Have to decide whether or not to use a universal power supply for the next generation of network laser printer; Rainbow
it can enable HP to better respond to the changing demand (individual markets and reduce its inventory costs)
but universal power supply would increase costs by $30/unit
Changing Market Conditions
HP held 57% of the worldwide laser printer market, but some formidable competitors had recenty enter the market
life cycles had fallen to under 3 years
consumers willing to switch brands if HP's price too far above the market average/product wasn't easily available
The Supply Chain
most of the customization of the product can all be carried out at the DCs
the supply chain process process involves the transportation of the base printer almost exclusively by boat, from the partner's facility to HP's DCs
monopoly control of one of the key components allowed this partner to require a 14-week LD from HP
when customers order from reseller arrive, the printers are customized and localized, followed by appropriate labeling and packaging
outsources the procurement and assembly of the product's main engine to a Japanese partner
the shipment process lasted 1 month
final transport tome via truck from resellers in each region
from few days to a week
The Product Development Perspective
The Marketing Perspective
HP hadn't forecasted the correct mix of European and North American demand
Product life cycle of printer can be divided into 3 stages
maturity
end of life
ramp-up
the time from the initial introduction of the product until HP's production volume level off
reflects a period of increasing competition
retail profits at this stage reach their lowest point as margin are squeezed
the division can also discount the product across the continent to correct for some of the imbalances
The Manufacturing Perspective
The Decision
The Finance Perspective
the financial analyst estimated that annual holding cost rate is approximately 30% (which covers warehousing, insurance, cost of capital, and shrinkage
the real concern with developing the universal supply is the potential power play that could emerge at the time of allocation of the production build 2 regions
some consideration of how the decision would impact future generations of products will have to be made