Case Study of Hewlett-Packard Company

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Table of Contents

Introduction
Discussion
Conclusion
References

Introduction

Hewlett-Packard, one of the world’s largest digital equipment exporters, is a target company to consider. As an optimization solution proposed at the corporate management meeting, introducing a universal power supply is offered. The answers to the questions from the case study by Simchi-Levi et al. (2021) are aimed at identifying the prospects for applying this strategy, mentioning its costs and benefits, and providing additional recommendations for its adoption.

Discussion

A postponement strategy is an approach designed to minimize risks and increase benefits by postponing a service or product investment until the last moment to sell goods unequivocally. Based on Hewlett-Packard’s case Simchi-Levi et al. (2021) present, this practice is universal as a method to personalize power supply while reducing the uncertainty of costs. Forecasting is made easier by accurately estimating customer demand, which, in turn, eliminates any storage costs. These characteristics make a postponement strategy a universal power supply.

A universal power supply may be associated with some costs. For instance, when evaluating the cost of goods, one can assume that the material cost could rise by $30 per item. Such a prospect is fraught with a drop in demand because clients are directly involved in the problem, and paying costs is a prerequisite for losing targeted customers (Carbonara & Pellegrino, 2018). Problems with warehousing can also incur costs due to unavoidable expenses. However, a universal power supply can also be characterized in terms of potential benefits, such as improved forecasting. Another favorable prospect is the minimization of inventory costs, which is critical for the preservation of assets.

At the product life cycle beginning, the benefits of a universal power supply are high. According to Luo et al. (2018), stockout costs can be higher initially, and based on the example of Hewlett-Packard, the absence of competition is a favorable prospect for market advantage. At the end of the product life cycle, the stock is minimized, and through transshipment procedures, the company can simplify the task of shipping products to different destinations. As a result, at the end of the product life cycle, the advantages of cost reduction are clear.

As an operational improvement, the Hewlett-Packard Corporation may consider the possibility of collaborating with a local manufacturer. According to Simchi-Levi et al. (2021), the company experienced serious risks by outsourcing to Japanese partners. Therefore, by working with a local firm, Hewlett-Packard can reduce costs while eliminating the threat of the monopolization of manufacturing. In addition, as Keller and Alsdorf (2012) argue, the trend of individualism is directly associated with higher production opportunities. Another recommendation for the company is to increase production capacities to establish its own manufacturing. One of the key advantages of this solution is the reduction in transportation costs.

The adoption of a universal power supply is relevant in the case of high demand uncertainty. In addition, when implementing this practice, the management of Hewlett-Packard should further evaluate how manufacturing costs can be reduced because, as Carbonara and Pellegrino (2018) note, this phenomenon is often accompanied by falling inventory costs. Faster responses to customer interests and reduced risk of overstocking are the positive outcomes of implementing a universal power supply.

Conclusion

The analysis of Hewlett-Packard’s case has made it possible to answer the questions related to the use of a universal power supply as a strategy aimed at optimizing the work of the corporation and minimizing risks. Recommendations for the implementation of this practice are provided, and both benefits and costs are given. Reduction in manufacturing costs and minimization of risks related to overstocking are favorable outcomes of the implementation of this strategy in the company’s operational mode.

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. Web.

Keller, T. & Alsdorf, K. (2012). Every good endeavor: Connecting your work to God’s work. Penguin Random House.

Luo, J., Zhang, X., & Wang, C. (2018). Using put option contracts in supply chains to manage demand and supply uncertainty. Industrial Management & Data Systems, 118(7), 1477-1497. Web.

Simchi-Levi, D., Kaminsky, P., & Simchi-Levi, E. (2021). Designing and managing the supply chain: Concepts, strategies and case studies (4^th ed.). McGraw-Hill Education.

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Case Study of Hewlett-Packard Company

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