HP Case Study

Company information
 Objectives
• Overview of Supply Chain
• Customer Order Decoupling Point
• Conflicting Goals of Departments
• Few Concepts
• HP Case Study (Interlinking Above Learning so
that you can derive solutions in the class)
 Supply Chain
Physical Goods Flow

Cash

Fulfillment
Sourcing Warehouse
Manufacturing
(Suppliers of & Distribution
(WIP,FG)
Comps,Raw) (Storage &
Retailers)
Transportation & Logistics

Upstream Downstream
Information
 Customer Order Decoupling Point
The point in the material flow(Value chain) where the product is From the decoupling
linked to the specific customer. Each stage the form changes point
•Purchase/Manufactu
re to plan to create
Forecast Driven - Push-Pull Boundary inventory
•Assemble/Finish to
order from the point
•Increase Lead time&
Opportunity lost
•Increase in inventory
& risk obsolescence

- Sales Order
 Conflicting Goals
Purchasing Manufacturing Warehousing Customers

•Stable Volume •Long run •Low Inventory •Shorted lead time

•Flexible Delivery production •Reduced •High in stock
time •High quality Transportation •Variety
•Little variation •High productivity costs •Low price
•Large quantities •Low production •Quick
cost replenishment
capability

Work towards Organizational Goals

 Some Concepts
• Delays (Information, Process, Change /Setup)
• Bull Whip Effect
• Safety Stock
• Localization
• Push or Pull
Push-Pull Systems
 Printer Supply Chain
Characteristics
•Pull Manufacturing – Push
Oth.Divisions r Asia Distribution
IC Mfg a spo
Se an •Inventory – Average Sales
Tr of 1 month Safety Stock
t
World wide Supplier Europe •Production Plan based on
PCAT FAT
Target Inventory Levels
•Make to Stock
Print •Pseudo Zero Inventory
Supplier Supplier Far East
Mechanism
MFG – High Volume and
High Speed
1 Week 1 Week / 5 Weeks

9
 Main Issues
• Satisfy Customer Needs – Right Product and
Less Inventory as the industry is highly
competitive
• Bringing in Alignment across Dif. Departments
right Inventory levels
 HP Case Challenges
Problems Causes
•Too much inventory in the DeskJet •Late Shipments/Procurment
supply chain (High Safety Stock) •Process Delays
•Europe still needed more more •Uncertainty about correct inventory
inventory levels
•European and Asian DCs cannot •Options due to geographic options
meet because of mismatch. (localization)
•Inventory Imbalance •Long lead times
•Service level deterioration •Uncertain market
•Difficulty at getting divisions to work
together
 HP DeskJet Case: Options
• Short Term But HP Focus on
– Rationalize safety stock •Conflicting Goals (Wrong
• Long Term Performance Measurement)
– Air shipment •Inventory @ Wrong Place
– European factory •Wrong Problem focus
– More inventory •Value Stream mapping
– Better forecasting
– DC localization