CASE HP DeskJet Printer Supply Chain
Introduction In this case William William Hewlett and David Packard with headquarters in Palo Alto, California founded Hewlett-Packard Company in !"!# HP diversifies its production into electronic test, measurement equipment and computers and peripherals products$ in !!%, HP had over &% operations worldwide with revenues of '"#( )illion and net income of '*"! million# In !++, the Desket printer was introduced and had )ecome one of HPs most successful products, with sales of .%%,%%% units/'0%% million in !!%# 1ummary 2his 2his case case study study deals deals with with Hewlet Hewlett-P t-Pack ackard ard 3HP4, 3HP4, a famous famous manufa manufactu cturer rer of comput computers ers and peripherals# In the early earl y !!%s, HP faced a so-called 5Inventory/1ervice-Crisis6 concernin7 one of their hi7h volume products, the Desk8et printer# Despite 7rowin7 inventory levels at the distri)ution centers centers in 9urope 9urope and Asia-Pacific, Asia-Pacific, customer service service levels levels were unsatisfac unsatisfactory tory## Affecte Affected d )y 7rowin7 competition this pro)lem had to )e handled quickly# :rent :rent Cartie Cartier, r, ;ana7e ;ana7err for 1pecia 1peciall Proec Proects ts in the ;ateri ;aterials als Depart Departmen mentt of HP Company Companys s
inally opinions and reactions of different company divisions concernin7 the implementation of DC locali?ation are analy?ed# 2he solution of pro)lems is the reconfi7uration of key strate7ies related with channels mana7ement# Improvement durin7 the early !+%s -;anufacturin7 cycle time reduced +-( weeks @@ week -Avera7e inventory reduced "#& months @@ %#! months -All finished 7oods inventory eliminated -Importance of response time and transportation time increased ->urther improvements should )e made on supply chain -;anufacturin7 cycle time reduced +-( weeks @@ week -Avera7e inventory reduced "#& months months @@ @@ %#! months months -All finished 7oods inventory eliminated -Importance of response time and transportation time increased ->urther improvements should )e made on supply chain -2ime )etween order and delivery reduced
Linda Fierro Villafuerte
Bo7istics II
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CASE HP DeskJet Printer Supply Chain 9urope Asia$ &#(& months @@ #(& months orth-America$ 0#(& months @@ %#( months -Importance of transportation time increased 9urope Asia$ E @@ (E orth-America$ (%E @@ +%E 2he primary need of all consumers is to print somethin7 in the form of ima7es or teFtG three options are availa)le for the customers of HP, dot ;atriF Printer, Inket Printer, laser Printer# Prior to !+!, most customers were not aware of inket technolo7y# However, customers were discoverin7 that inket print quality was almost as 7ood as laser print quality at a much afforda)le price#Baser printer and other printer related products of HP dont necessary require the online sellin7# :ecause customer were discoverin7 that inket print quality was almost as 7ood as laser print quality at a much afforda)le price# HP led the inket market in 1# ;eans in 1A, HP facilitate its customers and consumers needs are met )y current channel structure# :ut in other areas of the world especially in 8apan and in 9urope HP faces certain issues while satisfyin7 customers needs# 2he pro)lem is only in terms of product availa)ility# Channel structure is poorly desi7ned especially, in 9urope there is no information flow )etween channel mem)ers and lack of commitment#2here is no product availa)ility in some countries while others have access inventory 3in terms of finished 7oodsG printers4# :etween +%s and !%s HP was the market leader of Inket printer )ut now days HPs Desk8et printer in on siFth position in rankin7# Waitin7 time is hi7h in 9urope and Asia and availa)ility is low in 9urope#Physical possession and information flow dont function properly, now days every company tries to sell their products directly as well as throu7h third party distri)utors# 1ellin7 online is also important factor and D9BB is the eFample 3most successful4 of direct sellin7, there are many advanta7es of sellin7 online included$ quick transactions, no physical space required for inventory, hi7her product availa)ility, no waitin7 time, no intermediaries required# 1o HP should sell )oth printers and supplies direct 3online4# 2here is no such need of sellin7 directly in 1 )ecause of hi7h product availa)ility )ecause of functionin7 as a local company here, )ut in 9urope and Asia, HP must 7o direct# HP already has an online system for other product lines like PCs and BaptopsG desk8et printer is most successful )rand or product of HP and 7enerates hi7h volume of sales# 1o HP should sell Desk8et printer online, formulatin7 marketin7 channel strate7y, desi7nin7 marketin7 channels, selectin7 channel mem)ers, motivatin7 channel mem)ers, coordination channel strate7y with mem)ers, evaluatin7 channel mem)er performance and mana7in7 conflict in the channels# HP formulates its channel strate7y in a )etter way and choosin7 channel mem)ers properly# In its channel mem)ers include$ suppliers, manufacturer site 3
Linda Fierro Villafuerte
Bo7istics II
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CASE HP DeskJet Printer Supply Chain located in 1, 9urope and Asia Pacific4 then from DCs to resellers and retailers and finally to consumers# HP motivates its channel mem)ers and accepts the decisions from their side )ut there do not do too much effort on motivatin7, there is no coordination with channel mem)ers at low end# ;eans resellers and end users dont know what is HPs channel strate7y# 2here is no evaluation or feed)ack and finally HP sometimes fails to resolve issues# As we know from the case study that representatives conflictin7 7oals prevented them from reachin7 consensus on the issues# 2here are some advanta7es likeG no eFtra warehousin7 char7es )ear )y
Conclusion In conclusion HP should do work on value constellation rather than value chain#D staff should visit all the market especially in 9urope and Asia to )etter knowin7 the customer needs and for
Linda Fierro Villafuerte
Bo7istics II
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CASE HP DeskJet Printer Supply Chain demand analysis, there is no coordination in channel mem)ers so HP must improve this deficiency throu7h information flow, providin7 downstream mem)ers some eFtra )enefits for their )etter performance for improve forecastin7 throu7h different strate7ies and DC locali?ations# ;anufacturin7 site as
Linda Fierro Villafuerte
Bo7istics II
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