Hewlett-Packard Company:Network Printer Design For

Universality

Content

• Introduction• Network Laser Printer Division• HP’s Main Issues• Universal Power Supply(UPS) • Different Perspective Of Departments About UPS• Postponement Strategy• Cost Impact Of Postponement Strategy• Learning

The Hewlett-Packard Company• HP was one of the silicon valley’s legends.• Innovation was the key to HP’s strategy & brought the world products

such as- - Hand held calculator - Ink-jet printers etc.• HP spends about 10% of its revenue on R&D.• In 1990, HP’s revenue was 13.2b$ and profit was 739m$.• HP held a dominant 57% of the worldwide laser printer market.

Network Laser Printer Division

• Wants to introduce a new product (Rainbow).• Having Universal power supply.• Next generation printer.• High end printer with special

configuration options.• High customization variety.

HP Company Main Issues-

• The power specification for printer is different in North America(110 volt) and European (220 volt). This difference brings a big challenge in HP’s market forecasting, Stock out and transshipment between regions.• Long Lead time for engine manufacturing (at least 14 weeks).• If universal power supply is used then increase of 30$ cost for each

printer.

Universal Power Supply

Benefits

• Improved Forecasting• Reduced inventory and stock out cost• Reduced lead time and better response to the change in demand

Costs

• Mfg. cost of the printer increased by $30• Customer may not pay for increase in price so lost of sales

Cost and Benefits over Product Life cycle• At the beginning of the life cycle, cost of stock out would be high.• At the maturity stage, extra cost can be a real disadvantage. However

better forecasting of demand helps lower the level of inventory.• At the ending life cycle, cost of stock out is lower than compared to at

beginning because there is less fear of losing sales.

Postponement Strategy

• Delay the point of differentiation • Under postponement certain part of the supply chain are undertaking

a push strategy while other parts perform a pull strategy- - Upstream suppliers provides commodity parts using a push strategy - Downstream supplier employ a pull strategy & do not customize products or services until an order is placed

Cost Impact Of Postponement

Decrease• Inventory carrying cost • Inventory holding cost• Stock out cost• Standardization decreases

admin cost• Additional cost of transshipping

Increase• $30 material cost• Product/Process redesign for

standardization may increase system cost

Benefits Of Postponement

• Lower risk of unsold items.• Easier upgrade, service at customer location.• Increased order fulfillment.• Faster response to customer.

Learning

• Postponement is the key strategy for providing multiple configurable products at low cost.• If the design of a product is modular than we can manufacture

modules separately and at the same time. This shorten the total time required for production.• Modular design also helps in late product life cycle.

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