Group 9 - Section E - HP

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HP DESKJET

PRINTER SUPPLYCHAIN

Case Analysis

GROUP 9 (SECTION E)

Punit P Parekh ( ! "#!)

Hite$h Ku%ar ( ! "&")

C R Srira% ( ! " !)

J' in Suku%aran ( ! "& )

Shi*en+ra Prata, ( ! "!-)


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INDUSTRY ANALYSIS

Founded in the year 1939 by Willia !e"lett and Da#id $a%&ard' "ith head(uarter inCali)ornia* !$ do inated the sales in %o +uter +eri+herals and easure ent e(ui+ ent neededin %o +uters* The +eri+heral ,rou+s "ere +o+ular )or its inno#ati#e ran,e o) dis+osable +rintheads used in in&-et +rinter and o#in, +a,e +lotters*The retail +rinter ar&et %onsisted o) three a-or se, ents.

1* Dot atri/ $rinter 0 2 45* In&-et $rinters 052 43* Laser $rinters 0 2 4

A)ter 1992s' the ar&et share o) Dot 6atri/ +rinters be,an to de%line by 12 ' basi%ally due tolo" +rint (uality and the noise +rodu%ed by the +rinters* This in7turn led to the in%rease in

+o+ularity o) In&-et and Laser +rinters* $eo+le +re)erred In&-et o#er Laser +rinters' sin%e the)or er "as e%ono i%al* 8y this ti e' !$ and Canon %a e to tar,et this se, ent* !$ "as the)irst %o +any to %o e u+ "ith in& )or ulation and dis+osable +rint head in late 19 2s' )ollo"ed

by Canon in 1992*The su%%ess story o) !$ Des&-et $rinter "as not only restri%ted to US but it soon s+read to:uro+ean and Asian Countries* To harness this o++ortunity' !$ de%ided to set u+ its distribution%entres at three ,eo,ra+hies.7

1* North A eri%a DC5* :uro+e DC3* Asia7$a%i)i% DC

The distribution to North A eri%an DC "as throu,h road"ays; "hi%h too& a++ro/i ately 1 dayto shi+ +rodu%ts to Cali)ornia* The shi+ ents to :uro+e and Asia "as trans+orted throu,h"ater"ays "hi%h too& 7< "ee&s to shi+ the +rodu%ts to the %orres+ondin, DCs*In 19=9' !$ de%ided to set u+ a +rinter anu)a%turin, +lant in >an%ou#er' Washin,ton* Therisin, de and )or +rinters )or +ersonal use' "as one o) the ain dri#in, )a%tor behind this o#e*?ne o) the ost interestin, )a%tor about the +rodu%tion unit "as' it had sto%&less +rodu%tion and

lo" %y%le ti e*

The Su++ly Chain o) Des& @et %an be e/+lained as )ollo"in,.7

1. Suppliers: - The aterials li&e ra" +rinted %ir%uit boards' re(uire ent s+e%i)i%e(ui+ ent to %arry out lo%ali ation +arti%ular to a ,eo,ra+hy "as su++lied by thesesu++liers*

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2. Manufacturing:- 6anu)a%turin, "as a t"o sta,e +ro%ess.7

a. Printed Circuit Assembly and Test (PCAT):- The ob-e%ti#e o) this +ro%ess "asto asse ble and test ele%troni% %o +onents li&e R?6' ASICBs' +rint head dri#erso) +rinters and ra" +rinted %ir%uit boards*

b. inal Assembly and Test ( AT):- The ob-e%ti#e o) this +ro%ess "as to asse bledi))erent +arts )ro di))erent sub7asse blies and +rodu%e a )inal +rodu%t* So' itre(uired asse bly o) %hassis' otors' &ey+ads' %ables and +rinted %ir%uitasse blies*

!. "istributi#n: - Co +any had three distribution %enters in North7A eri%a' :uro+e andAsia7$a%i)i%* The )inal +rodu%ts i*e* the +rinters )ro the %o +any "ere shi++ed to these

lo%ations* It too& a++ro/i ately 1 "ee& )or shi+ ents in US to rea%h "hereas 7< "ee&s)or shi+ ents to other se, ents in :uro+e and Asia7$a%i)i%*

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$R?8L:6S FAC:D 8Y !$1. $#ng "urati#n f#r s%ipments

!$ shi++ed its )inal +rodu%ts i*e* +rinters to #arious distribution %enters in :uro+e andAsia $a%i)i%' "hi%h too& lar,e a ount o) ti e a++ro/i ately 7< "ee&s* Thisin%reased the lead ti e* So' it be%a e di))i%ult )or the %o +any to rea%t to any)lu%tuations in de and in these se, ents*

