Hewlett-Packard fires up supply chain management with Red Pepper software

Citation

(1998), "Hewlett-Packard fires up supply chain management with Red Pepper software", Assembly Automation, Vol. 18 No. 1. https://doi.org/10.1108/aa.1998.03318aab.011

Hewlett-Packard fires up supply chain management with Red Pepper software

Hewlett-Packard fires up supply chain management with Red Pepper software

Two Hewlett-Packard Co. businesses, the Home Products Division (HPD) and the Test and Measurement Organisation (TMO), are at opposite ends of the electronics manufacturing spectrum. The Test and Measurement Organisation develops and manufactures Hewlett-Packard's test and measurement systems ­ the original business founded by Bill Hewlett and Dave Packard in 1939. By contrast, the Home Products Division is a new division with a completely new product line ­ the HP Pavilion PC ­ engineered to address the needs of the home computer market. While the businesses are very different, the need for more intelligent management of their respective supply chains has drawn both organizations to PeopleSoft's Red Pepper supply chain optimization solutions.

At HPD headquarters in Cupertino, California, Tom Davis, project manager for supply chain planning, likes to note that building the Pavilion "is not unlike the perishable grocery business ­ wherein your inventory has only a short useful life. We have a high-volume product with a very short shelf life, thin profit margins and technology that can become obsolete overnight. Thus, our ability to intelligently manage our supply chain is fundamental to winning in our marketplace".

How does HPD develop, manufacture and distribute products quickly, at the lowest possible cost? It co-ordinates efforts with global suppliers of Pavilion components, while the assembly of the personal computer is contracted to regional factories closer to users. To help manage that ­ suppliers, factories and inventory levels in the retail channel ­ HPD recently installed Red Pepper's Enterprise planning software from PeopleSoft.

Improving visibility across the supply chain

"Red Pepper Enterprise Planning does a tremendous job of processing and presenting large amounts of data", says Davis. "Never mind its optimization capabilities ­ which are tremendous. Enterprise Planning will dramatically improve the way we manage our business by giving us unprecedented visibility into not only today's inventory positions at our factories, distribution facilities, and retail warehouses, but also our projected inventory positions based on expected demand, production and raw material deliveries. As things change, Enterprise Planning will re-synchronize our plans based on actual supply and demand ­ and we will also be able to adjust our future plans based on today's reality. The result will be dramatic improvements in customer service while minimizing investments in inventory assets".

HPD initiated its supply chain planning process with spreadsheets when it began operations two years ago. The division planned to replace these "startup" systems with an advanced supply chain optimization system ­ and they found it with PeopleSoft's Red Pepper Enterprise Planning solution. HPD's business is so inventory-centric, "we expect full payback on the investment in just a few months", says Davis.

The Test and Measurement Organisation, which includes 36 divisions, is now implementing Red Pepper's Enterprise Planning to manage global inventories and production schedules better. The software will initially be installed in ten sites.

Boyd Runyan, a strategic alliance manager for TMO, notes that the organization's main objective is to shorten the time from customer order to product delivery of some 20,000 TMO products. Fundamental to this strategy is the intent to improve on-time delivery to customers while minimizing investments in supply chain assets ­ thereby reducing cost and improving overall profitability.

"We make everything from hand-held equipment telephone technicians might use in the field to equipment that tests computer circuit boards and jet engines. It's a high product mix, low volume, manufacturing environment ­ where we'll sell one of something a year, or ten of something a month, directly to the customer," says Runyan. "Our customers are sophisticated. They want functionality and flexibility. But they only want to pay for what they need, when they need it. So a total look into the supply chain helps us understand what our constraints are ­ from a material and capacity optimization perspective. Gaining better control over our supply chain is fundamental to our objective of improving order-cycle time and on-time delivery ­ and we'll get there with help of the Red Pepper Enterprise system".

HP Network Server Division and Grenoble PC operations also team up with Red Pepper

Hewlett-Packard's Network Server Division in Cupertino, California, and its Grenoble PC operations have also licensed Red Pepper supply chain optimization solutions. The need to improve customer responsiveness and global inventory management are also critical business drivers for these operations. The Network Server Division develops and manufactures HP's NetServer NT products, while HP Grenoble has worldwide responsibility for HP's Vectra family of personal computers.