Hewlett-Packard Company DeskJet Printer Supply Chain (A) ( the full case A is here --> https://www.ecotec.edu.ec/materia
Posted: Tue Jul 05, 2022 11:43 am
Hewlett-Packard Company DeskJet Printer Supply Chain (A)
( the full case A is here --> https://www.ecotec.edu.ec/material/mate ... 115790.pdf )
Hewlett-Packard Company 1 DeskJet Printer Supply Chain (B)
Brent Cartier, Manager of Special Projects in the Materials Department of the Hewlett- Packard (HP) Vancouver Division, was enjoying a hot cup of coffee after lunch on the long flight to Germany. The last few days had been exhausting. Meetings, conferences calls and non-stop phone calls had been his daily routine. The next few days would be worse, he thought, and so he had better try to get some sleep.
Brent recalled his meeting a few days ago with Billy Corrington and his team, David Arkadia and his lieutenants. “The inventory model that we built for you can take care of the magnitudes of forecast errors, lead times, and the service targets that you want. The use of such a model would certainly bring discipline and rationality to the safety stock setting process. It is nice, but I do not think that we should stop with the implementation of the model.” David showed excitement when the idea of redesigning the DeskJet so that it could be localized remotely at the DCs was brought up. This meant that the power supply module would have to be redesigned so that it could be added to the printer at the last minute as a simple plug-in operation. This would be followed by simple testing and then adding the other localization materials, such as manuals and final packaging, to the product. He was especially pleased to hear that Billy’s model could quantify the benefits in terms of inventory reduction and service improvement resulted from such a change.
David was quick to secure the blessings of the manufacturing manager, Al Gracio, to start working out the details of such a redesign. Brent spent two days meeting with the Engineering group to outline the Materials Department’s recommendation. It was not an easy sell. There were a number of engineers who could not see why engineering changes were needed for the DeskJet, which they considered to be first rate in terms of its functionality and performance. “You have to realize that there is always potentially a disastrous problem somewhere every time you make an engineering change. Believe me, the DeskJet is on its success track. Why do anything which could jeopardize it?”
Brent felt like he had aged two years in the subsequent two days trying to convince the engineering group that the engineering change for the redesign of the product was necessary.
but revised in May 2001. It is intended as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. All data and names have been disguised to protect the interests of the companies involved. Copyright © 1994 by the Board of Trustees of the Leland Stanford Junior University.
1
, J +FO
SGSCMF-003-2001 HP DeskJet Printer Supply Chain
It had not been easy, but it seemed like he had gotten what he wanted. His next task, selling the idea to his European colleagues, was going to be much more difficult. He knew this from previous encounters with these same colleagues on other projects. Manufacturing and distribution were supposed to be integral parts of a supply chain, but somehow the two groups had very different organizational cultures and ways of thinking.
With a glass of after-dinner Cognac, Brent looked at the last fax he had received just before leaving for Europe. He must have read it a dozen times by now. “Localization and customization are manufacturing tasks, not really the responsibility of distribution. We are best at moving products. Who is going to be responsible for the testing and the ultimate quality of the product? Who is going to pay for the investment to set up the localization line? Who will do the training? Besides, procuring all these power modules and manuals is going to be a nightmare for us. We do not have the system set up to support these functions.”
Brent knew that he would have to answer all these questions satisfactorily before he would gain the support of the European distribution organization. The last comment had been especially disturbing to him. “P.S. We have all been engaged in eliminating non-value- added steps from our supply chain. The DeskJet printer is shipped in its final form. Your idea would mean that we would have to reopen the carton upon receipt, unpackage the contents, perform the localization step, test the product, repackage the whole thing, and then reship it out. That is simply a lot of non-value-added activities. Why not ‘do it right the first time,’ i.e., have the whole thing done at your end, so that we do not have to reopen and reseal the box? We are moving backwards with your idea!”
Before he took off, he also had made several phone calls to his friends in the Finance Department who were experts in customs and duties. He asked them to find out the customs implications of the redesign, and fax the answers directly to Europe. He was hoping that they would be able to complete their tasks by the time he arrived.
Why did David always give him these fun tasks? Brent wanted to be able to defend thoroughly the pros and cons of the current proposal. Maybe his hope of getting some sleep during the flight was again wishful thinking. He would need all the time to be well prepared.
What are the pros and cons of the following proposals mentioned in the A case: a European factory, better forecasting, more inventory?
Assess quantitatively the air freight option relative to current operations. Just consider the products for the European market. Do not forget to consider pipeline inventory (since HP owns the pipeline inventory from Vancouver to Europe). Use the following assumptions:
HP wants to minimize inventory while still achieving at least a 98% fill rate.
The lead time from Vancouver to Europe is 5 weeks by the current method (ocean) but 1 week by air.
HP orders and received inventory on a weekly basis.
There are 4.33 weeks per month and demand is independent across time.
The product sells for $450 and marginal production cost is $300.
Inventory carrying costs are 24% per year.
Shipping via sea (the current operation) costs $10 per printer, whereas air freight costs $25 per printer.
Evaluate quantitatively the proposal in the B case for the European market.
