HP’S DESKJETIndustry characteristics: competitive, fast growing, exploding in Europe, changing distributionchannel, rapid technological advances.Product characteristics: quite, medium price, highprint quality, leading technology, commodity–like,lighter and smaller, reasonable speed. Supply chain characteristics: centralized manufacturing, DCs fulfilling pure distribution functions, bulky products resulting in long ocean transit, lean manufacturing shifts inventory burden to DCs.
Inventory-Service CrisisWhat crisis: inventory imbalance, i.e., some product options having excess inventory while some others have shortages.What caused it:•many product options due to geography,•long DC replenishment lead time,•highly uncertain market,•inflexible design : not easy to rework oneoption to make it into another,•out of control inventory system,•uncoordinated functional interests (manufacturing, distribution, marketing, engineering )
Curse of Product Variety•High inventory•Poor customer service•High manufacturing cost•High cost of after-sales support•Forecasting nightmare•High obsolescence at end-of-life•High overhead support
Short Term :Rationalize Safety StockInventory control system used:Periodic review, order-up-to system.