Hewlett-Packard was facing issues with introducing its new network printer due to differences in power specifications between North America and Europe. The company considered implementing a universal power supply that would work across regions but it would increase costs by $30 per printer. While a universal power supply provided benefits like improved forecasting and reduced inventory costs, it also faced the risk of losing sales if customers did not pay the higher price. HP ultimately decided on a postponement strategy where certain parts were standardized for commonality across regions while customization was delayed until customer orders were placed. This approach balanced the benefits of reduced costs with the ability to customize products regionally as needed.

1. Hewlett-Packard Company:
Network Printer Design For
Universality

2. Content
• Introduction
• Network Laser Printer Division
• HP’s Main Issues
• Universal Power Supply(UPS)
• Different Perspective Of Departments About UPS
• Postponement Strategy
• Cost Impact Of Postponement Strategy
• Learning

3. The Hewlett-Packard Company
• HP was one of the silicon valley’s legends.
• Innovation was the key to HP’s strategy & brought the world products
such as-
- Hand held calculator
- Ink-jet printers etc.
• HP spends about 10% of its revenue on R&D.
• In 1990, HP’s revenue was 13.2b$ and profit was 739m$.
• HP held a dominant 57% of the worldwide laser printer market.

4. Network Laser Printer Division
• Wants to introduce a new
product (Rainbow).
• Having Universal power supply.
• Next generation printer.
• High end printer with special
configuration options.
• High customization variety.

5. HP Company Main Issues-
• The power specification for printer is different in North America(110
volt) and European (220 volt). This difference brings a big challenge in
HP’s market forecasting, Stock out and transshipment between
regions.
• Long Lead time for engine manufacturing (at least 14 weeks).
• If universal power supply is used then increase of 30$ cost for each
printer.

7. Universal Power Supply
Benefits
• Improved Forecasting
• Reduced inventory and stock out cost
• Reduced lead time and better response to the change in demand
Costs
• Mfg. cost of the printer increased by $30
• Customer may not pay for increase in price so lost of sales

8. Cost and Benefits over Product Life cycle
• At the beginning of the life cycle, cost of stock out would be high.
• At the maturity stage, extra cost can be a real disadvantage. However
better forecasting of demand helps lower the level of inventory.
• At the ending life cycle, cost of stock out is lower than compared to at
beginning because there is less fear of losing sales.

10. Postponement Strategy
• Delay the point of differentiation
• Under postponement certain part of the supply chain are undertaking
a push strategy while other parts perform a pull strategy-
- Upstream suppliers provides commodity parts using a push
strategy
- Downstream supplier employ a pull strategy & do not
customize products or services until an order is placed

13. Cost Impact Of Postponement
Decrease
• Inventory carrying cost
• Inventory holding cost
• Stock out cost
• Standardization decreases
admin cost
• Additional cost of transshipping
Increase
• $30 material cost
• Product/Process redesign for
standardization may increase
system cost

14. Benefits Of Postponement
• Lower risk of unsold items.
• Easier upgrade, service at customer location.
• Increased order fulfillment.
• Faster response to customer.

15. Learning
• Postponement is the key strategy for providing multiple configurable
products at low cost.
• If the design of a product is modular than we can manufacture
modules separately and at the same time. This shorten the total time
required for production.
• Modular design also helps in late product life cycle.

16. THANK YOU