Lenovo has been one of our close partners for many years. Therefore, we were of course thrilled to hear the news that Lenovo have now opened their first manufacturing plant in Europe! And the good news just keeps coming, even during this time where our headlines are filled with news of international unrest, delivery crisis, and demands for sustainability.
During recent years, we have all experienced like never before that time has become a critical factor in the IT industry. Many are experiencing issues with the deliveries and even though we are tightly connected in our digital infrastructure, geographical distances are becoming an issue when there is a need for new equipment. With that, it was clearly interesting to discover that one of the world’s leading IT manufacturers is now taking a big step towards increasing the proximity and thereby increasing the reliability of the delivery for all customers in Europe and the nearby regions. This factory is an important strategic piece of Lenovo’s international production network containing more than 35 plants.
Søren Koed, Country Sales Manager from Lenovo Infrastructure Solutions Group i Danmark explains: “Establishing another factory is a strategic decision on our part. It is an obvious benefit to our customers since we are one of the very few in the market that actually own and operate our own manufacturing plants and the two key elements of the plant in Hungary are sustainability and delivery” he says and adds: “As far as deliveries go, we will not get the components faster than our competitors because they originate from the same place, such as for instance China. However, once we have the components in our factory in Hungary, this is when we obtain our unique flexibility. We have the ability to scale at a completely different level than before. Delivery and speed go hand in hand.”
Flexibility and Capacity
We have worked with Lenovo for years, both in Denmark and globally. This new plant certainly adds several aspects, Ramus Foli, Head of Vendor Management at edgemo says: “The plant is new, and they are slowly adding to it. The idea is that the products must travel a shorter distance, which is the be-all and end-all for our customers. As such, in a time where delivery time is a crucial aspect of the competition, this is a great development filled with opportunities.” Practically speaking, Rasmus is very excited when speaking of the prospects of the plant in Hungary. “It is a very positive notion that Lenovo can play a role when it comes to capacity. The ability to scale production is present and the road thereto has become much shorter. This will affect both the large and the small orders” Rasmus Foli says.
Virus Affecting the Delivery Nerves
In the IT business, we know quite a bit about viruses, however, when the Covid-19 pandemic flooded the world, and especially China, we were hit harder than ever before. The way in which China handled the pandemic and the spread throughout the country caused deliveries to come to a halt. One is tempted to say that the delivery nerves were infected with a virus as well. However, Søren Koed explains that when things such as the Covid-19 shut-down happen, Lenovo is able to move production around between its factories. “This is where the advantage to manufacturing locally becomes obvious,” he says.
The new plant in Hungary can manufacture more than 1,000 servers and 4,000 workstations a day which clearly would make a big difference in the European market. Naturally, a plant like this of more than 50,000 square meters was not created to accommodate a global pandemic. “The factory was in the works long before Covid-19 hit and has the long-term goal focused on sustainability, but also scalability when it comes to operations and costs,” Søren Koed explains.
Our entire organization is highly focused on sustainability in several ways. This mindset is one Lenovo shares with us and the new production plant in Hungary has progressive long-term goals for sustainability. “There are a number of obvious advantages in local manufacturing and one is reducing the distances and thus saving a great deal of transportation and thus we lower our carbon footprint”, Søren Koed explains and elaborates: “We are not only talking the transportation to the customer because we can also make our transport of raw material much more effective”.
In addition to transportation, Lenovo has created a large solar energy project on the plant. “Initially, we have created a solar energy facility which produces 0,5 megawatt and during phase two, we will be increasing that to 2,5 megawatts. However, another thing we are doing to increase efficiency is something referred to as bulk packaging. Because we own the factories, we decide how things are packaged when they are shipped to the customer. We save a bunch of space and a heap of packaging materials. Specifically, we save up to 50% in space when we ship and have achieved a whopping 67% reduction in packaging materials. From a green perspective, we are very pleased with this. This is when business and sustainability go hand in hand.”
Development and Responsibility
For us, it is crucial to us that solutions, deliveries, and partnerships are responsible and considerate of the world in general as well as the climate. Rasmus also sees a connection to that in all of this: “The green perspective has an independent role. Clearly, the products themselves are becoming greener when they do not need to be manufactured and then shipped from the East and in that, we can offer our customers a substantially greener solution. This will particularly be critical for those of our customers who already have a pronounced green profile,” he says and continues: “In addition to that, this matches well with our work on Social Impact and responsibility since this creates jobs in the EU overall as well as very local jobs which has a great deal of positive impact.”
The circular mindset revolving around the lifespan of IT equipment is becoming more and more present in the industry on a global scale and it has also been central to the creation of Lenovo’s plant in Hungary:
Global and Local Key Player
Everyone knows that Lenovo is no minor league player. Boasting 35+ factories all over the world allows this manufacturer to throw its weight around when it comes to supply chain in a way most cannot compete with. “Currently, Gartner has us ranked number 9 in their Supply Chain Top 25 list for 2022. This only goes to show that it is one of our core skills,” Søren Koed says. “It is also the reason why we now manufacture for the largest Cloud Providers in the world. In fact, we deliver to eight of the ten largest providers. They all have very strict requirements for both components, quality, and the deliveries themselves. Clearly, this provides some volume to our production, but it benefits everyone. The more our factories put out, the better the pricing will be. As such, the factory in Hungary will contribute to us meeting our goal of sustainability while also optimizing our supply chains and economy,” Søren Koed concludes.
Large Green Customers Have Requirements
In edgemo and Danoffice IT we do business with global actors in green energy and in this area, the plant in Hungary has already played a role: The shorter delivery times and distances to travel are key for this type of customer. However, for companies that are already completely green or who deal in green energy, transport times are not enough.
We are faced with increasing requirements, and we relay those requirements to our partners, including Lenovo. The challenge remains whether the product is shipped from the East or from Hungary as these types of customers review the climate score related to the manufacturing of each individual product. Is it green or black? The plant in Hungary will most definitely be the answer to some of the challenges and will play a role, however, there continues to be several issues we must manage in our business and for that, we must act in unison. Both in Hungary, in Europe, and in the entire world.
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