Hewlett-Packard Company Network Design for Universality
Discussion 3: Hewlett-Packard Company Network Design for Universality
In what way is a universal power supply a postponement strategy?
The decision of Hewlett Packard (HP) to implement the use of universal power supplies (UPS) in their printers is a postponement strategy because the company would be able to delay providing final specifications to their manufacturing partner in Japan by two months ( Simchi-Levi et al., 2021). In the case of HP, this is an intentional disruption that would allow the company to improve the flow of goods and reduce waste (Phares & Richey, 2021). HP would have an opportunity to create more accurate forecasting and potentially save money not only in reduction of inventory required at their regional distribution centers, but also because configuration and component changes would not be required to comply to country regulations should inventory need to be shipped across the Atlantic Ocean (Simchi-Levi et al., 2021).
What are the costs and benefits of a universal power supply (feel free to make assumptions)?Costs
There are several costs that are associated with the implementation of the UPS to HP’s Rainbow printers. One cost that is associated is the increase in material costs of thirty dollars per printer (Simchi-Levi et al., 2021). For example, if HP ordered the manufacturing partner to begin with a production run of one thousand printers, this would increase material costs by a total of thirty thousand dollars. Another cost that HP may encounter is loss of reputation if the power supply has a defect since there is only one supplier for this component. There is no fallback plan and HP could potentially lose revenue due to their customers buying printers from competitors.
Benefits
While HP does not want to pass additional costs on to consumers, for fear of losing customers to competitors, money would be saved should additional inventory be available on one side of the Atlantic Ocean when the other side runs low. This also eliminates the fear of stockout. HP will also not be required to reconfigure the electronic circuitry which will save on labor and parts. HP will experience improved forecasting since a universal power supply would be implemented, thus lowering the risk of unsold items at the end-of-life benchmark.
How would such costs and benefits be different over the product life cycle?
There are three integral parts to the product life cycle of the Rainbow printer that HP needs to take into consideration. The possibility of stock out is high during the beginning of the lifecycle (Simchi-Levi et al., 2021). During the maturity stage of the product life cycle, HP will better be able to forecast additional units needed based upon customer demand. However, HP will also be at a disadvantage in this stage because their competitors are likely to have implemented similar technologies which in turn may drive down prices. In the end of the product life cycle there is less fear of losing sales from stock out. HP would lose far less money at this point because sales associates are more likely to upsell customers to the newest model.
Besides deciding on a universal power supply, what other operational improvements can you suggest to HP Boise?
The first recommendation is to bring the various departments together to discuss the Rainbow printer and brainstorm on ways that HP can benefit from implementing the UPS in its products. There seems to be a disconnect between the leaders that were interviewed for the case study and each has their own concerns about how their departments will be affected. The second recommendation is to use more than one manufacturer. This will divide the costs of any technical issues with the components that are supplied. Instead of HP’s product being completely useless there will be product that is available for sale. HP will also be able to replace faulty parts quicker so that customer downtime is reduced, and satisfaction is increased.
What would be your recommendations about the adoption of a universal power supply?
HP should take a Stochastic approach when forecasting for the uncertain demand that is expected from customers for the Rainbow printer. The postponement strategy is perfect for HP when planning and rolling out the new printer with the UPS. By taking the Stochastic approach HP will be able to order an initial amount of inventory to evaluate customer demand while gauging future manufacturing plans (Li & Liu, 2017). This also may reduce the cost of production and will decrease the need to carry excess inventory for HP.
References
Li, L., & Liu, S. (2017). Analysis of postponement problem in supply chain of customized products. Journal of Interdisciplinary Mathematics, 20(4), 1153-1166. https://doi.org/10.1080/09720502.2017.1364890
Phares, J., & Richey, R. G. (2021). Planned disruption and unintended consequences: Postponement by strategy vs. intervention in the U.S. beer supply chain. Business Horizons, 64(3), 369-377
Simchi-Levi, D., Kaminsky, P., & Simchi-Levi, E. (2021). Designing and Managing the Supply Chain: Concepts, Strategies and Case Studies (4th ed.). New York, NY: Richard D. Irwin, Inc.
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