1. Why do you suppose HP has not seen fit to establish a European manufacturing center prior to the time of the case? In the 1980s the Vancouver facility was already established to serve primarily the US market, which was the largest at that time. The facility has successfully pioneered the Kanban process and was one of the first to introduce the Deskjet printer. In addition the supply chain model that HP was using at the time worked well; the products were manufactured in Vancouver and shipped to the distribution center in Europe. However, the demand in Europe and Asia-Pacific region rapidly increased. According to the monthly demand by region Europe monthly mean of 23,108.6 wasn’t too far behind North America’s mean of 26,611.8. As the European market matured HP constantly tried to use its US/Vancouver’s manufacturing facility to meet the global demand. Despite several efforts it was hard for the company to control the transit time of 6 weeks for shipment to arrive in Europe, localization of the products, rising inventory costs and the increased frustration of its distributors.
2. Should the Vancouver facility be closed in favor of opening regional manufacturing centers in Asia and Europe? I believe the Vancouver facility should remain open and cater to the demand for HP’s operations in North America and surrounding countries. While two additional manufacturing centers should be opened in Europe and in Asia. If we analyze the overall monthly demand data by region in the case study we note that the demand for HP’s product is highest in North America, followed by Europe and Asia. In a supply chain study done by Gartner in 2012 it found that simplicity and multilocal operations played a crucial role towards the supply chain success of top 25 companies. This provides additional support why it is necessary to have multiple/local manufacturing facilities rather than one centralized one.
Furthermore HP products have to be localized for Europe and Asia. This is currently done at the Distribution Centre itself with insufficient number of trained staff and lack of adequate systems leading to frustration among staff. This will also help lower the supply chain costs (for instance, lower shipping costs) which will not only benefit the company but also the customers as products will become cheaper. Due to multilocal manufacturing operations HP will be able to control its inventory and will be able to provide the local resellers with stock quickly to meet the end customer’s demand. The presence of local manufacturing facility will also facilitate the after support care. Thus to preserve the most precious assets, customer loyalty and sentiment in the highly competitive printer market HP should have more manufacturing centers close to its local suppliers and end customers.
3. How can the design of the product be changed to better infiltrate with an improved supply chain? The product design should be flexible so as to allow the manufacturer to quickly change the product as required and without increasing costs. The modular design identified by Edward Feitzinger and Hau L. Lee 1 (1997) allows the standard components which are similar to all the products to be built and assembled all at one time, and limit the inclusion of components which differentiate the product till the end of the process. Using this design also allows the different modules of the product to be built separately or in parallel, thereby reducing production time. It also helps in identifying any production problems related to the quality of the product. For instance, if HP allows the assembly of power supply to its family of products towards the end instead of in the beginning then power cable can be localized depending on the region product will be delivered. This will not only make the supply chain more flexible but also cheaper.