Discipline: Business Studies
Type of Paper: Discussion Essay
Academic Level: High school
Paper Format: APA
Each reply must be a paragraph long of at least 275 words or more not including references which should supported by citing at least 2 peer-reviewed journal articles between 2017-2021 for each reply and a biblical reference. Your reply must be in current APA format and must include a reference list. Make sure that you are adding new and relevant information with each reply. Reference sample make sure to include DOI-Drollinger, T., Comer, L. B., & Warrington, P. T. (2006). Development and validation of the active empathetic listening scale. Psychology & Marketing, 23(2), 161-180. https://doi.org/10.1002/mar.20105
Discussion to Reply to:
In what way is a universal power supply a postponement strategy?
In recent years, the challenges of managing a global supply chain that is responsive to customer demands in various markets – in developing and developed countries – have intensified (Choi et al., 2012, p. 167). Delayed product differentiation (i.e., postponement strategy) has been noted as a viable solution to meeting these challenges (p. 167). HP is implementing this same strategy by delaying regional allocation decision by two and half months. Previously, printers in the North American and the European market have distinct power supplies and the associated fusers in the main engine of the printer (Simchi-Levi et al., 2021, p. 308). For North American printers, a 110-volt power supply was installed. For European printers, a 220-volt power supply was added. This printer engine was built by HP’s manufacturing partner in Japan. Due to the long lead time for engine manufacturing, HP had to specify the requirements of the two types of printers at least 14 weeks ahead (p. 308). The time that it takes the Japanese partner to commit the printers for shipment, the transportation times, and customs clearance totals about 4 weeks (p. 308). Hence, if a universal power supply is used, then HP would have the flexibility of postponing the specification of the printer engine by at least 2 months in the planning process (p. 308). Thus, by utilizing the postponement strategy for universal power supply, HP has the ability to aggregate worldwide demand instead of forecasting demand for each individual market (North America and Europe). Instead, a more accurate forecast can be made for demand where printers can be shipped to specific DCs for further customizations (localization of the product through the inclusion of driver software disks, manuals, power cords, and front panels) (p. 309).
2. What are the costs and benefits of a universal power supply (feel free to make assumptions)?
The cost of having a universal power supply would be the production cost of extra $30 per unit the Japanese partners quoted. The benefit would be better forecasting for markets, especially controlling uncertainties. Furthermore, the postponement strategy of universal power supply will smooth the flow of goods, provide cost savings, and improve customer experience (Phares & Richey, 2021). Another benefit is that the inventory will be staged nearest to the target customer or marketplace which minimizes delivery time (p. 373).
3. How would such costs and benefits be different over the product life cycle?
Modern businesses face an increasingly competitive market environment, in which companies need to shorten product life cycle (PLC) to bring their good products to market quickly, and thereby increase their competitive advantages (Shen et al., 2019, p. 1). In particular, the PLC of electronic products has become shorter to support the timing of marketing (p. 1). Simchi-Levi et al. (2021) explains that product life HP printers can be divided into three stages: ramp-up, maturity, and end of life. The ramp-up period is the time from the initial introduction of the product until HP’s production volume levels off (p. 310). During this stage, the product is usually the only printer on the market providing its distinctive features. The maturity stage reflects a period of increasing competition. Comparable printers will be introduced and price will become a more influential aspect of the product market (p. 310). In the last stage, end of life, there is fierce competition on all fronts as retail profits at this stage reach their lowest point as margins are squeezed (p. 310). It is here that HP aims to introduce its next-generation product. Currently, reconfiguring the product with a different power supply is proposed. Costs and benefits would be different over the product life as HP has to purchase new power supplies rated at the correct voltage, ship the printers across the Atlantic from the undersold region, swap the power supply, change the fuser electronic circuit and the fuser bulb, and, finally, distribute the product to retailers (p. 311). The old power supplies have to be disposed of and regulatory issues will need to be addressed. A universal power supply eliminates all rework that is now required, but whether the gains it provides outweigh the increase in materials cost is still an uncertainty (p. 311).
4. Besides deciding on a universal power supply, what other operational improvements can you suggest to HP Boise?
HP Boise has already come up with two operational improvement strategies: (1) instituting cost reduction goals for each new generation of printer, and (2) break-even time (BET), which measured the time from project initiation to break even, defined as the point where total discounted cash outflow equaled total discounted cash inflow (Simchi-Levi et al., 2021). One important strategy HP hasn’t considered is why VIPER was such a success in Europe but not in North America. Universal power supply will definitely decrease the cost of operations and logistics of customization for the two markets, but not deciphering this question could also put HP behind its competitors.Was VIPER unsuccessful in the North America market because the lead time took almost 3 months? Was it because of the marketing? One way to solve this puzzle is by implementing some type of demand forecasting mechanism. I would suggest Boise start by interviewing customers as to see why VIPER was not successful. VIPER’s unsuccessful sales could also impact the sales of universal powered products.
5. What would be your recommendations about the adoption of a universal power supply?
I would recommend HP to adopt the universal power supply. This would mean that forecasting demand wouldn’t be so complicated as demand is met in all markets (national and global) while optimizing inventory level. Additionally, customization is also possible but without repeating the VIPER incident of heavy discounting, or “fire sales,” which was needed to rid the excess inventory, incurring very high cost. Buyers in the North American market now expected HP to reduce printer prices over time. Inadvertently, HP had undercut its ability to command premium prices in the market. By changing its marketing strategy and using a universal power supply, HP might be able to market at a premium.