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Hewlett-Packard Company: Network Printer Design for Universality (The…
Hewlett-Packard Company: Network Printer Design for Universality
The Network Printer Division Supply Chain
The laser products as a group constitute a major and rapidly rising portion of HP's revenue
The network printer division at HP currently outsources the procurement and assembly of the product's main engine to a Japanese partner
The design team of Rainbow recognized that the multiple thousands of configurable options for the new product would be a nightmare for forecasting and production planning
The supply chain process involves the transportation of the base printer, almost exclusively by boat from the partner's facility to HP's DC in either North America or Europe
All necessary accessories and localization materials are also shipped to the DCs from the respective suppliers
Introduction
Project review meeting for the development of HP latest new product by manufacturing engineering manager, marketing manager, head of product design, and the controller of the division
The main topic for the meeting was the decision of whether or not to use a universal power supply for the next generation of network laser printer, code-named Rainbow
Japanese partner told that designing the new power supply is finally feasible and can be completed within the time constraints HP has set for delivering the product to market on time
Japanese partner quoted that universal power supply would increase costs by $30 per unit
Quantifying the advantages and disadvantages of universal power supply was more difficult
The Hewlett-Packard Company
Hewlett-Packard was one of Silicon Valley's legends. Established by two Stanford University graduates, William Hewlett and David Packard
In 1939 the company initially prided itself on supplying superior engineering tools, designed for engineers by engineers
Innovation was the key of HP's strategy
Through time, HP's focus on innovation had brought the world products such as the hand-held calculator and the ink jet
The company spent 10% of its revenue on researh and development
Changing Market Condition
In early 1990s, many business units were being forced to compete on other dimensions, while technological innovation continued to drive the company;s success
Product life cycles were continually shrinking, making time to market the difference between maximizing market opportunities and missing them
HP had aggressively worked to improve its product development process
The Universal Power Supply Decision
The Marketing Perspective
Changing to a universal power supply is a fantastic idea if it does not add cost to the product
The biggest difficulty in marketing is not will there be demand for the product, but how much and where
With the universal power supply, marketing team only need to estimate worldwide product demand four months ahead of time instead of numbers for each market
The Product Development Perspective
With the pressure to lower material costs, the design team would find it hard to justify this seemingly unnecessary increase in material cost
A universal power supply eliminates all rework that is now required , but whether the gains it provides outweigh the increase in material cost remains unclear
The Finance Perspective
There will be benefits from universal power supply. The team should take a hard look at the cost of stockouts and inventory
Annual holding cost rate is approximately 30%, which covers warehousing, insurance, cost of capital and shrinkage
The Manufacturing Perspective
The universal power supply is a great idea, the innovation will improve the flexibility to respond to orders in two key ways
The universal power supply would allow the company to avoid some problems, making transshipment a distinct possibility, the cost of reconfiguration is almost zero
The only real concern is the potential power play that could emerge at the time of allocation of the production build to the two region
The Distribution Perspective
Given a universal product, transshipment won't present a big problem for the DC; it is just another shipment to the team and the team can easily 'localize' the product by adding manuals and plug adapters at the DC
The Decision
The team had decision-making authority, but they would have to defend their decision to upper management
The team knew that if they decided to adopt the universal power supply, management would want to ensure they had performed adequate analyses of all the cost and the benefits of such a decision
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