22320455 c7 hp deskjet printer supply chain (1)

Hewlett-Packard : DeskJet Printer Supply Chain

Hewlett-Packard : DeskJet Printer Supply Chain

郭紋伶郭有維朱維禮

Kaushal Kishore (KK)

www.themegallery.com

Team Members

1 2 3

朱維禮郭紋伶郭紋伶郭有維郭有維

4

KK


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Contents

Introduction1

Zero inventory2

DeskJet supply chain 33

Distribution process44

The inventory and service crisis5

Conclusion46


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Introduction

In 1990’s, Hewlett-Packard faced several problems with inventory levels for the DeskJet Printer product line. This printer was produced in Vancouver’s facility and from there was shipped to a distribution center. HP has three distribution centers (DC), in North America, Asia Pacific and Europe that at the moment were filled of DeskJet stock.

Introduction

HP need to reach an optimal solution that balance the customers’ needs and keep a low inventory level, getting an agreement among the DC’s.


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ZERO inventory

The Vancouver division and its quest for zero inventory.

Just-in-time (JIT)

Reduced inventory from 3.5 months to 0.9 months.



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The DeskJet Supply Chain

Supplier

Manufacturing sites

Distribution centers

Dealers

Customers

The DeskJet Supply ChainThe DeskJet Supply Chain


There were two key stages in manufacturing process:

Printed circuit board assembly and test (PCAT) ASICs (application-specific integrated circuits) ROM (read-only memory )

Final assembly and test (FAT)


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9

The Deskjet Supply Chain

Two key manufacturing process

No significant buffer inventories

10


Localization

11

These products were then sorted into three groups destined for the three distribution centers:

North America, Europe, and Asia-Pacific


PCAT FAT1 week

Vancouver

U.S. DC

1 day

Europe Asia

4~5 weeks


The management change DCs: make-to-stock mode

inventory level=forecasted sales + safety stock level

Manufacturing: pull mode

3 major sources of uncertainty that could affect the supply chain:

Delivery of incoming materials Internal process Demand


Distribution process

Line item fill rate (LIFR)

Calculated as the total number of customer order line items filled on time divided by the total number of customer line items attempted.

Order fill rate (OFR)

Based on orders completed, where an order contains multiple line items.



Inventory level Safety stock (12% ~ 60%) Service level (98%)

Distribution cost Outbound freight salary


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Step 1

Receive (complete) products from various suppliers and stock them.

Step 2

Pick the various products needed to fill a customer order.

Step 3

Shrink-wrap the complete order and label it.

Step 4

Ship the order by appropriate carrier.

The inventory and service crisis

Europe Problem Contained issues

• Safety stock

–Forecasting system

–Make-to-stock system

–Multiple products

• Long lead time



Safety Stock

Great variations in market demand, keeping the firm’s target service level (98% in this case), i.e., meeting consumers’ requests with a higher probability.


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forecasting system Localization

Inaccurate forecasts

Uncoordinated and divided in terms of inventory policy


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Make-to-stock system

Due to all the lacks in forecasts and to long lead times, creates high levels of inventory in the DC’s resulting in carrying costs.

By using push system, HP has to calculate at great length its inventory levels avoiding stock-out and overstock.


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Multiple products

This variety in products contributes to high levels of inventory because there’s more products to keep in safety stock and to forecast expected demand.


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Issues to be discussed

Long lead time Reduction in lead time, the standard deviation

of demand during lead and review time is reduced.

This is due to the fact that smaller lead-times imply an absolute variation in demand, smaller than with larger lead-times.



Air Shipment

Asian and European distribution centers receive orders more frequently, they won’t need to keep higher safety stocks when compared to sea transportation.


New Plant

Another alternative would be to install a new plant somewhere between Europe and Asia. This would allow for smaller transportation costs and lead times.

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ERP System

Another proposal has to do with the implementation of an Enterprise Resource Planning (ERP) system

Conclusion

Improve forecasting system

Reduce the lead time and safety stock Air shipment New Plant

ERP system

22320455 c7 hp deskjet printer supply chain (1)

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