Hewlett-Packard case

1. How can design for logistic concepts be used to control logistics costs and make the supply chain more efficient?

            Design for logistics concepts can be used to control logistics costs by applying the concepts to the supply chain process.  The DFL focuses on three concepts, which are: packaging and transportation, parallel and concurrent processing, and standardization.  In terms of controlling logistics costs, the DFL suggests that packaging and transportation can be improved to save on costs.  If products parts are shipped in bulks, instead of transporting the already assembled products, the company will make a lot of savings.  Hewlett-Packard can apply this to its operation by transporting the printer’s parts to minimize space and leave the assembly to the distribution centers. 

            The parallel and concurrent processing can be effective in shortening the manufacturing time of a product.  This will also improved forecasting since many product components can be made at the same time.  In terms of components that need to be purchased and the supply is uncertain, the company can buy that part in volume.  This way, only that component needs to have a high level of inventory instead of the entire product.   This is highly applicable to HP’s problem of maintaining a low inventory level while meeting customer needs.  As for standardization, HP has already a standardized manufacturing process but it needs to break it down by module or by part.  HP can also implement a standardized procurement of materials.

2. What is delayed differentiation and how can Hewlett-Packard use delayed differentiation to address the problems described in the case? How can the advantages of delayed differentiation be quantified?

            Delayed Product Differentiation is a manufacturing technique wherein processes and parts are standardized while leaving the decision to what end product would result during the actual assembly of the specific product.  This technique is very useful particularly in areas where demand is highly unpredictable.  In HP’s case, the company could start making generic parts that they could use for many products.  They could make or purchase volumes of these generic parts every quarter based on last year’s aggregate sales.  They could send these generic parts for assembly in the assembly plants in Asia and Europe.  The assembly plants would only need to put the parts together and distribute them to the distribution centers depending on demand.

            Another way of applying delayed differentiation to HP’s case is to leave the customization and location of the printers to their plants in Europe and Asia.  This would entail building one facility in Asia and one in Europe for this purpose.  However, the advantage of this would be long term.  Customization and localization take time, but when done in Europe or in Asia, the availability would increase while not increasing the inventory level in Vancouver.  The advantages of this process can be quantified by making costs comparison and sales comparison before and after the differentiation process is implemented.

3. When should suppliers be involved in the new product development process?

            There isn’t a standard of when suppliers should get involved in the product development process.  There is, however, what is called a spectrum of integration for suppliers.  These spectrum are labeled as: none, white box, gray box, and black box.

            In the none level, the supplier is not involved in a product’s design.  Instead, the design and specifications are made according to buyers’ needs.  The buyer has all the expertise it needs in the development of its product.  The white box level calls for  informal supplier and buyer consultations in the design of the product.   For the gray box, the supplier is formally integrated into the product development process.  There is collaborative effort between buyer and supplier.  The buyer can interfere with the supplier anytime during the production process.  As for the black box level, the buyer provides a set of requirements for the development of the product, and the supplier works independently on the product based on those requirements.

            While the black box seems to be the most ideal in the manufacturing of products since the supplier can work outside of the buyer’s influence, any one of the three levels could work in the development process depending on the core competencies, external factors and manufacturing demands.  For instance, if management determines that it doesn’t have an expertise for a particular product but can’t isolate that process to be worked on outside of the company, then the white box is appropriate.  But if the process can be isolated and entrusted to a third party, then, the black box approach is applicable.

4. What is mass customization? Does the supply chain management play a role in the development of an effective mass customization strategy?

            Mass customization is using technology in order to produce customized products in large quantities.  In other words, it is the production of goods and services that meet the needs of customers even if the products are mass produced.  This possible using standardized components and assembly lines.  Hewlett-Packard can apply mass customization by integrating logistics concepts in its operations.  It can mass customized its production if it can build plants in Europe and Asia.

            Supply chain management play a role in mass customization since this calls for coordination among the various independent players in the production.  In order to make the mass customization strategy effective those who are involved in the process should have a strong business relationship and must make coordinated and collaborative efforts in order to make the process successful.

References

Anderson, D. (2004). Mass Customization, the Proactive Management of Variety.  Retrieved       September 29, 2008, from      http://results.myhpf.co.uk/framedresults.asp?Keyword=mass+customization

Ganeshan, R., ; Harrison, T.P. (1995, May 22).  An Introduction to Supply Chain Management.              Retrieved September 29, 2008, from

            http://results.myhpf.co.uk/framedresults.asp?Keyword=+coordinated+product+and+suppl

            y+chain+design

Manufacturing Business Technology. (2003, January 11).  If Haste Makes Waste, Delay Product Differentiation.  Retrieved September 29, 2008, from http://results.myhpf.co.uk/framedresults.asp?Keyword=delayed+product+differentiation