accumulate the right skills at the right cost and makes us more responsive.

Lenovo also will no longer use third parties in the manufacture of its desktop PCs, a strategy van Duijl says should allow the company to change its designs much faster. The EMEA division will employ 1,000 locals to produce 5 million PCs a year at a manufacturing facility in Poland, according to vnunet.com.

That facility could also begin manufacturing laptops, to counter the rising costs of transporting such machines from manufacturing facilities in China. This is a smart move. As I blogged back in September of 2006, the horizontal supply chain model is beginning to fail companies as the price of raw materials -- and fuel -- continues to rise.

Lenovo's EMEA division grew 21 percent in 2007's fourth quarter, generating $1.1 billion in sales.