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About HP
Hewlett Packard Company was founded in 1939 by William Hewlett and
David Packard.
Headquarters in Palo Alto, California.
DeskJet Printer
Hewlett-Packard introduced the DeskJet Printer in 1988 and it had become one of
HPs most successful products.
Manufacturing Process
Printed Circuit Assembly and Test (PCAT)
* ASICs (Application Spesific Integrated Circuits).
* ROM (Read Only Memory)
FAT (Final Assembly and Test)
The total factory cycle time through the PCAT and FAT stages was about a week.
Manufacturing of the deskjet printer operated in a pull mode.
Receive (Complete)
products from
various suppliers
and stock them
Problem Identification
Inventory growth had tracked sales growth closely.
The Organization in Europe was claiming that inventory levels there needed to
be raised even further to maintain satisfactory product availability.
Two main issues:
To find the best way to satisfy customer needs in terms of product availability while
minimizing inventory.
How to get agreement among the various parties that they had the right level of
inventory
Problem Identification
Three major sources of uncertainty that coukd affect the supply chain:
Issue of internal process: Safety Stock Rules
Issue of demand uncertainties: Sample of Demand Data
Issue of delivery of incoming materials: Air Shipment vs Ordinary Shipment
What level of change the model would recommend?
Options
Supplier
Supplier
Supplier
Asia
DC
IC Mfg
PCAT
Print
Mechanism
FAT
Supplier
Europe
DC
Far East
DC
Supplier
Supplier
US
DC
IC Mfg
PCAT
FAT
Supplier
Europe
DC
Supplier
Print
Mechanism
Supplier
Far East
DC
Supplier
Proposed Solution
Recalculate Safety Stock & Improving forecast accuracy
The root of the problem is bad forecasting system. By investing in to new sistem, HP
can get better forecasting accuracy and lower inventory level
Redesign Distribution Network
Higher quantity can be shipped with same volume.
Reducing high safety stock in each DC by keeping generic safety stock printers and
customizing the printers as demand is realized in their area.
Lesson Learned
There are 3 major sources of uncertainty that could affect supply chain:
1.
2.
3.
Distribution is a key driver of the overall profitability of a firm because it affects both
the supply chain cost and the customer value directly.
Performance of a distribution network should be evaluated along to dimensions:
1.
2.
Refference
HP Co.: DeskJet Printer Supply Chain (A) Stanford Graduate School of Business Case #
GS-3A
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