Global Supply Chain
Management
(MS 492)
Assignment - 2
Junaid Hassan
Reg # 2017173
Lecturer
Dr. Umar Farooq
Contents
Discuss various distribution strategies of HP for their global supply chain management?..........................3
Direct and Indirect Methods....................................................................................................................3
Direct Distribution Channel.................................................................................................................3
Indirect Distribution Channel..............................................................................................................3
Vendor managed Inventory.....................................................................................................................3
Pay-Per-Use (PPU)..................................................................................................................................4
Instant Capacity on Demand (iCOD) approach.......................................................................................4
Explain about the HP decision of Make or Buy products?..........................................................................4
Capacity Planning....................................................................................................................................4
Decision Support and Analytics Services................................................................................................4
References...................................................................................................................................................6
Discuss various distribution strategies of HP for their global supply
chain management?
HP, is an American multinational information technology corporation headquartered in
California, USA. The company was founded in a one-car garage by Bill Hewlett and Dave
Packard, and is now one of the world's largest information technology companies, operating in
nearly every country. HP specializes in developing and manufacturing computing, data storage,
and networking hardware, designing software and delivering services. Major product lines
include personal computing devices, enterprise servers, related storage devices, as well as a
diverse range of printers and other imaging products. [CITATION Sat \l 1033 ]
Direct and Indirect Methods
This organization of HP uses both direct and indirect method of marketing strategy. By indirect
marketing we mean business to business (B2B) type of marketing strategy whereas by direct
marketing we mean business to consumer (B2C) type of marketing strategy. [ CITATION Cou18 \l
1033 ]
Direct Distribution Channel
Direct sales means going straight to your customer and selling your product. A direct distribution
channel is organized and managed by the manufacturer itself. By controlling all aspects of the
distribution channel, a manufacturer has more control over how goods are delivered. They have
more control over cutting out inefficiencies, adding new services and setting prices.[ CITATION
Sea19 \l 1033 ] Hewlett-Packard has made its sales structure more like a direct sales model,
following a strategy that has been key to Dell Computer's success. Moreover, HP is letting
customers to go to its Website and order systems directly from HP distributors via the HP
Website. In this ordering process there is a much higher level of integration and cooperation with
HP and its distributors. [CITATION Bro \l 1033 ]
Indirect Distribution Channel
Whereas, an indirect distribution channel relies on intermediaries to perform most or all
distribution functions, otherwise known as wholesale distribution. Indirect distribution involves
third parties, like warehouses, wholesalers, and retailers. Indirect distribution may allow
companies to focus on their core business while outsourcing distribution to an expert. [ CITATION
Sea19 \l 1033 ] HP instituted its "Hard Deck" program, under which it has identified and listed
about 500 of its largest customers. The company sells its products and services directly to those
users while leaving other customers to be handled by resellers. [CITATION Jai \l 1033 ]
Explain about their Vendor Managed Inventory distribution systems?
Vendor managed Inventory
Vendor managed Inventory can be defined as means of optimizing supply chain performance in
which the supplier has access to the customer’s inventory data and is responsible for maintaining
inventory level required by the customer.[ CITATION Kur10 \l 1033 ]
In a VMI partnership, the supplier makes the inventory replenishment decision for the firms.
This means that the supplier will monitor firm’s inventory level and make periodic re-supply
decision on behalf of the firm, such as order quantities, shipping mode and timing. Order
transaction that is normally generated by the firm, is now initiated by the supplier itself.
Company also will relinquish control of its re-supply decision and also transfer financial
responsibility for the inventory to the supplier. [ CITATION Dav \l 1033 ]
Hewlett Packard began using their well-planned VMI system in the summer of 2001. Reportedly
after two years of VMI, HP cut their lead time in half, reduced buffer inventory from five to two
weeks, and eliminated 80% of manual transactions. [ CITATION SCR02 \l 1033 ]
HP uses On Demand approach; this approach is based on delivering assets to a client before the
need for the assets arises and activating these assets along with payment invoicing automatically
upon client’s request. On Demand hardware vendors ensure that IT assets with ample inventory
are available at the customer’s locations and activated when the need for additional power arises.