2. Mismatc% #f demand bet&een "istributi#n centers and Sales 'fficesThou,h the %o +any tried to shi+ loads o) +rinters to :uro+e but there "ere %onstant%o +laints about the una#ailability o) the +rodu%t )ro Sales o))i%es in :uro+e* 8ut'there "ere also %o uni%ation )ro Distribution %enters )ro the sa e se, entabout the e/%ess a#ailability o) other lo" on de and +rodu%ts' due to "hi%h they"ere out o) s+a%e*

!. $#cali ati#nThe Des& @et +rinters sold by !$ "ere %usto i ed a%%ordin, to lan,ua,e and +o"er su++ly re(uire ents o) #arious %ountries* As +rinters "ere anu)a%tured %entrally' soto eet these re(uire ents o) %usto i ed +rodu%ts "as di))i%ult at %entral le#el' asea%h %ountry in di))erent se, ents had di))erent lan,ua,e and +o"er re(uire ents*

. *mpr#per predicti#n #f "emandThou,h >an%ou#er di#ision o) the Co +any +rided itsel) to be a sto%&less )a%tory butthey "ere not able to +redi%t the de and e))e%ti#ely as there are instan%e "hen thesu++ly has in%reased so u%h that the distribution %enters didnBt had s+a%e to store*So' an e))e%ti#e +redi%tion o) the de and "ill hel+ in aintainin, an o+ti al a ounto) in#entory and in7turn redu%e %on)li%ts*

+. C##rdinati#n am#ng different departments:a%h de+art ent had di))erent ,oals due to "hi%h it "as di))i%ult )or the to rea%h to

a %ensus' li&e +rodu%tion de+art ent didnBt "anted to ,et into ana,e ent o) in#entory issue so they +ro-e%ted it as -ust a aterials issueE and not their +roble *Also' the Distribution %enters in :uro+e %har,ed the %ost o) e/tra "arehouse s+a%e)ro the >an%ou#er Di#ision* Also' the +er%enta,e o) non7)rei,ht %osts "as %har,ed)ro the +rodu%t line* !en%e' "e %an say that the di))erent de+art ents o) theor,ani ation didnBt %oordinate +ro+erly*

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,. ncertainty in supply c%ainThe reasons )or un%ertainty in su++ly %hain "ere due to delay in deli#ery o) ra"

aterials or hi,h lead ti e in anu)a%turin, o) the +rodu%t and inability to e))e%ti#ely +redi%t de and )or the )inal +rodu%ts*

. "e/iati#n in t%e r#le #f "istributi#n CentersThe standard +ro%ess )or distribution %enters "as to re%ei#e +rodu%ts' sto%& the anddeli#er the to di))erent %usto ers* Distribution %enters %ould deli#er +rinters by)ollo"in, this standard +ro%ess but in %ase o) +ersonal %o +uters' they "ere e/+e%tedto +er)or e/tra +ro%essin, as Inte,rationB' "hi%h in#ol#ed %hoosin, a++ro+riate&eyboard and anual )or destination %ountry *

ASSU6$TI?NSThe assu +tions ta&en into a%%ount )or the %al%ulations are.

1* The unit %ost o) trans+ortation by Air is G12 and by Shi+ is G1*5* Trans+ortation ti e ta&en by Air is 3 days and by Shi+ is 3< days 0< Wee&s4*3* Re#ie" +eriod i*e* the ti e ta&en to re#ie" the in#entory and +la%in, the order is = days*

* C?HS unit. Gan%ou#erBs sister +lant in :uro+e*

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:>ALUATI?N ?F ALT:RNATI>:S

'pti#n 1: Assembly in 0anc#u/er (PCAT AT) Sea reig%t t# ur#pe (Currentscenari#)

Data Used. Re#ie" +eriodK 1 "ee& 6anu)a%turin, $eriodK 1 "ee& Re+lenish ent Lead Ti e 0trans+ortation4K < "ee&s

Cy%le Sto%& is %al%ulated as the 6ean de and +er "ee& 5*$i+eline in#entory is %al%ulated usin, the LittleBs La" "ith Flo" rate as the "ee&ly eande and and Flo" ti e as the re+lenish ent Lead Ti e* Sa)ety Sto%& is %al%ulated usin, the)ollo"in, )or ula.7

Sa)ety Sto%&K M s(rt* 0Re#ie" +eriod 6anu)a%turin, $eriod Re+lenish ent Lead Ti e4 MStandard de#iation o) de and +er "ee&*

