DeskJet Printer Supply Chain
Sources of Uncertainty
There are three major sources of uncertainty that could affect HP’s DeskJet Printer. The first source of uncertainty is the delivery of parts and raw materials from HP’s various suppliers; uncertainties include late shipments or incorrect deliveries. The second source is HP’s internal process, which includes process yields and possible machine downtimes. The first two sources of uncertainties can result in delays in the manufacturing lead-time. The third major source of uncertainty is demand. Demand uncertainties can lead to inventory buildup or backorders at the Distribution Centers (DCs). The long lead-time for shipping printers to Europe and Asia puts HP at a huge disadvantage in responding to fluctuations in demand.
Inventory and Service Crisis
Vancouver’s management struggled to limit the amount of inventory throughout the DeskJet supply chain while providing the high level of service needed. The manufacturing group in Vancouver made great progress in reducing uncertainties caused by delivery variabilities of materials from suppliers, improving process yields, and reducing downtimes at the plant. However, inventory is not being matched with demand. Some view this Inventory and Service Crisis as a forecasting problem, while others see it as an inventory problem. The first viewpoint believes a better forecasting system will solve the crisis. With a better forecasting system, HP can improve the alignment between supply and demand. This will help the distribution centers, especially for those in Europe, where the magnitude of the demand imbalances was especially alarming. The second viewpoint believes a higher inventory level is needed to serve as a buffer for unmet demand. This is most likely not the case. There is actually too much inventory in the supply chain. However, due to mismatches,...