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HP Deskjet- Supply Chain
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 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
The DeskJet supply chain contd… No buffer inventory kept between PCAT and FAT stage Factory cycle time: 1 week Shipping from Vancouver 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 Eu ropean 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 Factory – sufficient demand de mand ?? 5. Introducing a generic model for worldwide sales: higher prices but demand uncertainty to be very low-success in a generic mark market?? et?? 5. Improve forecasting method - Difficult to implement
Postponement Strategy Vancouver Division PCAT
FAT
Vancouver Division PCAT
FAT
European D.C Custom
Localizati on
European D.C Localizati on
Custom
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 be sourced locally to further reduce costs Both Backor Backorder der and Inventory Level Level is reduced Better Line item Fill rate (LIFR) and Order Fill Rate (OFR)
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
