Hp Deskjet Supply Chain

HP Deskjet Case Study

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)

 North America

 Asia Pacific and  Europe

2

Mohd. Zubair Saifi, SIBM-Pune

Deskjet Supply Chain

3

Mohd. Zubair Saifi, SIBM-Pune

Cycle time for production and distribution

Factory Cycle Time

US DC

Europe

Asia

4

Mohd. Zubair Saifi, SIBM-Pune

Problem

 Satisfy customer requirements by holding minimum

inventory  Bring a consensus amongst various division about inventory levels

 Marketing wants 98% product availability

 Distribution wants minimum inventory

 Sources of uncertainties

 Delivery of incoming material

 Internal Processes

 Demand

5 Mohd. Zubair Saifi, SIBM-Pune

Bad Solution - Forecasting

 Forecasting is generally not reliable

 Longer forecasting horizon makes forecast worse

 Aggregate forecasts are much accurate  In case of HP deskjet case the problem is more serious

because

 Higher Inventory carrying costs in case of HP case varying from

12% to 60%  In technology products, chances of obsolescence are higher

6

Mohd. Zubair Saifi, SIBM-Pune

Europe

Europe A AA Average 42.33 420.17 Std dev 32.41 203.93 Average Inventory to support 98% sales 108.90 838.98

AB

AQ AU AY Europe TOTAL

7

15830.08

2301.17 4208.00 306.83 23108.58

5624.58

1168.49 2204.58 103.12 6243.96

27381.56

4700.96 8735.66 518.62 35932.11

Mohd. Zubair Saifi, SIBM-Pune

Asia Pacific

Asia-Pacific

A AB AG AK AU

Average

114.67 331.58 1005.92 31.00 448.50

Std dev

281.63 265.83 604.49 23.49 555.71 750.27

Average Inventory to support 98% sales

693.06 877.52 2247.39 79.25 1589.78 3472.53

APAC TOTALZubair Saifi, 1931.67 Mohd. SIBM-Pune

8

North America

North America Average...