Hewlett-Packard Company Deskjet Printer Supply Chain (A)

The inventory crisis has led to the advent of supply chain management solutions that let companies and their trading partners share design and component info, reduce inventory costs, monitor their bills of materials and obtain increased visibility into their suppliers' inventories. It also gave birth to online trading exchanges in such models as extranet, private or third party.

Inventory is a symptom of something else. There are several causes of the inventory crisis:

1.    Uncertainties in manufacturing process
   The uncertainties in manufacturing process included the delivery variability of incoming materials, process yields and downtimes at the plant. The uncertainties may increase the lead time and cause the shortage of inventory at Distribution Center. Also, manufacturing process don’t take into account in the product design process, so the process not efficient enough.

2.    Demand Uncertainties
   Demand uncertainties could lead to inventory buildup or back order at the Distribution Centers, especially at European and Asian Distribution Centers. It is because the transportation time from Vancouver to there requires four to five weeks. Thus, the European and Asian Distribution Centers’ ability to respond to fluctuations in the demand for the different versions of the product is limited. In order to assure high availability to customers, high levels of safety stocks were set up. Therefore, it will increase the inventory holding cost.

3.    Shipment by ocean not by air
Shipment by ocean not by air takes four to five weeks to ship the printers to Europe and Asia, the long lead time means cannot faster reaction time to unexpected changes in product mix. That should ...
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