Hewlett-Packard: DeskJet Printer coordinated product and supply chain design

1. HEWLETT-PACKARD: DESKJET PRINTER
COORDINATED PRODUCT AND SUPPLY
CHAIN DESIGN
• GROUP MEMBER:
• M. Asim Uddin Khan 6922
• Hamza Jawed 9974
• Jawwad Ali 6821
• Khawar A.Siddiqui 6947
• Muhammad Naeem 6705
• Zohaib Zakir 7698

2. ABOUT HP
Founded in 1939
William Hawlett and David Packard
Introduced or brought innovation i.e.
deposable print head in ink jet
printers.
Customers discovered that ink jet
printers had almost same quality as
laser printers and at a much
affordable price.`

3. ABOUT HP
Supplying high quality electronic tools from 1939
Diversification with strong technological innovations with the
advent of computer technology
The Retail Printer Market : Dot Matrix 40% , INKJET 20% , LaserJet
40%
HP led the inkjet market in U.S . Whereas CANON led market in
JAPAN. Soon other companies launched their Printers due to
which product loyalty decreased.
They cracked Revenues of $13.2 billion In 1990.

4. MISSION STATEMENT
•To become the recognized
world leader in low cost
premium quality printers
for offices and homes.

5. THE DESKJET PRINTER
 It was first introduced in 1988
 In 1990, HP sold DeskJet Printer 600,000
units and earn $400 million
 Were getting commoditized quickly, thus
getting differentiated on the basis of
general business criteria such as cost and
availability
 Main manufacturing division is located in
Vancouver

6. VANCOUVER PLANT
Established in 1979 by HP to consolidate all its printer manufacturing
operations
• Vancouver plant uses a pull system and was the first US plant to
successfully implement JIT, Kanban and Stockless production
• Vancouver had the proper production system
• Operated successfully with inventory levels of just 0.9 months- down
from previous levels of 3.5 months and soon became the market
leader
• DeskJet printer became its flagship product

7. GLIMPSE OF VANCOUVER PLANT

8. THE DESKJET SUPPLY CHAIN
2 Key stages in Manufacturing
(1)(PCAT) Printed Circuit Board assembly & test.
2) FAT Final Assembly & testing.
3 major sources of uncertainty that could affect the
supply chain
(1)Delivery of incoming materials (late shipments ,wrong parts )
(2) Internal Process (machine downtime)
(3) Demand .

9. THE DESKJET SUPPLY CHAIN CONTD…
• No buffer inventory kept between PCAT and FAT stage
• Factory cycle time: 1 week
• Shipping from Vancouver facility to U.S. DC: 1 day
• Shipping from U.S. DC to regional suppliers in Asia, Europe: 4-5
weeks
• Dealers kept very little inventory, hence pressure on Vancouver to
maintain high levels of finished goods inventory
• “Localization” is the process of meeting the required customization of
the printer to meet language and power supply requirements of the
local countries

10. THE DESKJET SUPPLY CHAIN

11. THE DESKJET SUPPLY CHAIN CONTD…

12. THE DESKJET DISTRIBUTION PROCESS
• DeskJet printers are a high-volume product and the major
performance measures for a typical DC included line item fill
rate (LIFR) and order fill rate (OFR).
• DC had four simple, straight-line process steps:
• Receive (complete) products from various suppliers and stock
them
• Pick the various products needed to fill a customer order
• Shrink-wrap the complete order and label it
• Ship the order by the appropriate carrier

13. PROBLEMS AND ISSUES
Determine the right level of inventory (best safety stock
amount) and provide high level of service is a big challenge
There was issue in forecasting inventory especially in Europe
Region .
They were following Judgmental Rule of thumb (traditional
Rules ) .
Reduce the uncertainty caused by delivery of incoming
materials, impoving manufacturing and equipment efficiency,
reduce downtimes
Transportation Problem .

14. OBJECTIVE
•To Decrease inventory level
while maintaining service
level ( 98 %)

15. FORECAST ERRORS, PROBLEMS AND ISSUES
• Forecast errors, especially in Europe
• Product shortages and piled up inventory
• Safety Stock Rules fail a lot, not meet the target inventory
• Inconsistent inventory level causes unsatisfied customer and loss of sales.

16. FORECAST ERROR’S SOLUTIONS
• Make the forecast more accurate
• Collecting related data month by month for every single product, and also
examine aggregate demand
• To be prapared to manufacture customized power supply and manual
• Anaylze HP and competitor’s sales of previous years
• Define an average sale of each month, calculate standard deviation, be aware of
trends
• Similarly, data loss of sales, stock outs, and backorders have to be examined
• This research must be done especially for Europe Market and European
customer behavior
• Customer surveys and analyze expectation/satisfaction

17. FORECAST ERRORS SOLUTIONS
• Makeing the forecast more accurate provides some benefits
• More accurate forecast provides more reliably safety stock level and
reduce amount of unnecessary products stocked in inventory
• Reduce the replenishment lead time
• Reduce unsold products, it is crucial because product’s technologic clock
speed is high
• Reduce inventory holding cost and cost of unsold products
• Avoid stockouts, unsatisfied demand, loss of customer

18. TRANSPORTATION PROBLEMS AND ISSUES
• Transportation
• It takes long time to ship products from US to Europe and Far East
• Reduce transportation lead time.
• If there is a shortage in Europe and Far East, it is hard to fix it

19. TRANSPORTION PROBLEMS’ SOLUTIONS
• Transportion
• It is very long time to transport products from US to Europe and Far East
• Vessels were chosen as transportation vehicle
• Air transportation would shorten the lead time and make the company ready to
satisfy customer. Shipping from Vancouver facility to U.S. DC: 1 day
• Shipping from U.S. DC to regional suppliers in Asia, Europe: 4-5 weeks

20. INVENTORY PROBLEMS AND ISSUES
• Inventory
• Increase or utilize the current capacity
• Similar to establishing new inventory, analyze whether a plant is set up
in Europe.

21. INVENTORY STOCK-OUT SOLUTIONS
• Increase the capacity of inventory
• Analyze the cost of lost sales
• European DC runs out of space to store as DC tells and complains
• If investing on a new inventory diminishes the lost sales and it is more
profitable
• Revise safety stock rules, so the target inventory levels that is sum of
safety stock and forecast

22. ALTERNATIVE SOLUTIONS
• An alternative option is Process Standardization (postponement)
• Ship “unlocalized” printers to the European DC and localizing them after
observing local demand
• Calculate required safety stock for each of the customized
products
• Lead time is five weeks
• Require a 98 percent service level
• European DC only keeps safety stock of generic printers,
customizing the printers as demand is realized