Hewlett-Packard Company: Network Printer Design for Universality

1. In what way is a universal power supply a postponement strategy?

HP has two specifications for its printers, 110-volts for North American region and 220-volts for European region. One of the crucial part of the printer is engine. It is built by one of HP’s manufacturing partner in Japan who needs the specification 14 weeks in order prepare for production. However production period only takes four weeks. The dilemma is that should HP were to develop universal power supply, it can have the flexibility of postponing the specification requirement to its partner by 2 months. On the other hand, should the universal power supply strategy is implemented, HP can respond the demand in the individual market by optimizing is inventory and reducing its indirect cost that hits is SG&A.

2. What are the costs and benefits of a universal power supply (feel free to make assumptions)?

Costs:

A. Universal power supply will cost $13.5 million which it is only 3% of product cost that can easily be passed through customer. On the other hand, HP can cover the cost which means 3% off its bottom line. However, if this money is not invested, lost of future customers due to stock out or even lost in profit margin due to transshipment can drain the companies finance through time.

B. Increase in price by 3% can also reduce revenue (sale).

C. Cost or loss of potential sale due to high price.

Benefits:

A. Decrease if not eliminate stock out.

B. With universal power supply, HP no longer needs to develop demand forecast for each market. It only needs to generate estimated worldwide product demand four months ahead.

C. Standardization in universal power supply could also offer customer benefit of using the product in different region.

D. Standardization in universal power supply in printer can also initiate standardizing in other products such as work stations and servers.

E. Add value to customers.

D. Eliminate direct cost associated with labor spent responding to demand by...