HP provides capability through; [ CITATION Ben07 \l 1033 ]
Pay-Per-Use (PPU)
HP’s PPU model offers similar capabilities, charging clients only for actual processor usage. The
client acquires a specific hardware platform and number of processors, and HP charges for the
actual usage, based on the number of active processors in the complex.
Instant Capacity on Demand (iCOD) approach
The iCOD approach allows for the initial purchase of a specified number of activated processors,
with an access fee for a specified number of deactivated processors. HP bills the client every
time the inactive processor is activated. The iCOD Audit Application monitors the usage and
billing.
Explain about the HP decision of Make or Buy products?
HP's skill lies in the ability to look ahead two years and see what price and performance the
market will demand, and then to convert those requirements into engineering specifications. This
basically requires two skills: market knowledge and system engineering. HP's strategy was thus
to control creation of the specifications and rely on suppliers to deliver most of them. [CITATION
Cha96 \l 1033 ]
Capacity Planning
Capacity is a significant factor influencing make or buy decision. To keep up with the increasing
demand from the customers, HP outsources some of its part/component to supplier maintaining
the same quality standards and at less prices than in-house manufacturing cost of company, so
that they can shorten waiting time and deliver the product on time. If production capacity reaches
its limits shows that at lowest limits total cost increases with decrease in percentage of make
parts, and at the higher limit the total cost decreases marginally, while the percentage of make
parts increases. For mitigating loss in quality, HP follows; plan, establish, measure, monitor, and
adjust levels of capacity so that sufficient capacity is available to permit execution of the
manufacturing schedules. [CITATION Fin07 \l 1033 ]
Decision Support and Analytics Services
Secondly, HP is using Analytics Solutions to decide whether if they make or buy products. For
this reason, they’re using Enterprise-wide Analytics Paradigm.
The analytics shared services group within HP is called Decision Support and Analytics Services
(DSAS). DSAS is a multi-functional analytics center based in India that drives data-driven
decision-making across sales, marketing and supply chain functions by leveraging structured and
unstructured data. This is done with a key focus to influence key business outcomes for HP in
terms of revenue growth, risk minimization and cost reduction. [ CITATION Pri10 \l 1033 ]
The analytics team at HP has invested in top-notch talent comprising professionals with
advanced degrees in quantitative disciplines and rich industry and functional experience. At
DSAS, the analytics practitioners apply sophisticated research techniques, data-mining and
predictive modeling to enable better decision-making. HP work on enterprise-wide data
sources/structures, apply a common set of data-mining and modeling tools and leverage best
practices to deliver actionable intelligence in a cost-effective and efficient manner. [ CITATION
Pri10 \l 1033 ]
By using these novel methods of Business Intelligence, HP decides in which part of the world, or
which of their products needs to be either outsourced or manufacture in-house.
References
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Charles H. Fine, D. E. (1996). IS THE MAKE-BUY DECISION PROCESS A CORE COMPETENCE? MIT Center
for Technology, Policy, and Industrial Development.
CourseHero. (2018).
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Katikar R, D. P. (2007). Finding the Relation between Make or Buy Decisions. International Journal of
Engineering Inventions e-ISSN: 2278-7461, p-ISSN: 2319-6491, PP: 45-55.
Kureshi, N. F. (2010). Current health of quality management practices in service sector of SMEs. The
TQM Journal, 317-329.
Needle, D. (2011, Feb 21). Ford Taps Cloud-Based Prediction Market. Retrieved from InternetNews:
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Olson, D. L. (2013). Business analytics for supply chain: A dynamic-capabilities framework. International
Journal of Information Technology and Decision Making, 12(01):9-26.
Payman Ahi, C. S. (2013). A comparative literature analysis of definitions of green and sustainable supply
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Piya, S. S. (263–281). Identification of Critical Factors and Their Interrelationships to Design Agile Supply
Chain: Special Focus to Oil and Gas Industries. Glob J Flex Syst Manag, 2020.
Rao, M. S. (2017). Innovative tools and techniques to ensure effective employee engagement. Industrial
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Satvik, K. (2017). Distribution Strategy of Hewlett. Attribution Non-Commercial (BY-NC).
Singh, P. R. (2010). Better Decision-Making: How HP delivers business value with enterprise-wide
analytics services. Forecasting.
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Vijayan, J. (2001, March 16). HP refines sales strategy, plans new midrange servers. Retrieved from
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