Please enable JavaScript.
Coggle requires JavaScript to display documents.
Hewlett-Packard Company (The Universal Power Supply Decision (The…
Hewlett-Packard Company
The Universal Power Supply Decision
The
Product Development
Perspective
Product life cycle of printer divided into 3 stages : ramp-up, maturity, and end of life
Having excess inventory in one continent and shortages in another, or ship the excess from one continent to another (transshipment)
Division can also discount the product to create demand, dismantle the product and sell parts to HP's service division in Roseville, or just write the product off
Need to decide strategy quickly and GO
Implemented 2 new product development metrics :
First
, Instituted cost reduction goals for each new generation of printer. The costs captured in this measure included labor, material. and manufacturing overhead
Second
metric, called break-even time (BET), had been mandated by upper management. It measured the time from project initiation to break even, defined as the point where total discounted cash outflow equaled total discounted cash inflow
The
Finance
Perspective
The other major cost is inventory. annual holding cost rate is approximately 30%, which covers warehousing, insurance, cost of capital, and shrinkage
The costs of stockouts in the ramp-up stage is highest, it is also this stage when we know the least about the market response to ournew product, and our forecast errors are usually much greater
The
Marketing
Perspective
Changing universal power supply is a fantastic idea if it does not add cost to the product. Customer will not pay for features that they don't need
The Biggest difficulty we have in marketing is not will there be demand for our product, but how much and where
What hurts us is our inability to accurately forecast the mix of demands in geographical regions.
The long lead time from Japan causes my marketing staff to pull their hair out
With the universal power supply, we only need to estimate worldwide product demand four months ahead of time instead of numbers for each market
HP had not forecasted the correct mix of European and North American VIPER demand. The printer was sold out in Europe while demand in the United States was less than anticipated
The
Manufacturing
Perspective
Concern with developing the universal supply is the potential power play that could emerge at the time of allocation of the product build to the two regions
The
Distribution
Perspective
If we can avoid what happened with the VIPER we have got to be better off
The Decision
The team had decision-making authority
They have to defend their decision to upper management
How the decision would impact future generations of products will have to made
Estimate of the risks involved
Management want to ensure they had performed adequate analyses of all costs and benefits of such a decision
Changing Market Condition
In early
I990s
While technological innovation success, Many business units were being forced to compete on other dimensions
Consumer product lines, low prices, broad availability, and ease of use had become competitive requirements
Lew Platt (HP CEO)
The importance of improving customer service and responsiveness
Improvement in order fulfillment will strengthen HP's competitiveness, increase customer satisfaction, and reduce expenses
Along with improving profitability
HP held a dominant 57% of the worldwide laser printer market
Several formidable competitors
Apple
Fuji-Xerox
Kyocera
Oki
Compaq
To meet challenges
HP had aggressively worked to improve its product development process
Cross-functional teams that brought specialists from all functional areas together to create a new product were becoming standard
The primary benefit of such teams was their ability to identify and eliminate potential problem early in the design cycle
The different perspectives of the team members often gave raise to heated debates over design decisions
Introduction
Network Laser Printer Division
Jane Schunshinki (
Marketing Manager
)
Leo Linbeck (
Head of Product Design
)
Sarah Donohoe
(Manufacturing Engineering Manager
)
David Hooper (
The Controller of The Division
)
Main Topic Meeting
Code-named
Rainbow
Decision
of whether or not to
use a Universal Power Supply
for
the next generation of network laser printer
Distinct Power Supply
North American Printer (110 volt installed)
European Printers (220 volt added)
Printer Engine built by HP's manufacturing partner in Japan
Due long lead time for engine manufacturing
Specify the requirements of two types at least
14 weeks
ahead
Commit for Shipment, Transportation times, Custom clearance (
4 weeks
)
If a
Universal Power Supply Used
HP have flexibility of postponing the specification of the printer engine by at least
2 month in planning process
Can enable HP to
better respond to the changing demand
in the individual markets and
reduce its inventory costs
Increase costs
$30/unit
Must
CONVINCE
management that
BENEFITS OUTWEIGHTED the COSTS
The Hewlett-Packard Company
Established by William Hewlett and David Packard (1939)
Supplying superior engineering tools, designed for engineers by engineers
Technological innovation as the key to competitive advantage persisted
Innovation was the key to HP's strategy
In 1957, importance of capability
Improvement is accomplished by
better methods
,
better techniques
,
better machinery and equipment
and by
continually finding better ways to do their jobs and to work together as a team
The Network Printer Division Supply Chain
in 1992 revenue of laser product was $3billion, but was projected to reach close to $8 billion by 1998.
The network printer division currently outsources the procurement and assembly of the product's main engine to a Japanese partner
The components, including the power supply and fuser unit, were fully integrated with printed circuit board from HP's Boise Factory into the printer engine at the partner's factory
Customization of the products, like the installation of paper units, cabinet stands, fax modems, paper output units, stapler upgrade package, memory, and print server linkage, can all carried out at the DC
The localization of the product through the inclusion of driver software disks, manuals, power cords, and front panels (with the correct mix of languages) are also done at the DC