Weekly Roundup - Process Efficiency in Procurement, HP’s AI-Optimized Servers and Bonprix’s Digital Product Passport

According to McKinsey’s CPO survey, brands are increasingly prioritizing end-to-end process efficiency to combat demand volatility, geopolitical tensions, and inflation in shipping and raw-material costs. Efficiency has become the top sourcing consideration for nearly half of all survey respondents, a significant rise from its fourth priority in 2019. About 70% of respondents expect to improve sourcing costs in the near term, leading to a reassessment of how to enhance efficiency across all sourcing facets, including product costs, sourcing expenses, and go-to-market processes.

Source: McKinsey Apparel CPO Survey 2019, 2021, 2023

Brands are focusing on building long-term, mutually beneficial relationships with suppliers to improve planning, resilience, and efficiency. 71% of brands prioritize consolidating their supplier base, with deeper relationships now representing 43% of the supplier base. Shared investments in projects and infrastructure, along with collaborative planning processes, can align short- and long-term business objectives and mutual targets. These and other themes mentioned in the article highlight the need for brands to adopt a more efficient, sustainable, and collaborative approach to sourcing, leveraging digital tools and data-driven strategies to navigate the complexities of the current market landscape.

Source: McKinsey Apparel CPO Survey 2019, 2023

Hewlett Packard Enterprise (HPE) forecasted third-quarter revenue above Wall Street expectations, fueled by strong demand for its AI-optimized servers, which sent its shares up 11% in extended trading. The demand for AI servers, powered by Nvidia hardware, led to AI systems revenue more than doubling from the previous quarter. HPE projected third-quarter revenue between $7.4 billion and $7.8 billion, compared to estimates of $7.46 billion, and reported second-quarter revenue of $7.20 billion, surpassing estimates of $6.82 billion. Additionally, HPE is seeing increased demand in its hybrid cloud and data storage segments, aided by AI integration. Sector peer Dell also saw a rise in AI server shipments, though at the cost of weaker margins. HPE's CEO Antonio Neri emphasized strong order books and improved supply chain conversion, while CFO Marie Myers expressed confidence in long-term trends in hybrid cloud and networking, which bodes well for a recovery in the networking market. Overall, HPE's strong second quarter and optimistic forecasts highlight the growing significance of AI and high-performance computing in its business strategy.

Bonprix, a subsidiary of the Hamburg-based Otto Group, introduced a swimwear collection with a digital product passport in early June. According to a press release, this passport, accessible via QR code, includes a Sustainability Report detailing the entire supply chain, insights into the ecological performance of selected suppliers, and the environmental impact of each product. For each swimwear item, more than 200 data points were collected to calculate the life cycle analysis. The introduction of the Sustainability Passport is a step towards greater transparency for customers and preparation for future EU regulations like the Ecodesign for Sustainable Products Regulation (ESPR). Stefanie Sumfleth, Vice President Corporate Responsibility & Technical Product at Bonprix, emphasizes the strategic importance of the project, highlighting the company's long-standing efforts to bring transparency to the supply chain and the benefits of sustainable materials.

Nike is grappling with supply chain constraints, which are hindering its ability to meet demand effectively. A slower-than-expected recovery in China and a challenging macroeconomic environment, including high oil prices and elevated interest rates, are also affecting Nike's overall performance. Despite these challenges, Nike’s gross margin improved to 44.5%, up 100 basis points y-o-y in the first three quarters of 2024. The company plans to reduce expenses by $2 billion over the next three years, potentially boosting its operating profit margin to over 15% from the current ~13%. However, strategic cost reductions, inventory management, and potential market recovery efforts could position Nike for future gains once economic conditions stabilize.

Dive deep into research

"Exploring optimal pathways for enterprise procurement management systems based on fast neural modeling and semantic segmentation" by Xiaodong Wang, Xinchao Shi, Junbo Chen, Xu Guo, Donghai Li (2024)

"An integrated multi-criteria decision-making and multivariate analysis towards sustainable procurement with application in automotive industry" by Sudipta Ghosh, Chiranjib Bhowmik, Sudipta Sinha, Rakesh D. Raut, Madhab Chandra Mandal, Amitava Ray (2024)

Events

The European Sustainable Industry Summit 2024

When: 25. - 26. June 2024

Where: Brussels, Belgium

What: The European Sustainable Industry Summit stands as the premier gathering for forward-thinking companies leading the charge in shaping the next era of corporate sustainability practices, advancing a resilient, inclusive, and environmentally responsible Europe.

European Manufacturing Conference 2024

When: 24. - 25. September 2024

Where: Brussels, Belgium

What: Over 350 participants are expected at Event Lounge to engage with policymakers, industry representatives, as well as academia, RTOs, startups, scaleups, and innovators at the European Manufacturing Conference this year.

AI & Big Data Expo

When: 01. - 02. October 2024

Where: Amsterdam, Netherlands

What: AI & Big Data Expo is the leading event for Enterprise AI, Machine Learning, Security, Ethical AI, Deep Learning, Data Ecosystems, and NLP.