Hewlett-Packard Company DeskJet Printer Supply Chain (A)
INTRODUCTION Brent Cartier, Manager for Special Projects in the Materials Department of Hewlett-Packard (HP) Company’s Vancouver Division, clicked off another mile. It had been a long week and it looked like it would be a long weekend as well, based on the preparation that needed to be done for Monday’s meeting with Group Management on worldwide inventory levels for the DeskJet Printer product line. Even when he was busy, he always took the time for the seven-mile bike ride into work—it helped reduce stress in times like this … The DeskJet printer was introduced in 1988 and had become one of HP’s most successful products (Exhibit 1). Sales had grown steadily, reaching a level of over 600,000 units in 1990 ($400 million). Unfortunately, inventory growth had tracked sales growth closely. Already, HP’s distribution centers had been filled with pallets of the DeskJet printer. Worse yet, the organization in Europe was claiming that inventory levels there needed to be raised even further to maintain satisfactory product availability. Each quarter, representatives from the production, materials and distribution organizations in Europe, Asia Pacific and North America met to discuss the “I-word,” as they referred to it, but their conflicting goals prevented them from reaching consensus on the issues. Each organization had a different approach to the problem. Production had not wanted to get involved, claiming it was “just a materials issue,” but had taken the time to rant about the continued proliferation of models and options. The distribution organization should have to track and store warehouses of inventory, just because Vancouver Division couldn’t build the right products in the right quantities. The European distribution organization had even gone so far as to suggest that they charge the cost of the extra warehouse space that they were renting back to Vancouver Division directly, instead of allocating it among all the products they shipped. Finally, Brent’s boss, David Arkadia, the Materials Manager at the Vancouver Division, had summarized the Dr. Laura Kopczak and Professor Hau Lee of Stanford University prepared this case as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. It was first written in 1994 and revised in August 1998 and May 2001 and 3/8/04. All data and names have been disguised to protect the interests of the companies involved. Copyright © 1994 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved. To order copies or request permission to reproduce materials, e-mail the Case Writing Office at: email@example.com or write: Case Writing Office, Stanford Graduate School of Business, 518 Memorial Way, Stanford University, Stanford, CA 94305-5015. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means –– electronic, mechanical, photocopying, recording, or otherwise –– without the permission of the Stanford Graduate School of Business. This document is authorized for use only in Creating Ops Excellence by Sebastian Heese from November 2012 to May 2013.
HP DeskJet Printer Supply Chain
perspective of Group Management at the last meeting when he said, “The word is coming down from corporate: We can’t run our business with this level of unproductive assets. We’re just going to have to meet customer needs with less inventory.” As Brent saw it, there were two main issues. The first issue was to find the best way to satisfy customer needs in terms of product availability while minimizing inventory. The second and stickier issue involved how to get agreement among the various parties that they had the right level of inventory. They needed to develop a consistent method for setting and implementing...