SGSCMF-003-2001 HP DeskJet Printer Supply Chain

Global Supply Chain Management Forum

GRADUATE SCHOOL OF BUSINESS

STANFORD UNIVERSITY
GSS3B
MAY 2001

Hewlett-Packard Company
DeskJet Printer Supply Chain (B)1

Brent Cartier, Manager of Special Projects in the Materials Department of the Hewlett-
Packard (HP) Vancouver Division, was enjoying a hot cup of coffee after lunch on the long
flight to Germany. The last few days had been exhausting. Meetings, conferences calls and
non-stop phone calls had been his daily routine. The next few days would be worse, he
thought, and so he had better try to get some sleep.

Brent recalled his meeting a few days ago with Billy Corrington and his team, David
Arkadia and his lieutenants. “The inventory model that we built for you can take care of the
magnitudes of forecast errors, lead times, and the service targets that you want. The use of
such a model would certainly bring discipline and rationality to the safety stock setting
process. It is nice, but I do not think that we should stop with the implementation of the
model.” David showed excitement when the idea of redesigning the DeskJet so that it could
be localized remotely at the DCs was brought up. This meant that the power supply module
would have to be redesigned so that it could be added to the printer at the last minute as a
simple plug-in operation. This would be followed by simple testing and then adding the
other localization materials, such as manuals and final packaging, to the product. He was
especially pleased to hear that Billy’s model could quantify the benefits in terms of
inventory reduction and service improvement resulted from such a change.

David was quick to secure the blessings of the manufacturing manager, Al Gracio, to start
working out the details of such a redesign. Brent spent two days meeting with the
Engineering group to outline the Materials Department’s recommendation. It was not an
easy sell. There were a number of engineers who could not see why engineering changes
were needed for the DeskJet, which they considered to be first rate in terms of its
functionality and performance. “You have to realize that there is always potentially a
disastrous problem somewhere every time you make an engineering change. Believe me,
the DeskJet is on its success track. Why do anything which could jeopardize it?”

Brent felt like he had aged two years in the subsequent two days trying to convince the
engineering group that the engineering change for the redesign of the product was necessary.

but revised in May 2001. It is intended as the basis for class discussion rather than to illustrate either effective or
ineffective handling of an administrative situation. All data and names have been disguised to protect the
interests of the companies involved. Copyright © 1994 by the Board of Trustees of the Leland Stanford Junior
University.

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SGSCMF-003-2001 HP DeskJet Printer Supply Chain

It had not been easy, but it seemed like he had gotten what he wanted. His next task, selling
the idea to his European colleagues, was going to be much more difficult. He knew this
from previous encounters with these same colleagues on other projects. Manufacturing and
distribution were supposed to be integral parts of a supply chain, but somehow the two
groups had very different organizational cultures and ways of thinking.

With a glass of after-dinner Cognac, Brent looked at the last fax he had received just before
leaving for Europe. He must have read it a dozen times by now. “Localization and
customization are manufacturing tasks, not really the responsibility of distribution. We are
best at moving products. Who is going to be responsible for the testing and the ultimate
quality of the product? Who is going to pay for the investment to set up the localization
line? Who will do the training? Besides, procuring all these power modules and manuals is
going to be a nightmare for us. We do not have the system set up to support these
functions.”

Brent knew that he would have to answer all these questions satisfactorily before he would
gain the support of the European distribution organization. The last comment had been
especially disturbing to him. “P.S. We have all been engaged in eliminating non-value-
added steps from our supply chain. The DeskJet printer is shipped in its final form. Your
idea would mean that we would have to reopen the carton upon receipt, unpackage the
contents, perform the localization step, test the product, repackage the whole thing, and then
reship it out. That is simply a lot of non-value-added activities. Why not ‘do it right the
first time,’ i.e., have the whole thing done at your end, so that we do not have to reopen and
reseal the box? We are moving backwards with your idea!”

Before he took off, he also had made several phone calls to his friends in the Finance
Department who were experts in customs and duties. He asked them to find out the customs
implications of the redesign, and fax the answers directly to Europe. He was hoping that
they would be able to complete their tasks by the time he arrived.

Why did David always give him these fun tasks? Brent wanted to be able to defend
thoroughly the pros and cons of the current proposal. Maybe his hope of getting some sleep
during the flight was again wishful thinking. He would need all the time to be well
prepared.