(c7) Hp Deskjet Printer Supply Chain
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Hewlett-Packard : DeskJet Printer Supply Chain
郭紋伶 郭有維 朱維禮 Kaushal Kishore (KK)
www.themegallery.com
Team Members 1
郭紋伶
2
3
4
KK
www.themegallery.com
Contents 1
Introduction
2
Zero inventory
3
DeskJet supply chain
4
Distribution process
5
The inventory and service crisis
6 4
Conclusion Company Logo
www.themegallery.com
Introduction In 1990’s, Hewlett-Packard faced several problems with inventory levels for the DeskJet Printer product line. This printer was produced in Vancouver’s facility and from there was shipped to a distribution center. HP has three distribution centers (DC), in North America, Asia Pacific and Europe that at the moment were filled of DeskJet stock.
Company Logo
www.themegallery.com
Introduction HP need to reach an optimal solution that balance the customers’ needs and keep a low inventory level, getting an agreement among the DC’s.
Company Logo
www.themegallery.com
ZERO inventory The Vancouver division and its quest for zero inventory. Just-in-time (JIT) Reduced inventory from 3.5 months to 0.9 months.
www.themegallery.com
The DeskJet Supply Chain
Supplier Manufacturing sites
The DeskJet Supply Chain
Distribution centers Dealers Customers
Company Logo
www.themegallery.com
The DeskJet Supply Chain There were two key stages in manufacturing process:
Printed circuit board assembly and test (PCAT) ASICs (application-specific integrated circuits) ROM (read-only memory )
Final assembly and test (FAT) Company Logo
The Deskjet Supply Chain
No significant buffer inventories
Two key manufacturing process
9
The Deskjet Supply Chain
Localization
10
The Deskjet Supply Chain These products were then sorted into three groups destined for the three distribution centers: North America, Europe, and Asia-Pacific FAT PCAT Vancouver 1 week 1 day U.S. DC 4~5 weeks Asia
Europe 11
www.themegallery.com
The DeskJet Supply Chain The management change DCs: make-to-stock mode
inventory level=forecasted sales + safety stock level
Manufacturing: pull mode
3 major sources of uncertainty that could affect the supply chain: Delivery of incoming materials Internal process Demand
www.themegallery.com
Distribution process Line item fill rate (LIFR) Calculated as the total number of customer order line items filled on time divided by the total number of customer line items attempted. Order fill rate (OFR) Based on orders completed, where an order contains multiple line items.
www.themegallery.com
Distribution process Inventory level Safety stock (12% ~ 60%) Service level (98%)
Distribution cost Outbound freight salary
Company Logo
www.themegallery.com
Distribution process Step 4
Step 3 Step 2
Step 1
Receive (complete) products from various suppliers and stock them.
Pick the various products needed to fill a customer order.
Ship the order by appropriate carrier.
Shrink-wrap the complete order and label it.
Company Logo
www.themegallery.com
The inventory and service crisis Europe Problem Contained issues • Safety stock –Forecasting system –Make-to-stock system –Multiple products • Long lead time
www.themegallery.com
The inventory and service crisis Safety Stock Great variations in market demand, keeping the firm’s target service level (98% in this case), i.e., meeting consumers’ requests with a higher probability.
Company Logo
www.themegallery.com
The inventory and service crisis forecasting system Localization Inaccurate forecasts Uncoordinated and divided in terms of inventory policy
Company Logo
www.themegallery.com
The inventory and service crisis Make-to-stock system Due to all the lacks in forecasts and to long lead times, creates high levels of inventory in the DC’s resulting in carrying costs. By using push system, HP has to calculate at great length its inventory levels avoiding stock-out and overstock.
Company Logo
www.themegallery.com
The inventory and service crisis Multiple products This variety in products contributes to high levels of inventory because there’s more products to keep in safety stock and to forecast expected demand.
Company Logo
www.themegallery.com
Issues to be discussed Long lead time Reduction in lead time, the standard deviation of demand during lead and review time is reduced. This is due to the fact that smaller lead-times imply an absolute variation in demand, smaller than with larger lead-times.
Issues to be discussed Air Shipment Asian and European distribution centers receive orders more frequently, they won’t need to keep higher safety stocks when compared to sea transportation.
Issues to be discussed New Plant Another alternative would be to install a new plant somewhere between Europe and Asia. This would allow for smaller transportation costs and lead times.
