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HP Case Study

Company information

Objectives

• Overview of Supply Chain • Customer Order Decoupling Point • Conflicting Goals of Departments • Few Concepts

• HP Case Study (Interlinking Above Learning so that you can derive solutions in the class)

Supply Chain

Physical Goods Flow
Physical Goods Flow
Cash
Cash
Fulfillment Sourcing Sourcing Warehouse Manufacturing (Suppliers of (Suppliers of & Distribution (WIP,FG) Comps,Raw) Comps,Raw) (Storage &
Fulfillment
Sourcing
Sourcing
Warehouse
Manufacturing
(Suppliers of
(Suppliers of
& Distribution
(WIP,FG)
Comps,Raw)
Comps,Raw)
(Storage &
Retailers)
Transportation & Logistics
Upstream
Downstream
Information

Customer Order Decoupling Point

The point in the material flow(Value chain) where the product is

linked to the specific customer. Each stage the form changes Forecast Driven - Push-Pull Boundary
linked to the specific customer. Each stage the form changes
Forecast Driven -
Push-Pull Boundary

- Sales Order

From the decoupling point •Purchase/Manufactu re to plan to create inventory •Assemble/Finish to order from the point •Increase Lead time& Opportunity lost •Increase in inventory & risk obsolescence

Customer Order Decoupling Point The point in the material flow(Value chain) where the product is linked

Conflicting Goals

Purchasing

 

Manufacturing

 

Warehousing

 

Customers

•Stable Volume

•Long run

•Low Inventory

•Shorted lead time

•Flexible Delivery

production

•Reduced

•High in stock

time

•High quality

Transportation

•Variety

•Little variation

•High productivity

costs

•Low price

•Large quantities

•Low production

•Quick

cost

replenishment

capability

Work towards Organizational Goals
Work towards Organizational Goals

Some Concepts

• Delays (Information, Process, Change /Setup) • Bull Whip Effect • Safety Stock • Localization •

Push or Pull

Push-Pull Systems

Printer Supply Chain

Asia Oth.Divisions IC Mfg World wide Supplier Europe PCAT FAT Print Characteristics •Pull Manufacturing – Push
Asia
Oth.Divisions
IC Mfg
World wide Supplier
Europe
PCAT
FAT
Print
Characteristics
•Pull Manufacturing – Push
Distribution
•Inventory – Average Sales
of 1 month Safety Stock
•Production Plan based on
Target Inventory Levels
•Make to Stock
•Pseudo Zero Inventory
Supplier
Far East
Mechanism
Supplier
MFG – High Volume and
High Speed
1 Week
1 Week / 5 Weeks
Transpor t Sea

Main Issues

• Satisfy Customer Needs – Right Product and Less Inventory as the industry is highly competitive

• Bringing in Alignment across Dif. Departments right Inventory levels

HP Case Challenges

Problems

Causes

•Too much inventory in the DeskJet supply chain (High Safety Stock)

•Late Shipments/Procurment •Process Delays

 

•Europe

still

needed

more

more

•Uncertainty

about

correct

inventory

inventory

levels

•European and Asian DCs cannot

•Inventory Imbalance

•Options

due

to

geographic

options

meet because of mismatch.

•Service level deterioration

(localization) •Long lead times •Uncertain market

 

•Difficulty at getting divisions to work together

HP DeskJet Case: Options

• Short Term

– Rationalize safety stock

• Long Term

– Air shipment – European factory – More inventory – Better forecasting – DC localization

But HP Focus on •Conflicting Goals (Wrong Performance Measurement) •Inventory @ Wrong Place •Wrong Problem focus •Value Stream mapping