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Hewlett-Packard – Supplying the DeskJet Printer in Europe

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Floyd Flores

on 13 November 2013

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Transcript of Hewlett-Packard – Supplying the DeskJet Printer in Europe

Hewlett-Packard – Supplying the DeskJet Printer in Europe
Case Question 3
Evaluate the idea of supplying generic printers to the Europe DC and integrating the product by packaging the power supply and the instruction manual at the DC just prior to the delivery to the European resellers. Focus on the impact on DC inventory in this analysis
Case Questions
4. What is your recommendation to HP?
Based on the analysis done above, it is highly recommended that HP proceed with the localization of the DeskJet printer in the distribution centers provided that an effective quality assurance policy will be implemented.
Background
In 1988, Hewlett-Packard (HP) started manufacturing the DeskJet printer which became one of its popular products. Manufacturing and “localization” of the said product is done at HP’s Vancouver plant; while its distribution centers are located in North America, Asia Pacific, and Europe.

The main problem of the case revolves around the difficulty in managing the inventory level of the DeskJet printer in the distribution centers, especially in Europe. This may have been brought about by uncertainties in demand and inefficient internal processes which directly affects the delivery of the printers to the customers.

Inventory Control
Direct-to-store Approach
“Distribution center bypass”; or “Direct distribution”
Drivers:
a. Global sourcing
b. Upstream migration of value-added logistics services
c. Internet-enabled electronic links
d. Sophisticated point-of-sale systems
e. More accurate sales forecasting tools
f. Tracking and tracing tools

The average cost of inventory in the US is 30 to 35 percent of its value mainly through:

a. obsolescence
b. insurance
c. opportunity

Inventory Costs
A. HOLDING (OR CARRYING) COST

storage facilities, handling, insurance, pilferage, breakage, obsolescence, depreciation, taxes, opportunity cost of capital

B. SETUP (OR PRODUCTION CHANGE) COSTS

materials, equipment setup, required papers, appropriately charging time and materials, moving out the previous stock of material

C. ORDERING COSTS

managerial and clerical costs; also includes maintaining the system needed to track orders

D. SHORTAGE COSTS

cost resulting from stockout (lost customers, lateness penalties)

Inventory System
Set of policies and controls that monitor levels of inventory and determine:
a. what levels should be maintained
b. when stock should be replenished
c. how large orders should be

“maintaining and controlling goods to be stocked”
Supply Chain Inventory
Inventory System
A. SINGLE-PERIOD INVENTORY MODEL

B. MULTIPERIOD INVENTORY MODEL
1. Fixed-order Quantity Model
2. Fixed-time Period Model

Single Period Inventory Model
Multiperiod Inventory Model
are designed to ensure that an item will be available on an ongoing basis throughout the year
usually the item will be ordered multiple times throughout the year
The system dictates the actual quantity ordered and the timing of the order

Doing the integration process in the distribution centers would have a positive impact on HP’s inventory management. Most importantly, this would significantly decrease their freight cost and customs duties. This would also increase their local market presence since they will be able to meet the local standards i.e., language, electrical specifications. Value of transit inventory will also decline because their focus will be on the generic product. Packaging will also be lessened which is helpful to the environment.

The only disadvantage of the localization process being done in the distribution centers is that quality will not be as good as when the whole product is done in HP’s Vancouver manufacturing center.

Baritua, Johanna Marie
Flores, Floyd
Jamosale, Daren
Macandili, Jonalyn
Quieng, Karol Anson
Quiniquini, Ma. Kristina

Thank You. =)
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