Supply Chain Design of HP Regarding Network printer, also contain postponement strategy

1. Hewlett-Packard Company:
Network Printer Design For
Universality

2. Content
• Introduction
• Network Laser Printer Division
• HP’s Main Issues
• Universal Power Supply(UPS)
• Different Perspective Of Departments About UPS
• Postponement Strategy
• Cost Impact Of Postponement Strategy
• Learning

3. The Hewlett-Packard Company
• HP was one of the silicon valley’s legends.
• Innovation was the key to HP’s strategy & brought the world products
such as-
- Hand held calculator
- Ink-jet printers etc.
• HP spends about 10% of its revenue on R&D.
• In 1990, HP’s revenue was 13.2b$ and profit was 739m$.
• HP held a dominant 57% of the worldwide laser printer market.

4. Network Laser Printer Division
• Wants to introduce a new
product (Rainbow).
• Having Universal power supply.
• Next generation printer.
• High end printer with special
configuration options.
• High customization variety.

5. HP Company Main Issues-
• The power specification for printer is different in North America(110
volt) and European (220 volt). This difference brings a big challenge in
HP’s market forecasting, Stock out and transshipment between
regions.
• Long Lead time for engine manufacturing (at least 14 weeks).
• If universal power supply is used then increase of 30$ cost for each
printer.

7. Universal Power Supply
Benefits
• Improved Forecasting
• Reduced inventory and stock out cost
• Reduced lead time and better response to the change in demand
Costs
• Mfg. cost of the printer increased by $30
• Customer may not pay for increase in price so lost of sales

8. Cost and Benefits over Product Life cycle
• At the beginning of the life cycle, cost of stock out would be high.
• At the maturity stage, extra cost can be a real disadvantage. However
better forecasting of demand helps lower the level of inventory.
• At the ending life cycle, cost of stock out is lower than compared to at
beginning because there is less fear of losing sales.

10. Postponement Strategy
• Delay the point of differentiation
• Under postponement certain part of the supply chain are undertaking
a push strategy while other parts perform a pull strategy-
- Upstream suppliers provides commodity parts using a push
strategy
- Downstream supplier employ a pull strategy & do not
customize products or services until an order is placed

13. Cost Impact Of Postponement
Decrease
• Inventory carrying cost
• Inventory holding cost
• Stock out cost
• Standardization decreases
admin cost
• Additional cost of transshipping
Increase
• $30 material cost
• Product/Process redesign for
standardization may increase
system cost

14. Benefits Of Postponement
• Lower risk of unsold items.
• Easier upgrade, service at customer location.
• Increased order fulfillment.
• Faster response to customer.

15. Learning
• Postponement is the key strategy for providing multiple configurable
products at low cost.
• If the design of a product is modular than we can manufacture
modules separately and at the same time. This shorten the total time
required for production.
• Modular design also helps in late product life cycle.

16. THANK YOU