HP Deskjet- Supply Chain

Group – 9
Muralikrishna
Badrianth G.M.
Saurabh Kumar
Piramanayagam
Richie Giftson Paul
About HP
Supplying high quality electronic tools from
1939

Diversification with strong technological

innovations with the advent of computer
technology

Retail printer market in 1990 had reached a

size of about $10 billion
The product: inkjet printers
Started as an economic
alternative to laser printers
in 1988
pioneered by HP and Canon
in 1980s
Were getting commoditized
quickly, thus getting
differentiated on the basis of
general business criteria
such as cost and availability
Role of the Vancouver division

Established in 1979 by HP to consolidate all its

printer manufacturing operations

Was the first US plant to successfully

implement JIT and Kanban

Operated successfully with inventory levels of

just 0.9 months- down from previous levels of
3.5 months
The DeskJet supply chain

1.PCA
T 2.
FAT 3.Localizati
on
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
Problems
High demand fluctuations in European markets
leading to higher levels of safety stocks

Long lead times due to transport using ships

and this in turn adds difficulty to the
forecasting process

Extra inventory in some cases and backorder in

others in European market

Balance between inventory level and Service

Level
Objective
To Decrease inventory level while maintaining
service level ( 98 %)
Possible Solutions
1. Sophisticated safety stock calculation method
2. Air Shipment – Expensive
3. Postponement Strategy / Assemble to Order /
Standardization:
Stock standard subassemblies in Europe
and assemble localized features according to
local demand
Aggregate demand – Lesser uncertainties
Possible Solutions
4. European Factory – sufficient demand ??
5. Introducing a generic model for worldwide
sales:
higher prices but demand uncertainty to
be very low-success in a generic market??
5. Improve forecasting method - Difficult to
implement
Postponement Strategy
Vancouver Division European D.C
Custom
Localizati er
PCAT FAT
on

European D.C
Vancouver Division
Custom
Localizati
PCAT FAT er
on
Postponement Strategy
Advantages of Postponement
Reduction in Safety Stock by over 6000 units
due to lesser uncertainty in Aggregate demand
Lesser carrying and transit cost due to compact
packaging
Localized feature can be sourced locally to
further reduce costs
Both Backorder and Inventory Level is reduced
Better Line item Fill rate (LIFR) and Order Fill
Rate (OFR)
Adjustments needed
Distribution centers should have assembling
facilities
Need of skilled workers
Standard Design to be reconsidered taking into
account:
 Ease of final assembly during localization
 A compact design for efficient packaging
Thank You!!!!
