Create and articulate a response to another students discussion board post. The student was answering questions from a case study which I have attached for reference. The response MUST include three refrences. Here is the students original post that you are responding too:
Introduction
Hewlett-Packard once was a legend in Silicon Valley’s legends, created by Stanford University graduates, William Hewlett and David Packard (Simchi-Levi, Kaminsky, & Simchi-Levi, 2008). In 1939, Hewlett-Packard was the main supply of higher quality of engineering tools, designed for and by engineers (Simchi-Levi et al., 2008). With innovation as the key to HP’s strategy, the focus on innovation brought products such as hand-held calculator and the inkjet, having the company spending 10% of its revenue on research and development (Simchi-Levi et al., 2008).
The project overview was a meeting for developing HP’s latest new product by manufacturing engineering manager, marketing manager, head of product design, and the controller of the division (Simchi-Levi et al., 2008). The aim of the meeting was deciding if the company can use a universal power supply for the next generation of a network laser printer, with the code-named “Rainbow”. Their Japanese partner indicated that designing the new power supply would be feasible and completed within the time restrictions that HP for bringing the end product to market on time (Simchi-Levi et al., 2008). The universal power supply was quoted to increase costs by $30 per unit calculating that the advantages and disadvantages of universal power supply more difficult. In this discussion, the complication created by creating a universal power supply will be discussed. Some solutions to creating a universal power supply will also be weighed as well (Simchi-Levi et al., 2008).
- In What Way is a Universal Power Supply a Postponement Strategy?
Postponement the strategy is used as a business strategy aiming at maximizing possible benefits and minimizing risk by delaying product or service investment that are current, until the last moment (De Grey, 2005). The postponement will benefit HP as the allocation of the laser printers will have differed to exact regions for approximately two months. There are various ways to handle postponing, the first strategy is to allow leverage in forecasting, as postponing dictates whether the firms should move the creation, creating room for personalization and improvement of the power supply. It is also a good strategy for HP as it will effectively reduce inventory undesirability and reduce the risk and uncertainty of the costs associated with undesirable products, however, it needs a united and reliable supply chain to ensure that the consumer demands and forecasting can often be created and implemented through the supply chain to produce and distribute the power supply to their customers (De Grey, 2005). Currently, HP has two different specifications, North America with 110 voltage and Europe with 220 voltage, for the printers’ power supply.
2. What are the Costs and Benefits of a Universal Power Supply?
There are costs associated with postponing the universal power supply, just as there are benefits.
The first cost is the increase in material cost by $30 for each unit. As consumers might not be willing to pay these costs, there might be a decline in sales, causing losses to the company (Carbonara, & Pellegrino, 2018). Another cost is the warehouse transshipment which is enabled by using the universal power supply.
There are, however, various advantages to the universal power supply including; improved forecasting accuracy which reduces the cost of stock-outs and reduced inventory, also reduce the risk of irrelevant stocks that could not be useful to consumers due to the extended lead times (Carbonara, & Pellegrino, 2018). The transshipment costs are also reduced as overpriced reworks are avoided and safety regulations could easily be approved further benefiting the company. There is also a reduction in stock and inventory costs which is minimized or done as a service fee.
3. How Would Such Costs and Benefits be Different over the Product Life Cycle?
Introducing products into the market brings in various challenges and volatility. Consequently, the advantages of risk pooling done using the universal power supply are rather high at the beginning of the life cycle. This is the time when there should be more safety stock held, as inventory holding costs are high. Additionally, the stock-out costs are higher during the advertising stage during the product life cycle as HP will be able to charge a premium because they initially had no competition. The hostile advertising of stock-outs, in the beginning, may have an impact on the eventual achievement of the product (Luo, & Zhang, 2018). In the direction of the end of the life cycle, the stock is reduced, and transshipment now is an option to ease petitions on inequalities between different regions. Thus, the profits from a cost decrease in transshipment become vital at the end of the product life cycle (Luo, & Zhang, 2018).
4. Besides Deciding on a Universal Power Supply, What Other Operational Improvements Can You Suggest to HP Boise?
Outsourcing the printer engine to a Japanese supplier has brought an issue with lead time and the duration in which the product is brought back to North America, then to the consumers. This extended period of time monopolizes manufacturing and is too long compared to the product life cycle (Luo, & Zhang, 2018). Outsourcing the main component of the product could be very risky and could cost the company especially when not manufactured correctly. The suggestion is to find a local company that can handle the demand for HP. In order to reduce the risk of losing the key component or remanufacturing, and the extended lead times, another suggestion would be for HP Boise should deliberate manufacturing the printer engine in-house if the company has enough production capacity (Luo, & Zhang, 2018). Inhouse production might increase the opportunity for the company to save in costs of transportation since printed circuit boards would not be shipped from Boise to Japan.
5. What Would be Your Recommendations About the Adoption of a Universal Power Supply?
Laser printers tend to have a shorter life cycle, and with the high demand uncertainty, the recommendation would be adopting the universal power supply strategy. However, there is a need for more research to determine methods in which the increase in manufacturing costs and the decrease in stock-out and inventory holding costs can be reduced due to risk pooling (Carbonara, & Pellegrino, 2018). The marginal cost will increase if compared to the potential increase in sales, therefore, with the universal power supply, HP could have a lower risk of unsold items, an increase in order fulfillment and faster response time to customer demands and orders.
Conclusion
HP could reduce the cost of production by investing in a manufacturing plant that is based in North America and Europe to increase the opportunity of maximizing profits and reducing the risk of the key component getting damaged or not being manufactured properly. In-house production reduces the costs of recalls and returns as they will be monitored and manufactured under local supervision. It is a great investment since the origination will be able to increase production and monitor orders, giving a clear picture of when the consumer should expect their product, reducing the chances of extreme long lead time.
References
Carbonara, N., & Pellegrino, R. (2018). Real options approach to evaluate postponement as
supply chain disruptions mitigation strategy. International Journal of Production Research, 56(15), 5249-5271.
De Grey, A. (2005). A strategy for postponing aging indefinitely. Studies in Health Technology
and Informatics, 118, 209-219.
Luo, J., & Zhang, Q. (2018). Operations mechanism of postponement strategy for service-
oriented manufacturing. The International Journal of Advanced Manufacturing Technology.
Simchi-Levi, D., Kaminsky, P., & Simchi-Levi, E. (2008). Designing and managing the supply
chain: concepts, strategies and case studies (3rd ed.). New York, NY: Richard D. Irwin,
Inc. hpcasestudy.pdf
description 2 pages, Double Spacing
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