hewlett pack grp1

8/8/2019 Hewlett Pack Grp1

1/12

Hewlett Packard:DeskJet Printer Supply Chain

Group 1Anubhav JalanChitale Mahadeo Ganesh

Devendra RajoraKinshuk MishraMohit Kumar


2/12

Market Description17 mn units amounting to USD 10 bnCurrently

Dot Matrix - 40%Ink-Jet - 20%Laser - 40%Trend towards ink-jet from dot matrix

Market Leaders

North America - HPJapan - CannonEurope - Lots of players


3/12

ObjectivesSatisfy customer in terms of productavailability

Minimize inventorySynchronize the supply chainMarket changing to commodity

No product loyaltyHigh reliability and quality and low cost


4/12

Supply Chain (simplified)

Suppliers VancouverFactory

US DC

AsiaDC

EuropeDC

Customer

Customer

Customer


5/12

Sources of VariabilityLate delivery of incoming materials bysuppliersInternal process delays (process yields andmachine downtimes)Demand uncertainty, resulting in improperforecastingManufacturing

Made-to-orderPull mode

DistributionMade-to-stock


6/12

Some Important FactsPrinters assembled and tested atVancouver for ALL countries

Vancouver FactoryCycle Time - 1 weekInventory - 0.9 months

Lead times

US DC - 1 dayEurope DC - 4 - 5 weeksFar East DC - 4 - 5 weeks


7/12

Problem AreasLarge Forecasting errors in Europe

Shortages for demanded product

Inventory pileup of other productsAppears like an immature marketwith large fluctuation in demandLead times in European & AsianMarkets


8/12

Option 1 Use of Air transportLead time reduces to 14 days from 42 days

34% reduction in safety stock of each modelAverage Inventory reduces from 27159 units to18711 unitsExtra air fare = USD 6.378 mn per annum

But...............it still does not solve non-localizedproduction problem


9/12

Option 2 Manufacture in EuropeAll models except A, AG and AKReduction in Lead Time from 42 days to 8

days44.6% reduction in safety stock of each modelAverage Inventory reduces from 27159 units to16230 units, nearly 44%.Solves non-localized production problem

New manufacturing unit cost unknownNeed for new suppliers and other issues tooExcess capacity, which can be utilized by demand


10/12

O ption 3 Reliable Demand

Forecasting SystemBetter ability to predict and meet thedemand accurately

Reduction in safety stock resulting forsudden uncertainty of demandReduction in the inventory holdingcosts due to the reduction ininventory


11/12

Option chosenO ption number 2 is chosen, because

1. Cost savings are higher (about 40%)2. Lead time is also reduced by a

significant amount (reduction of 4

weeks)3. Lack of information about the sector


12/12

THANK Y O U

Questions??

hewlett pack grp1

Documents