Hewlett-Packard was able to develop a new and better business strategy to match the demand characteristics of the global printing market
Hewlett-Packard Company: Network Printer Design for UniversalityMaria Franco-CortesLiberty UniversityHewlett-Packard Company: Network Printer Design for UniversalityUniversal Power Supply as A Postponement Strategy
Hewlett-Packard was able to develop a new and better business strategy to match the demand characteristics of the global printing market. As a marketing approach, HP\’s Universal Power Supply enables them to make an individual market determination afterward, preventing costly localized areas and assisting in precise forecasting. However, they faced various obstacles in marketing HP printers, particularly in gauging market demand, where, when, and how much is required. HP\’s failure to effectively estimate mixed demand for HP printers in diverse geographical regions has long been a problem. In addition, market conditions influence demand in various geographical regions, which can change dramatically in weeks. According to Syntetos et al. (2016), supply networks have another crucial operational component in their structure: depth. Supply chains are frequently referred to as supply nets rather than chains because they are sometimes geographically dispersed. These factors make forecasting demand more complex, necessitating the need to plan ahead of time and identify the market need for HP printers four and a half months before delivery. HP can handle this problem with the universal power supply and does not need to know exact numbers for each market because it only needs to predict market demand globally for four months ahead of delivery time. As a result of the universal power supply, HP would postpone the printer engine specification by at least two months. Postponing would also allow HP to minimize excess inventories, if any, by shipping them to either market, avoiding failures like the one with VIPER, when a full warehouse of things had to be modified in order to meet European standards, where the product was a complete success, unlike in the United States.
Costs And Benefits of a Universal Power Supply
The initial expenses of adding universal power supplies and ultimately selling roughly 450000 Rainbow HP printers will be around $13.5 million in material expenses added to the initial material costs. The benefit of a universal power supply is that it will ensure that the company does not miss a sale, which will hurt product profit margins. The costs of missing a sale increase as demand fluctuates over the product life cycle. When a company cannot meet demand, a customer may be lost to the competition, and consumables like cartridges may suffer. By keeping inventories under control, a universal power supply eliminates these uncertainties. When releasing a new product, forecasting errors are more likely because we do not know how the market will react, leading to stockouts. The use of a universal power supply could help solve this difficulty.
Costs And Benefits are Different Over the Product Life Cycle
When a product is first brought to the market, the costs of stockouts are substantial, and they can rise to much higher levels as the product\’s publicity rises over time. Due to the prospect of a new product being released soon, stockout costs will be significantly lower after the product cycle. Because the reception to the product is unpredictable before its launch, forecasting market demand is complex, and because HP is a leading innovator, stockout costs are anticipated to rise. In all markets, the standard variation of the average monthly demand is approximately 40% at the mature period. This is due to increased competition from items with almost identical elements, as the rainbow would have been introduced, resulting in diminished demand and profitability. Life cycle competition is fiercer near the end of a product\’s life cycle, and retail profits are low. Therefore, HP must innovate and launch a new product into the market to stay competitive.
Operational Improvements
In anticipation of increased demand during the ramp-up stage, which results in high warehouse expenses, the corporation should implement a new strategy that cuts warehousing expenses. Instead of having a single storage facility, HP might create branches in places where they are strategically strategic and stockpile their products in warehouses to meet demand at a faster rate in diverse geographical places (Iddris, 2016). 3D printing is the new face of printing in terms of operational advances, yet the technique is costly due to the non-reusability of the materials used in printing, which are costly. Advances in technology have enabled 3D printing materials to produce products comparable to traditional ones, such as those produced by the Rainbow printer (Schubert et al., 2021). This is a brand-new market, and if HP does not react quickly, it will go out of business. Introducing more demand forecasting techniques for better operations, conducting correct sales at the regional level, developing research and development teams for the designing and manufacturing of printer engine and fuse features, identifying and developing a more significant number of vendors for the supply of the printer engine and including components for reducing lead time and costs are some of the improvement processes which HP can implement.
Recommendations About the Adoption of a Universal Power Supply
The universal power supply is recommended for HP since the potential benefits outweigh the costs. Customers would be able to acquire more new products if there was a universal power supply available. The forecasting method will also improve, as aggregate forecasting will be achievable with implementing the universal power supply. Because the company\’s supply and marketing teams should examine the market circumstances of all markets and provide a good prognosis on what to expect, four and a half months is ample time to prepare for demand fluctuations. Before the full dispatch of the goods, a few samples should be supplied so that approvals can be completed on time and market demand can be established. Another suggestion is that HP should assess the additional costs and reduce them, particularly in stockout costs and inventory management, to improve their operational procedures\’ effectiveness and efficiency.
References
Iddris, F. (2016). Measurement of innovation capability in supply chain: an exploratory study. International Journal of Innovation Science, 8(4), 331–349. https://doi.org/10.1108/ijis-07-2016-0015
Simchi-Levi, D., Kaminsky, P., & Simchi-Levi, E. (2021). Designing and Managing the Supply Chain 3e with Student CD (4th ed.). McGraw-Hill Education.Syntetos, A. A., Babai, Z., Boylan, J. E., Kolassa, S., & Nikolopoulos, K. (2016). Supply chain forecasting: Theory, practice, their gap, and the future. European Journal of Operational Research, 252(1), 1–26. https://doi.org/10.1016/j.ejor.2015.11.010
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