IIM Bangalore
CASE ANALYSIS HP SUPPLY CHAIN
Operations Management Ayush Aggarwal 1411348 ayush.aggarwal14@iimb.ernet.in
D.K.Harish 1411292 dk.harish14@iimb.ernet.in
Meenakshi Singh 1411303 meenakshi.singh14@iimb.ernet.in
Pavel Gupta 1411315 pavel.gupta14@iimb.ernet.in
Suryaansh Makked 1411337 suryaansh.makked14@gmail.com
Sachin Gowda M B 1411326 sachin.gowda14@iimb.ernet.in
Contents
Introduction – The Primary Issues 2
Analysis of the present scenario 3
Switching to Air Transport – A Positive Step? 3
Other Alternatives 5
Recommendations 8
Hewlett – Packard Supply Chain
Introduction – The Primary Issues
Deskjet printers were one of the high volume products for HP. They were being manufactured at HP’s plant…show more content… Safety stock levels are also down by 34% in both cases.
2. Classification of items based on ABC inventory
All items, today, are being stocked as per the safety stock levels and are being given the equal importance. This is not reflected in the sales/demand of these products – a few are high volume products and a few are quite low volume. Given this disparity in the items being produced, it is only imperative that the ABC system is brought into implementation. As a continuation to this, the LIFR can be reduced for low volume items and a focused approach can be deployed for high volume items to ensure their availability.
Grouping has been made based on demand. Group A has demand greater than 60%, Group B has demand greater than 20% and rest fall under group C. The Service level for Group A, B and C is taken as 98%, 93% and 90% respectively. The varying service levels are used to reduce the safety stock and thereby reduce the holding costs. By introducing this there is a significant drop in safety stock levels (by 13%) and hence a cost reduction to the tune of $0.5 million