Question
Draw the supply chain for HP’s CD-RW device before and after the redesign. Show' tire duration of each link on each supply drain.
In the late 1990s, Hewlett-Packard was under competitive pressure in its CD-RW Device markets. The supply chain from the manufacturers of the CD-RW devices in Japan and Malaysia to the customers (computer resellers) in Americas and Europe took approximately 126 days: the shipment of the base units from the Far East took about 30 days; there was a 75-day supply kept in the two regional localization and conversion centres (U.S., Netherlands) in order to hedge against the variability of supply lead time; localization and conversion, i.e., adding a case for external units and putting on labels and packaging in various languages, took only 1 day; 15 days of finished goods inventory was also kept to hedge against demand variability'; and ground transportation within North America and Europe took 5 days on average. The total of 126 days cost HP 8 percent per year in holding cost, which amounted to $5.50 per unit (using a unit selling price of $200).