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

Sourcing
(Suppliers of
Comps,Raw)

Upstream

Manufacturing
(WIP,FG)

Fulfillment
Warehouse
& Distribution
(Storage &
Retailers)
Transportation & Logistics

Downstream
Information

Customer Order Decoupling Point

The point in the material flow(Value chain) where the product is
linked to the specific customer. Each stage the form changes
Forecast Driven -

Push-Pull Boundary

- Sales Order

From the decoupling

point
Purchase/Manufactu
re to plan to create
inventory
Assemble/Finish to
order from the point
Increase Lead time&
Opportunity lost
Increase in inventory
& risk obsolescence

Conflicting Goals
Purchasing

Manufacturing

Warehousing

Customers

Stable Volume
Flexible Delivery
time
Little variation
Large quantities

Long run
production
High quality
High productivity
Low production
cost

Low Inventory
Reduced
Transportation
costs
Quick
replenishment
capability

Shorted lead time

High in stock
Variety
Low price

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

Oth.Divisions

World wide Supplier

Supplier

r
a spo
Se an
Tr
t

IC Mfg

PCAT
Print
Mechanism

FAT

Supplier

Asia

Europe

Far East

Characteristics
Pull Manufacturing Push
Distribution
Inventory Average Sales
of 1 month Safety Stock
Production Plan based on
Target Inventory Levels
Make to Stock
Pseudo Zero Inventory

MFG High Volume and

High Speed

1 Week

1 Week / 5 Weeks

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
Too much inventory in the DeskJet
supply chain (High Safety Stock)
Europe still needed more more
inventory
European and Asian DCs cannot
meet because of mismatch.
Inventory Imbalance
Service level deterioration

Causes

Late Shipments/Procurment
Process Delays
Uncertainty about correct inventory
levels
Options due to geographic options
(localization)
Long lead times
Uncertain market
Difficulty at getting divisions to work
together

HP DeskJet Case: Options

Short Term
Rationalize safety stock

Long Term

Air shipment
European factory
More inventory
Better forecasting
DC localization

But HP Focus on
Conflicting Goals (Wrong
Performance Measurement)
Inventory @ Wrong Place
Wrong Problem focus
Value Stream mapping