Hewlett-packard case

The main problem of the DeskJet supply chain is the forecast accuracy. As they described: “they have a horrible forecasting system”
However, we detected some more problems due tothe poor forecast accuracy.
Such as inventory problems in the DC centers, specially in Europe.
Problems between HP divisions around the world, between Europe’s DC and Vancouver.Moreover we detected more problems in the supply chain:
Long lead times due the transport between Vancouver and Europe, this time is about 4 or 5 weeks.
The “I-world” meetings are notproductive because the members from this cross functional teams do not have aligned objectives and they do not reach any consensus.
In push-based system, the production decisions arebased on long-term forecasts, while the pull-based supply chains, production is demand driven
The Supply Chain is a result of a combination of both push and pull strategies.
Pushstrategy: supply and manufacturing
Demand uncertainty is relatively small
Decisions based on forecasts
Large production batches
Excessive inventories due to the need of large safetystocks
Decoupling point/ Push-Pull boundary: final assembly and process of “localization”
Pull strategy: final manufacturing processes and distribution
Demand uncertainty is highBackorders
Provide high levels of availability at the DC’s for the resellers
Why are inventory problems higher in Europe?
Printers must be customized according to localrequirements; ‘localization’
In Europe, the products might first be shipped to country offices rather than directly to retailers
4-5 week shipment to Europe, compared to a 1-day shipment tothe US distribution centre (long lead time)
Limited ability to respond to fluctuations in demand due to long lead times
High safety stock needed to assure high product availability