(c7) hp deskjet printer supply chain
TRANSCRIPT
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Hewlett-Packard : DeskJet Printer Supply Chain
Hewlett-Packard : DeskJet Printer Supply Chain
郭紋伶郭有維朱維禮
Kaushal Kishore (KK)
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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.
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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
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The 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
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10
The Deskjet Supply Chain
Localization
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These products were then sorted into three groups destined for the three distribution centers:
North America, Europe, and Asia-Pacific
The Deskjet Supply Chain
PCAT FAT1 week
Vancouver
U.S. DC
1 day
Europe Asia
4~5 weeks
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The DeskJet Supply Chain
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
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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.
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Distribution process
Inventory level Safety stock (12% ~ 60%) Service level (98%)
Distribution cost Outbound freight salary
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Distribution process
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.
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The inventory and service crisis
Europe Problem Contained issues
• Safety stock
–Forecasting system
–Make-to-stock system
–Multiple products
• Long lead time
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The inventory and service crisis
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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The inventory and service crisis
forecasting system Localization
Inaccurate forecasts
Uncoordinated and divided in terms of inventory policy
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The inventory and service crisis
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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The inventory and service crisis
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.
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Issues to be discussed
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.
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Issues to be discussed
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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Issues to be discussed
ERP System
Another proposal has to do with the implementation of an Enterprise Resource Planning (ERP) system
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Conclusion
Improve forecasting system
Reduce the lead time and safety stock Air shipment New Plant
ERP system
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