HEWLETT-PACKARD: DESKJET PRINTER SUPPLY CHAIN

(case explanation)

BY:

ASHUTOSH SHARMA

INTRODUCTION

• Hewlett-Packard Company was founded in 1939.

• Founders were William Hewlett and David Packard.

• Headquarters in Palo Alto, California.

• Diversifying from its base in electronic test and measurement equipment into computer and peripherals production, Which now dominated its sales.

ABOUT DESKJET PRINTER

• DeskJet printer was introduced in 1988 and had become one of HP’s most successful products.

• Sales had grown steadily, reaching a level of over 600,000 units in 1990($ 400 million).

ANALYSIS OF THE CASE/ISSUES

• The inventory problems in the European distribution center. HP faced long delivery lead time of about four to five weeks from its production facility in Vancouver, Washington, to Europe. The Vancouver plant is a high speed, high- volume facility where manufacturing takes about a week.

• HP concerned with high inventory levels and inventory imbalance in Europe. One of the characteristics of the DeskJet product line is that it is customized for local markets, a process called localization. This involve adding labeling and documentation in the correct language and customizing the power supply for the correct voltage level and plug.

• Customization is done in Vancouver many weeks before the products arrive in Europe. Furthermore, once the printers arrive in Europe, inventory imbalance might occur in the following sense:

the European DC often finds itself with too much inventory of printer customized for certain markets, and not enough inventory of printer customized for other.

• What are the cause of these problem?

uncertainty about how to set the correct inventory level.

different localization options makes inventory difficult to manage.

long lead time to difficulty in forecasting.

high safety stock.

uncertainty in many local market makes forecasting difficult.

maintaining co-operation between the various HP divisions.

THE DESKJET SUPPLY CHAIN AT VANCOUVER

THE DISTRIBUTION PROCESS

There were four process steps:-

• Receive (complete) products from various supplier and stock them.

• Pick the various products needed to fill a customer order.

• Shrink-wrap the complete order and label it.

• Ship the by the appropriate.

What are the frameworks, tools and concepts that companies can use as they think about the product engineering process and its impact on supply chain performance?

The supply chain: which focuses on the flow of physical products from supplier through manufacturing and distribution all the way to retail outlets and customers, and

The development chain: which focuses on new product introduction and involves product architecture, make/buy decisions, earlier supplier involvement, strategic partnering, supplier footprint, and supply contracts.

These two chains will intersect as products move from development to production, and just as clearly, decision made in the development chain will impact the efficiency of the supply chain.

How can design for logistics concepts be used to control logistics costs and make the supply chain more efficient?

DFL addresses ,using the following three key components:-

• Economic packaging and transportation.

• Concurrent and parallel processing.

• Standardization.

CONCURRENT AND PARALLEL PROCESSING

What is delayed differentiation and how can Hewlett-Packard use delayed differentiation to address the problem described in the case above? How can the advantage of delayed differentiation be quantified?

• when should supplies be involved in the new product development process ?

This involvement of suppliers on design ideas to making suppliers fully responsible for the design of components or systems they will supply. Moreover, suppliers may be involved at different stages of the new product development process. Early supplier involvement is a key coordinating process in supply chain design, product design and process design

What is mass customization?

• Mass Customization is an operational strategy focused on inducing velocity and flexibility in a make-to-order production process, with the capability of producing at a minimum, a quantity of one, or large quantities with minimal changeovers and interruptions. Mass Customization products compete directly with standard products, providing a company a competitive edge by having the capability to manufacture specialized or custom products at the speed, volume, cost, and quality as standard products.

• Mass Customization requires an agile supply chain to function optimally. Supply chain agility is the extent of network capability that the organization possesses. Key to the success of an agile supply chain is the speed and flexibility with which these activities can be accomplished and the realization that customer needs and customer satisfaction are the very reasons for the network.