Company Logo
Issues to be discussed ERP System Another proposal has to do with the implementation of an Enterprise Resource Planning (ERP) system
Conclusion Improve forecasting system Reduce the lead time and safety stock Air shipment New Plant
ERP system
郭紋伶 郭有維 朱維禮 Kaushal Kishore (KK)
www.themegallery.com
Team Members 1
郭紋伶
2
3
4
KK
www.themegallery.com
Contents 1
Introduction
2
Zero inventory
3
DeskJet supply chain
4
Distribution process
5
The inventory and service crisis
6 4
Conclusion Company Logo
www.themegallery.com
Introduction In 1990’s, Hewlett-Packard faced several problems with inventory levels for the DeskJet Printer product line. This printer was produced in Vancouver’s facility and from there was shipped to a distribution center. HP has three distribution centers (DC), in North America, Asia Pacific and Europe that at the moment were filled of DeskJet stock.
Company Logo
www.themegallery.com
Introduction HP need to reach an optimal solution that balance the customers’ needs and keep a low inventory level, getting an agreement among the DC’s.
Company Logo
www.themegallery.com
ZERO inventory The Vancouver division and its quest for zero inventory. Just-in-time (JIT) Reduced inventory from 3.5 months to 0.9 months.
www.themegallery.com
The DeskJet Supply Chain
Supplier Manufacturing sites
The DeskJet Supply Chain
Distribution centers Dealers Customers
Company Logo
www.themegallery.com
The DeskJet Supply Chain There were two key stages in manufacturing process:
Printed circuit board assembly and test (PCAT) ASICs (application-specific integrated circuits) ROM (read-only memory )
Final assembly and test (FAT) Company Logo
The Deskjet Supply Chain
No significant buffer inventories
Two key manufacturing process
9
The Deskjet Supply Chain
Localization
10
The Deskjet Supply Chain These products were then sorted into three groups destined for the three distribution centers: North America, Europe, and Asia-Pacific FAT PCAT Vancouver 1 week 1 day U.S. DC 4~5 weeks Asia
Europe 11
www.themegallery.com
The DeskJet Supply Chain The management change DCs: make-to-stock mode
inventory level=forecasted sales + safety stock level
Manufacturing: pull mode
3 major sources of uncertainty that could affect the supply chain: Delivery of incoming materials Internal process Demand
www.themegallery.com
Distribution process Line item fill rate (LIFR) Calculated as the total number of customer order line items filled on time divided by the total number of customer line items attempted. Order fill rate (OFR) Based on orders completed, where an order contains multiple line items.
www.themegallery.com
Distribution process Inventory level Safety stock (12% ~ 60%) Service level (98%)
Distribution cost Outbound freight salary
Company Logo
www.themegallery.com
Distribution process Step 4
Step 3 Step 2
Step 1
Receive (complete) products from various suppliers and stock them.
Pick the various products needed to fill a customer order.
Ship the order by appropriate carrier.
Shrink-wrap the complete order and label it.
Company Logo
www.themegallery.com
The inventory and service crisis Europe Problem Contained issues • Safety stock –Forecasting system –Make-to-stock system –Multiple products • Long lead time
www.themegallery.com
The inventory and service crisis Safety Stock Great variations in market demand, keeping the firm’s target service level (98% in this case), i.e., meeting consumers’ requests with a higher probability.
Company Logo
www.themegallery.com
The inventory and service crisis forecasting system Localization Inaccurate forecasts Uncoordinated and divided in terms of inventory policy
Company Logo
www.themegallery.com
The inventory and service crisis Make-to-stock system Due to all the lacks in forecasts and to long lead times, creates high levels of inventory in the DC’s resulting in carrying costs. By using push system, HP has to calculate at great length its inventory levels avoiding stock-out and overstock.
Company Logo
www.themegallery.com
The inventory and service crisis Multiple products This variety in products contributes to high levels of inventory because there’s more products to keep in safety stock and to forecast expected demand.
Company Logo
www.themegallery.com
Issues to be discussed Long lead time Reduction in lead time, the standard deviation of demand during lead and review time is reduced. This is due to the fact that smaller lead-times imply an absolute variation in demand, smaller than with larger lead-times.
Issues to be discussed Air Shipment Asian and European distribution centers receive orders more frequently, they won’t need to keep higher safety stocks when compared to sea transportation.
Issues to be discussed New Plant Another alternative would be to install a new plant somewhere between Europe and Asia. This would allow for smaller transportation costs and lead times.
Company Logo
Issues to be discussed ERP System Another proposal has to do with the implementation of an Enterprise Resource Planning (ERP) system
Conclusion Improve forecasting system Reduce the lead time and safety stock Air shipment New Plant
ERP system
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