HEWLETT PACKARD COMPANY DESK JET Case Solution

Problem statement:

Hewlett Packard is one of the leading companies, which deals in printed communication products widely used all over the world for official as well as home based use. The main problem which we are going to analyze in this case is the mismanaged inventory systems of the company, where the Vancouver division failed to meet fluctuating demands and dealing with customers in an appropriate manner and at proper timing. Moreover, another issue is the transport cost to meet demands of overseas customers and mismanaged plans and procedures for forecasting sales.

BACKGROUND AND OVERVIEW:

Hewlett-Packard launched the desk jet printer in 1988, which was HP’s most successful launch in the class of ink-jet printers. HP and CANNON were the pioneers of retail price market dealing in ink-jet technology in their respective corporate division. Prior to that, their sales consisted of dot-matrix printers however, that technology became obsolete, and was replaced by ink-jet or laser printers.

We are going to discuss the Vancouver division of HP and the inventory management problems faced by them, and their desire to lead the market by launching high quality printed communication products and ink-jet printers for different office and home users and meeting customers requirement  quality and  reliability of the product. The problems faced by them and the proposed growth plans are for ultimately leading the division and to achieve the desired level of transformations for success.

Matching increased sales and fluctuating demand. Having to deal with stock out issues at some of the places to maintain satisfactory product availability is one of its issues.

MANUFACTURING AND DISTRIBUTION PROCESS:

The manufacturing process consists of two phases first (PCAT) printed circuit assembly and test and then (FAT) final assembly and test. Both stages cycle time is one week. Manufacturing is done in pull mode.

The distribution network consists of  3 destined locations US DC, Europe DC and Asia DC. Long shipments time is about 4-5 weeks to ship the printers throughout the world due to sea transit routes.

Their DC process consists of :

  • Receiving products from supplier and its stocking.
  • Usage of products for specific customer order.
  • Labeling and completion to finished product.
  • Shipping of order via appropriate carrier.

PROS AND CONS OF THE COMPANY VANCOUVER DIVISION:

HP is one of the leading companies in its domain earning high percentage of profits since its inception and providing high quality products to its customers; the product quality is of high standard and of high quality, but they are having some difficulties to meet the demands of the company because forecasing the demand is a difficult task and it does not have proper forecasting plans to meet the fluctuating demand. This makes the costs of the company to increase because holding inventory when not required increases the cost of holding inventory and insurance and security costs as well. Sometimes when demands are high and they face low stocks or stock outs and do not meet customers’ requirement, then this leads to a loss as well as it affects the reputation in the market. These are some of the cons that need to be dealt with.

PROBLEMS IDENTIFICATION:

  • Supply chain needs to be improved. This is the foremost problem with the company, as the supply chain needs improvement through the reduction of unnecessary supply chain components. Moreover, distribution networks should be improved all over the world where they supply their products.
  • Inventory in Europe needs to be increased to maintain product requirement on time and to bring satisfactory product availability. The company has huge customer base in Europe and by having low inventory levels it is losing its customers as well its goodwill in the market of the print media.
  • The management’s decisions on cost component needs to be revisited, also the thedecision regarding safety stock’s probability needs to be revised. Its management’s work is not up to the mark. They need to have some specialist for such calculations and it should implement on proper intervals with accuracy.
  • Due to problem of transportation regarding the routes, it uses Asian region through sea to supply and this incurs huge cost for the company in terms of lead time as well as fuel consumption. Their security and insurance cost also increased due to this followed by custom duties and clearance time. Overall, it is a time-consuming process that needs to be considered and reduced. Transportation time from Vancouver to EU takes 5 weeks due to sea route transits, therefore it should be taken into account and air routes should be adopted..........................

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