HP Supply Chain Case Study

HP Case StudyCompany information

ObjectivesOverview of Supply ChainCustomer Order Decoupling PointConflicting Goals of DepartmentsFew ConceptsHP Case Study (Interlinking Above Learning so that you can derive solutions in the class)

Supply Chain Suppliers(Comps,Raw)ManufacturingPlantsWarehouse& Distribution(Storage & Retailers)UpstreamDownstreamClass 1Class 3Class 2

Supply Chain Sourcing(Suppliers of Comps,Raw)Manufacturing(WIP,FG)Fulfillment Warehouse& Distribution(Storage & Retailers)InformationPhysical Goods FlowCashUpstreamDownstreamTransportation & Logistics

Customer Order Decoupling Point- Sales OrderFrom the decoupling point Purchase/Manufacture to plan to create inventoryAssemble/Finish to order from the pointIncrease Lead time& Opportunity lostIncrease in inventory & risk obsolescence

The point in the material flow(Value chain) where the product is linked to the specific customer. Each stage the form changesForecast Driven -Push-Pull Boundary

Conflicting GoalsPurchasing

Stable VolumeFlexible Delivery timeLittle variationLarge quantitiesManufacturing

Long run productionHigh qualityHigh productivityLow production costWarehousing

Low InventoryReduced Transportation costsQuick replenishment capabilityCustomers

Shorted lead timeHigh in stockVarietyLow priceWork towards Organizational Goals

Some ConceptsDelays (Information, Process, Change /Setup)Bull Whip EffectSafety StockLocalizationPush or Pull

Push-Pull Systems

*Printer Supply Chain1 Week1 Week / 5 Weeks CharacteristicsPull Manufacturing Push DistributionInventory Average Sales of 1 month Safety StockProduction Plan based on Target Inventory LevelsMake to StockPseudo Zero Inventory

Main IssuesSatisfy Customer Needs Right Product and Less Inventory as the industry is highly competitiveBringing in Alignment across Dif. Departments right Inventory levels

HP Case ChallengesProblemsToo much inventory in the DeskJet supply chain (High Safety Stock)Europe still needed more more inventory European and Asian DCs cannot meet because of mismatch. Inventory ImbalanceService level deterioration

CausesLate Shipments/ProcurmentProcess DelaysUncertainty about correct inventory levelsOptions due to geographic options (localization)Long lead timesUncertain marketDifficulty at getting divisions to work together

HP DeskJet Case: OptionsShort TermRationalize safety stockLong TermAir shipmentEuropean factoryMore inventoryBetter forecastingDC localizationBut HP Focus onConflicting Goals (Wrong Performance Measurement)Inventory @ Wrong PlaceWrong Problem focusValue Stream mapping

444422222 8217679*What is supply Chain

*What is supply Chain

**In Europe the Inventory ships to specific country*