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Research Firm Comments On Lenovo's Layoff Plan
March 21, 2006 |
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Chinese computer maker Lenovo Group Ltd. announced it will lay off about 1,000 employees, or 5% of its global workforce, and integrate its global sales and back-office support as part of a restructuring plan, which will cost it $100 million in charges but save it about $250 million annually from next year.
Analysys International says supply chain management has become critical to the electronics manufacturing industry.
Other components of the plan include moving the global supply chain closer to the manufacturing and suppliers, and moving its corporate headquarters from Purchase, N.Y., to Raleigh, N.C. Lenovo also said its desktop computer operations would be centralized in China.
Analysys says profit in the electronics manufacturing industry is becoming more marginal. Lenovo faces challenges to the costs and flexibility of its global supply chain. Cost and service quality determines the future development of Lenovo. Analysys International says centralizing desktop computer operations in China is, on the one hand, helpful for reducing manufacturing costs; on the other hand, it is helpful to improve the entire supply chain performance.
Analysys research shows that centralization of manufacturing reduces manufacturing costs, however, it is very likely the distribution channel and terminal retail sales costs will rise sharply. Lenovo must pay attention to its global cost control to avoid the counteraction.
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