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Hewlett-Packard:

Creating a Virtual Supply Chain


Group Members
• Mirza Muhammad Qayyum Baig
• Bashir Ahmad Waseem
The Case
• What is Hewlett-Packard?
– Global provider of computing and imaging
solutions and services for business and home
– 89,000 employees
– Annual turnover: US$ 48.8 billion
The Case

3%
14%
Printing Systems
41%
Computing Systems

IT Services

Others
42%
The Case
• Tape Drive Business Unit

HP

Imaging & Computing


IT Services Other Business
Printing Systems Systems

Storage Division

Tape Drive Unit


• Market Situation:
– Very fast expanding storage market
– Market Share of HP: 55%
– Product Lifecycle: 4 years (relatively short)
– Qualifying Criteria of Product: Quality
Supply Chain For DDS Products

• Supply Chain For DDS Products

Mechanism Distribution
Reseller
& Head Center (HP)
FAST Config. Consumer

OEM
PCA
• History

Players in the Outsourced Supply Chain with Different Models of DDS

Model Start Mechanism & PCA FAST Configuration


Head
DDS1 1990 Sony CM A HP Bristol HP Bristol

DDS2 1997 Mitsumi CM A CM A CM A (Ireland)


(Scotland)
DDS3 1998 Mitsumi CM B CM A CM A (Ireland)
(Scotland)
DDS4 1999 Mitsumi CM A Mitsumi CM A (Ireland)
CM = Contract Manufacturer
Alternatives
• Alternative 1:
Path of Least Resistance
• The Ultimate Supply Chain
• Consolidation
Alternative 1
• Path of Least Resistance
– Production parts that are outsourced to
Philips:
• FAST
• Configuration
• Distribution

Mechanism Distribution
Reseller
& Head Center (HP)

FAST Config. Consumer

OEM
PCA
Alternative 2
• The Ultimate Supply Chain
– Whole supply chain fulfilled by Mitsumi

Mechanism Distribution
Reseller
& Head Center (HP)
FAST Config. Consumer

OEM
PCA
Alternative 3
• Consolidation
– Collaborating with a competitor in all steps of
the production

Mechanism Distribution
Reseller
& Head Center (HP)
FAST Config. Consumer

OEM
PCA
Evaluation
Criteria Alternative 1 Alternative 2 Alternative 3
Path of Least The Ultimate Consolidation
Resistance Supply Chain

Flexibility high high medium

Investment low medium medium

Production Costs high low medium

Financial Risk low low medium

Loss of Know How medium medium medium

Dependency high very high high


Decision for HP
• The Ultimate Supply Chain
– Whole supply chain fulfilled by Mitsumi

Criteria Alternative 2

Flexibility high

Investment medium

Production Costs Low

Financial Risk low

Loss of Know How medium

Dependency very high


The Ultimate Supply Chain
– Mitsumi reliable manufacturer
over years
– Low financial risk
– No investments in
machinery necessary
– Know How is kept at HP
– High flexibility

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