Per M#nt% Per 3ee4 A/erage St#c4 $e/el

ur#pean'pti#ns

Mean Std"e/

Mean Std"e/

Cycle

Pipeline

Safety

T#tal

A 5*3 35* 12*J 1J*5 <


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The in#entory %ost is %al%ulated as the a#era,e in#entory held in a year 0"hi%h isIdenti%al to a#era,e in#entory held in a "ee&4 M !oldin, Cost M C?HS* Shi+ entCost is %al%ulated as Yearly de and M Trans+ortation Cost +er unit*

'pti#n 2: Assembly in 0anc#u/er (PCAT AT) Air reig%t t# ur#pe

Data Used. Re#ie" +eriodK 1 "ee& 6anu)a%turin, $eriodK 1 "ee& Re+lenish ent Lead Ti e 0trans+ortation4 K 3 days

Cy%le Sto%& is %al%ulated as the 6ean de and +er "ee& 5*$i+eline in#entory is %al%ulated usin, the LittleBs La" "ith Flo" rate as the "ee&ly eande and and Flo" ti e as the re+lenish ent Lead Ti e* Sa)ety Sto%& is %al%ulated usin, the)ollo"in, )or ula.7

Sa)ety Sto%&K M s(rt* 0Re#ie" +eriod 6anu)a%turin, $eriod Re+lenish ent Lead Ti e4 MStandard de#iation o) de and +er "ee&*

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C#st Per 7ear

ur#pean'pti#ns

*n/ent#ry S%ipment T#tal

A G5J'313*J G


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Per M#nt% Per 3ee4 A/erage St#c4 $e/el

ur#pean'pti#ns

Mean Std"e/

Mean Std "e/ Cycle Pipeline Safety T#tal

A 5*3 35* 12*J 1J*5 < <


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$#cali ati#n in Sact#ry

5232J G3'J


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lo%ally' sa e ti e "ould be ta&en to deli#er in :uro+e i) there is a lo%al +lant4 Cost o) trans+ortation lo%ally in :uro+e is G 2*


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R:C?66:NDATI?NS 'pti#n 1 'pti#n 2 'pti#n ! 'pti#n

A/erage *n/ent#ry an%ou#er +lant %ontinues to o+erate as the only +rodu%tion )a%ility' then?+tion 5 i*e* air )rei,ht to :uro+e a)ter asse bly in >an%ou#er Di#ision is the ost a++ro+riate%hoi%e* In this %ase' a#era,e in#entory and the in#entory holdin, %osts are lo"er than the +resentsituation be%ause o) a redu%tion in the +rodu%tion lead ti e* !o"e#er' the air )rei,ht %ost ayo))set the bene)it )ro a redu%tion in the in#entory holdin, %ost i) the assu ed air )rei,ht +er unitis ore than a threshold le#el* In turn' total %osts ay also be ,reater than the +resent situation*

8ut "hen the setu+ %ost o) a ne" +lant in :uro+e is re%o#erable in a short +eriod' ita&es sense to ,o ahead "ith o+tion as this a++ears to be the best in ter s o) a#era,e

in#entory' in#entory %ost' shi+ ent %ost and total %ost* !o"e#er' %al%ulations to this e/tent %ouldnot be done due to insu))i%ient data* Another inbuilt assu +tion here is that !$ "ould be able to

+ro%ure its ra" aterials at the sa e %ost in :uro+e as in >an%ou#er "hi%h ay not be true*Another +ossibility is that the setu+ %ost o) a %o +lete +lant is e/orbitant and air )rei,ht

%har,es are also #ery hi,h' In this %ir%u stan%e' o+tion 3 i*e*' lo%ali ation in :uro+e is the only +ra%ti%al o+tion* This ensures ti ely shi++in, o) standardi ed +rodu%t )ro >an%ou#er*Ada+tation to lo%al needs %an be %o +leted in :uro+e . This o+tion leads to better de and)ore%astin, and o) %han,es in de and* !i,h and lo" de and +atterns a on, indi#idual +rodu%tstend to %an%el one another' thereby yieldin, a ore stable +attern o) total de and* It %an also bere+li%ated )or the Asia ar&et*

Irres+e%ti#e o) the o+tion %hosen' it is i +erati#e to de#elo+ better odels )or +redi%tiono) de and* All rele#ant lo%al )a%tors that a))e%t the de and )or #arious +rinters ha#e to bein%luded in +redi%tion* This "ould hel+ in better +rodu%tion +lannin, and in#entory

ana,e ent*

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Group 9 - Section E - HP

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