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
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
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Hewlett-Packard Universal Power Supply Case Study
Hewlett-Packard (HP) is exploring a new idea to utilize a universal power supply. Launching the new universal power supply is achievable within the time constraints; however, a decision must be made within two weeks. Therefore, the following concepts will be explored in order to determine if a universal power supply is the right fit for HP. First, the postponement strategy of the universal power supply will be examined. Second, the benefits and costs will be compared. Third, the product life cycle will be reviewed. Next, operational improvements will be suggested. Finally, recommendations will be made.
Universal Power Supply as a Postponement Strategy
According to Simchi-Levi (2021), postponement is a delayed differentiation in product design and represents an example of a push-pull strategy. Furthermore, postponement allows for the opportunity to delay specific product decisions as long as possible. In doing so, postponement can also reduce freight handling costs. Considering the challenges HP is facing with transshipment, the universal power supply will help realign shipments to benefit the organization. More importantly, the implementation of a universal power supply will allow the company to delay the regional allocation decisions by two and a half months, improving the flexibility to respond to orders.
Benefits and Costs of a Universal Power Supply
A universal power supply presents many benefits for HP. In addition to the above benefits resulting from a postponement strategy, by reducing the four-month decision-making by two and a half months, HP will benefit in many ways. First, the company can determine individual market demands much later; therefore, it can better respond to evolving market demands. As well, the timeline reduction provides for more accurate forecasts, which reduces expensive localization errors and limits overstock and inventory costs. Finally, a universal power supply lowers the need to ship printers across the Atlantic Ocean to swap out the power supply.
On the other hand, the largest downside of a universal power supply is the cost. Specifically, the cost of $30 per unit would be at the expense of HP as it is not a charge that can be passed on to the consumer. If HP sold a predicted 450,000 units of a specific computer, it would incur $13.5 million in additional material costs (Simchi-Levi, 2021). As well, there would be an initial increase to labor costs as employees are trained on the new process. Therefore, HP must consider the cost of change and seek to achieve an equilibrium between the benefits and costs (Outrata & Valdman, 2020).
Benefits and Costs Over the Product Life Cycle
The product life cycle consists of three stages. The first stage, ramp-up, begins at the initial introduction of the product and ends when production volume levels off. The second stage, maturity, represents a period in which competition increases and similar printers are introduced in the market. In the third and final stage, end-of-life, competition is at its height and an organization seeks to introduce the next-generation product because the profits for the existing product have reached the lowest point. Moreover, product life cycles in the printer industry are consistently shrinking. Jane Schushinski, marketing manager for HP, advises that the entire life cycle for the product is 18 months (Simchi-Levi, 2021). This reduction in the product life cycle limits the capability to maximize marketing opportunities.
One of the main cost drivers occurs in the ramp-up phase. During this period, the organization knows the least about market responses and forecast errors are always more than predicted. Additionally, in between each phase, the company may have challenges with the fluctuating costs of a sale, which many times can become exponentially higher because the consumer may purchase a printer from a competing brand for future generations. Toward the end of the product life cycle, some of the benefits begin to balance out the costs. For example, at the end-of-life stage, HP depends on transshipment to ship excess inventory from one continent to another and swap out the power supply. By utilizing a universal power supply, HP would save on time and labor costs.
One operational improvement that HP should consider is the impact of economies of scale on outsourcing (Simchi-Levi, 2021). Because two separate power sources are no longer needed, the company can reduce manufacturing costs through the aggregation of orders. Another consideration is the framework for buy-decisions. Specifically, HP should influence buying habits by making a universal power supply feel like a necessity through intentional marketing strategies. Furthermore, a persuasive messaging campaign can motivate consumer behaviors and influence purchasing decisions (Kaptein, 2018). Next, HP is engaging in part standardization with the universal power supply; subsequently, it should focus on process standardization which will also help with postponement. Lastly, HP should assess how any product changes will impact its push-pull strategy and process flexibility.
Because of the multitude of considerations, making a decision on the adoption of a universal power supply is challenging. While there are more benefits than downsides, the downside of cost may outweigh the benefits combined. On the other hand, changing to a universal power supply will save on expenses. Specifically, the postponement will allow for more accurate forecasting and ultimately reduce costs. As well, streamlining the process with one power supply with help with transshipment, overstock, time, and labor costs. Therefore, these cost saving results will help balance the expense. Thus, it is recommended that HP proceeds with the universal power supply.