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HP Deskjet- Supply Chain

HP Deskjet- Supply Chain Group – 9 Muralikrishna Badrianth G.M. Saurabh Kumar Piramanayagam Richie Giftson Paul

Group – 9

Muralikrishna Badrianth G.M. Saurabh Kumar Piramanayagam Richie Giftson Paul

About HP

Supplying high quality electronic tools from

1939

Diversification with strong technological innovations with the advent of computer technology

Retail printer market in 1990 had reached a size of about $10 billion

The product: inkjet printers

The product: inkjet printers  Started as an economic alternative to laser printers in 1988 

Started as an economic alternative to laser printers in 1988

pioneered by HP and Canon in 1980s

Were getting commoditized quickly, thus getting differentiated on the basis of general business criteria such as cost and availability

Role of the Vancouver division

Established in 1979 by HP to consolidate all its printer manufacturing operations

Was the first US plant to successfully implement JIT and Kanban

Operated successfully with inventory levels of just 0.9 months- down from previous levels of 3.5 months

The DeskJet supply chain

1.PCA 2. 3.Localizati
1.PCA
2.
3.Localizati

The DeskJet supply chain contd…

No buffer inventory kept between PCAT and FAT stage

Factory cycle time: 1 week

Shipping from Vancouver facility to U.S. DC: 1 day

Shipping from U.S. DC to regional suppliers in Asia, Europe: 4-5 weeks

Dealers kept very little inventory, hence pressure on Vancouver to maintain high levels of finished goods inventory

Problems

High demand fluctuations in European markets leading to higher levels of safety stocks

Long

lead times due

to transport using

ships

and

this

in

turn

adds

difficulty

to

the

forecasting process

Extra inventory in some cases and backorder in others in European market

Balance between inventory level and Service

Objective

To Decrease inventory level while maintaining service level ( 98 %)

Possible Solutions

1. Sophisticated safety stock calculation method 2. Air Shipment – Expensive

3. Postponement Strategy / Assemble to Order / Standardization:

Stock standard subassemblies in Europe and assemble localized features according to local demand

Aggregate demand – Lesser uncertainties

Possible Solutions

  • 4. European Factory – sufficient demand ??

  • 5. Introducing a generic model for worldwide sales:

higher prices but demand uncertainty to

be very

low-success in a generic market??

  • 5. Improve forecasting method - Difficult to implement

Postponement Strategy

Vancouver Division Localizati PCAT FAT on
Vancouver Division
Localizati
PCAT
FAT
on

European D.C

 
 

Custom

Postponement Strategy Vancouver Division Localizati PCAT FAT on European D.C Custom European D.C Vancouver Division Localizati
Postponement Strategy Vancouver Division Localizati PCAT FAT on European D.C Custom European D.C Vancouver Division Localizati
European D.C Vancouver Division Localizati PCAT FAT on
European D.C
Vancouver Division
Localizati
PCAT
FAT
on

Custom

Postponement Strategy Vancouver Division Localizati PCAT FAT on European D.C Custom European D.C Vancouver Division Localizati

Postponement Strategy

Advantages of Postponement

Reduction

in

Safety Stock by over 6000 units

due to lesser uncertainty in Aggregate demand

Lesser carrying and transit cost due to compact packaging

Localized

feature

can

further reduce costs

be

sourced

locally to

Both Backorder and Inventory Level is reduced

Better Line Rate (OFR)

item

Fill

rate

(LIFR)

and

Order Fill

Adjustments needed

Distribution centers should have assembling facilities

Need of skilled workers

Standard Design to be reconsidered taking into account:

Ease of final assembly during localization A compact design for efficient packaging

Thank You!!!!