HP Desk Jet Printers Supply Chain A case

HP Desk. Jet Printers Supply Chain A case on Basestock Levels and Postponement 1 utdallas. edu/~metin

HP Desk. Jet Printers Then and Now The first Desk. Jet printer Mobile printer Color printer Photo printer utdallas. edu/~metin 2

History of HP – HP founded in 1939 by William Hewlett and David Packard – 1990 revenues $13. 2 B and profit $739 M – Then, a manufacturer of electronic test and measurement equipment – Now, mostly manufactures computers and peripherals – Peripherals is the second largest group among six product groups – Peripherals: Printers, Plotters, Magnetic disc and tape drivers, Terminals and Network products utdallas. edu/~metin HP Radio Oscillator circa 1939 3

Printer Market – HP sold ? ? M printers and made a revenue of $? ? B in 1990 » Each printer about $? ? ? » But prices has been dropping – Printers are becoming a commodity sold at supermarket – Market is composed of » ? ? % impact/dot matrix, dropping » ? ? % inkjet, increasing; HP is the market leader » ? ? % laser utdallas. edu/~metin 4

Vancouver Plant – Printer production at Fort Collins, CO, Boise, ID, Sunnyvale, CA and Corvallis, OR is consolidated to the Vancouver site – Vancouver plant uses a pull system » JIT, Kanban, Stockless production – Vancouver had the proper production system – Desk. Jet printer became its flagship product utdallas. edu/~metin 5

Printer Supply Chain ? ? Lead time Supplier utdallas. edu/~metin Asia DC IC Mfg PCAT Print Mechanism FAT Supplier Europe DC Far East DC 6

What is Brent Cartier’s problem? utdallas. edu/~metin 7

Brent Cartier’s problem u Too much inventory in the Desk. Jet supply chain u Some suggest pumping up more inventory u European and Asian DCs cannot meet because of ? ? ? mismatch. utdallas. edu/~metin 8

DCs operate as a push or a pull system? Asia DC FAT Europe DC Far East DC utdallas. edu/~metin 9

What is localization? utdallas. edu/~metin 10

What is localization? u Customization of a printer to meet the language and power supply requirements of the local countries – Product manuals – Several power cords u Where utdallas. edu/~metin is localization done? 11

Can a DC localize? utdallas. edu/~metin 12

Can a DC localize? u DCs do not have a ? ? ? ? system for assembly operations u US DC manager To Beal says: – [At a DC] We have to decide what our core competency is …. If we want to take on manufacturing processes here, we have to put processes in place to support them u In conclusion, DC managers are for/against (? ? ) localizing at DCs. utdallas. edu/~metin 13

What is inventory imbalance? utdallas. edu/~metin 14

Inventory imbalance u Start with an example: – There are 1000 Desk. Jet configured/packaged for France – Another 1000 for England – What is the shortage if the demand in France and England are both 1000 printers? – What is the shortage if the demand in France is 1500 while the demand in England is 500? u Inventory imbalance is having the correct amount of total inventory but the incorrect mixture utdallas. edu/~metin 15

Can localization at a DC avoid inventory imbalance? utdallas. edu/~metin 16

Can localization at a DC avoid inventory imbalance? u Continuing with the same example: – There are 2000 Desk. Jet ready for Europe – What is the shortage if the demand in France and England are both 1000 printers? » Shortage is ? ? – What is the shortage if the demand in France is 1500 while the demand in England is 500? » Shortage is ? ? u Not convinced yet, what is the effect of postponed localization on printer inventories? utdallas. edu/~metin 17

To convince ourselves more Consider options with monthly demand larger than 1000 in Exhibit 4. Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct AB 20572 20895 19252 11052 19864 20316 13336 10578 6096 14496 23712 9792 AQ 4008 2196 4761 1953 1008 2358 1676 540 2310 2046 1797 2961 AU 4564 3207 7485 4908 5295 90 0 5004 4385 5103 4302 6153 Compute the basestock levels for each product to achieve a fill rate of 98%. Note that basestock levels can be reduced if these options are aggregated into a single one. What would be the basestock level for this single product? utdallas. edu/~metin 18

Postponing localization to the DCs u Is the US DC manager right? u What problems are possible with localization at DCs? u How to avoid these problems? utdallas. edu/~metin 19