Will the B case proposal be effective in the other major markets, North America and Asia?
Would you support the B case proposal? If so, why? If not, why?
( the full case A is here --> https://www.ecotec.edu.ec/material/mate ... 115790.pdf )
Hewlett-Packard Company 1 DeskJet Printer Supply Chain (B)
Brent Cartier, Manager of Special Projects in the Materials Department of the Hewlett- Packard (HP) Vancouver Division, was enjoying a hot cup of coffee after lunch on the long flight to Germany. The last few days had been exhausting. Meetings, conferences calls and non-stop phone calls had been his daily routine. The next few days would be worse, he thought, and so he had better try to get some sleep.
Brent recalled his meeting a few days ago with Billy Corrington and his team, David Arkadia and his lieutenants. “The inventory model that we built for you can take care of the magnitudes of forecast errors, lead times, and the service targets that you want. The use of such a model would certainly bring discipline and rationality to the safety stock setting process. It is nice, but I do not think that we should stop with the implementation of the model.” David showed excitement when the idea of redesigning the DeskJet so that it could be localized remotely at the DCs was brought up. This meant that the power supply module would have to be redesigned so that it could be added to the printer at the last minute as a simple plug-in operation. This would be followed by simple testing and then adding the other localization materials, such as manuals and final packaging, to the product. He was especially pleased to hear that Billy’s model could quantify the benefits in terms of inventory reduction and service improvement resulted from such a change.
David was quick to secure the blessings of the manufacturing manager, Al Gracio, to start working out the details of such a redesign. Brent spent two days meeting with the Engineering group to outline the Materials Department’s recommendation. It was not an easy sell. There were a number of engineers who could not see why engineering changes were needed for the DeskJet, which they considered to be first rate in terms of its functionality and performance. “You have to realize that there is always potentially a disastrous problem somewhere every time you make an engineering change. Believe me, the DeskJet is on its success track. Why do anything which could jeopardize it?”
Brent felt like he had aged two years in the subsequent two days trying to convince the engineering group that the engineering change for the redesign of the product was necessary.
but revised in May 2001. It is intended as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. All data and names have been disguised to protect the interests of the companies involved. Copyright © 1994 by the Board of Trustees of the Leland Stanford Junior University.
1
, J +FO
SGSCMF-003-2001 HP DeskJet Printer Supply Chain
It had not been easy, but it seemed like he had gotten what he wanted. His next task, selling the idea to his European colleagues, was going to be much more difficult. He knew this from previous encounters with these same colleagues on other projects. Manufacturing and distribution were supposed to be integral parts of a supply chain, but somehow the two groups had very different organizational cultures and ways of thinking.
With a glass of after-dinner Cognac, Brent looked at the last fax he had received just before leaving for Europe. He must have read it a dozen times by now. “Localization and customization are manufacturing tasks, not really the responsibility of distribution. We are best at moving products. Who is going to be responsible for the testing and the ultimate quality of the product? Who is going to pay for the investment to set up the localization line? Who will do the training? Besides, procuring all these power modules and manuals is going to be a nightmare for us. We do not have the system set up to support these functions.”
Brent knew that he would have to answer all these questions satisfactorily before he would gain the support of the European distribution organization. The last comment had been especially disturbing to him. “P.S. We have all been engaged in eliminating non-value- added steps from our supply chain. The DeskJet printer is shipped in its final form. Your idea would mean that we would have to reopen the carton upon receipt, unpackage the contents, perform the localization step, test the product, repackage the whole thing, and then reship it out. That is simply a lot of non-value-added activities. Why not ‘do it right the first time,’ i.e., have the whole thing done at your end, so that we do not have to reopen and reseal the box? We are moving backwards with your idea!”
Before he took off, he also had made several phone calls to his friends in the Finance Department who were experts in customs and duties. He asked them to find out the customs implications of the redesign, and fax the answers directly to Europe. He was hoping that they would be able to complete their tasks by the time he arrived.
Why did David always give him these fun tasks? Brent wanted to be able to defend thoroughly the pros and cons of the current proposal. Maybe his hope of getting some sleep during the flight was again wishful thinking. He would need all the time to be well prepared.
What are the pros and cons of the following proposals mentioned in the A case: a European factory, better forecasting, more inventory?
Assess quantitatively the air freight option relative to current operations. Just consider the products for the European market. Do not forget to consider pipeline inventory (since HP owns the pipeline inventory from Vancouver to Europe). Use the following assumptions:
HP wants to minimize inventory while still achieving at least a 98% fill rate.
The lead time from Vancouver to Europe is 5 weeks by the current method (ocean) but 1 week by air.
HP orders and received inventory on a weekly basis.
There are 4.33 weeks per month and demand is independent across time.
The product sells for $450 and marginal production cost is $300.
Inventory carrying costs are 24% per year.
Shipping via sea (the current operation) costs $10 per printer, whereas air freight costs $25 per printer.
Evaluate quantitatively the proposal in the B case for the European market.
Will the B case proposal be effective in the other major markets, North America and Asia?
Would you support the B case proposal? If so, why? If not, why?