1. HP DeskJet Printers Supply Chain
A case on Basestock Levels and Postponement
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2. HP DeskJet Printers
Then and Now
The first DeskJet printer
Mobile printer
Color printer
Photo printer
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3. History of HP
– HP founded in 1939 by William Hewlett
and David Packard
– 1990 revenues $13.2 B and profit $739 M
– Then, a manufacturer of electronic test
and measurement equipment
– Now, mostly manufactures computers and
peripherals
– Peripherals is the second largest group
among six product groups
HP Radio Oscillator circa 1939
– Peripherals: Printers, Plotters, Magnetic
disc and tape drivers, Terminals and
Network products
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4. Printer Market
– HP sold ?? M printers and made a revenue of $?? B in 1990
» Each printer about $???
» But prices has been dropping
– Printers are becoming a commodity sold at supermarket
– Market is composed of
» ??% impact/dot matrix, dropping
» ??% inkjet, increasing; HP is the market leader
» ??% laser
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5. Vancouver Plant
– Printer production at Fort Collins, CO, Boise, ID, Sunnyvale, CA
and Corvallis, OR is consolidated to the Vancouver site
– Vancouver plant uses a pull system
» JIT, Kanban, Stockless production
– Vancouver had the proper production system
– DeskJet printer became its flagship product
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6. Printer Supply Chain
??
Lead time
Asia
Supplier IC Mfg DC
Europe
Supplier PCAT FAT DC
Print Far East
Supplier Supplier
Mechanism DC
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7. What is Brent Cartier’s problem?
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8. Brent Cartier’s problem
• Too much inventory in the DeskJet supply chain
• Some suggest pumping up more inventory
• European and Asian DCs cannot meet because
of ????? mismatch.
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9. DCs operate as a push or a pull
system?
Asia
DC
Europe
FAT DC
Far East
DC
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10. What is localization?
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11. What is localization?
• Customization of a printer to meet the language
and power supply requirements of the local
countries
– Product manuals
– Several power cords
• Where is localization done?
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12. Can a DC localize?
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13. Can a DC localize?
• DCs do not have a ???? ???? system for
assembly operations
• US DC manager To Beal says:
– [At a DC] We have to decide what our core
competency is …. If we want to take on
manufacturing processes here, we have to put
processes in place to support them
• In conclusion, DC managers are for/against (??)
localizing at DCs.
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14. What is inventory imbalance?
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15. Inventory imbalance
• Start with an example:
– There are 1000 DeskJet configured/packaged for France
– Another 1000 for England
– What is the shortage if the demand in France and
England are both 1000 printers?
– What is the shortage if the demand in France is 1500
while the demand in England is 500?
• Inventory imbalance is having the correct amount
of total inventory but the incorrect mixture
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16. Can localization at a DC avoid inventory imbalance?
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17. Can localization at a DC avoid inventory imbalance?
• Continuing with the same example:
– There are 2000 DeskJet ready for Europe
– What is the shortage if the demand in France and England are both 1000
printers?
• Shortage is ??
– What is the shortage if the demand in France is 1500 while the demand in
England is 500?
• Shortage is ??
• Not convinced yet, what is the effect of postponed localization on
printer inventories?
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18. To convince ourselves more
Consider options with monthly demand larger than 1000 in Exhibit 4.
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
AB 20572 20895 19252 11052 19864 20316 13336 10578 6096 14496 23712 9792
AQ 4008 2196 4761 1953 1008 2358 1676 540 2310 2046 1797 2961
AU 4564 3207 7485 4908 5295 90 0 5004 4385 5103 4302 6153
Compute the basestock levels for each product to achieve a fill rate of 98%.
Note that basestock levels can be reduced if these options are aggregated into a single o
What would be the basestock level for this single product?
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19. Postponing localization to the DCs
• Is the US DC manager right?
• What problems are possible with localization at
DCs?
• How to avoid these problems?
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