Stanford Global Supply Chain Management Forum
August 10, 1999
Hewlett-Packard Company: Network Printer Design for Universality Introduction Sarah Donohoe, manufacturing engineering manager of the network laser printer division at Hewlett-Packard Company (HP), listened intently to her colleagues at the project review meeting for the development of their latest new product. With Sarah at the meeting were Jane Schushinski, marketing manager, Leo Linbeck, head of product design, and David Hooper, the controller of the division. The main topic for this 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. Previously, printers in the North American and the European market have distinct power supplies and the associated fusers in the main engine of the printer. For North American printers, a 110 volt power supply was installed. For European printers, a 220 volt power supply was added. This printer engine was built by HP’s manufacturing partner in Japan. Due to the long lead time for engine manufacturing, HP had to specify the requirements of the two types of printers at least fourteen weeks ahead. The time that it takes the Japanese partner to commit the printers for shipments, the transportation times and customs clearance totals about 4 weeks. Hence, if a universal power supply is used, then HP would have the flexibility of postponing the specification of the printer engine by at least two months in planning process. Consequently, the production team believed that universal power supply can enable HP to better respond to the changing demand in the individual markets and reduce its inventory costs. Linbeck had begun the meeting by reviewing a fax he had received from the Japanese partner. “We have been asking our partner for a universal power supply and fuser for a long time. Now, when we are about to finalize our design of the next generation network printer, they are telling us that designing the new power supply is finally feasible and can be completed within the time constraints we have set for delivering the product to market on time. However, we must make the decision within the next two weeks so our Japanese partner can line up its design engineers to work on the project.” Hooper summed up finance's position as follows, “I do not know what other costs or benefits to the supply chain This case was written by Professor Hau L. Lee, based on an original case written by Steven Plous and Toni Cupal. It is intended as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. The product and individuals’ names have been disguised. Copyright © 1998 by the Board of Trustees of the Leland Stanford Junior University. 1
SGSCMF-003-1999 HP-Network Printer
will be derived from this new change, but what I do know is that our Japanese partner quoted that universal power supply would increase costs by $30 per unit.” As the conversation progressed around the room, Hooper's words became more and more indicative of the group's feelings as a whole. The only hard number available for analyzing the costs and benefits of the change was the $30 increase as quoted by the Japanese partner. If the team were to implement the change, they would have to convince management that the benefits outweighed the costs. Unfortunately, as the meeting went on, quantifying the advantages and disadvantages appeared more and more difficult.
The Hewlett-Packard Company Hewlett Packard (HP) was one of Silicon Valley's legends. Established by two Stanford University graduates, David Packard and William Hewlett, in 1939, the company initially prided itself on supplying superior engineering tools, designed for engineers by engineers. As the company grew and became diversified, the strong belief in technological innovation as the key to...