The Demand And Supply Chain Network Design

2180 Words9 Pages
Introduction Due to the shift from high-end devices to commodities in PC industry, the market competition grows significantly. Thus, cost factors such as, material devaluation, scrap, write-off, price protection and discounts are changing from insignificant roles to high importance factors. In order to achieve company’s profitability in the highly competitiveness PC industry, Hewlett-Packard (HP) carried out inventory-Driven Cost (IDC) metric to help them match the demand and supply, and create value in the supply chain. IDC robustness analysis Measure design template Performance measure record sheet is used to analyse the constitution of IDC and to prove that whether IDC is clearly defined (Neely et al., 1997). The analysis is shown in table 2.1. Table 2.1 Measure Inventory-driven cost (IDC) Purpose Matching demand and supply, and to track process on improving the company’s bottom line. Related to Inventory management, manufacturing management & supply chain network design Target Restore company’s profitability Formula Material devaluation (cost caused by raw material supply and parts inventory) Price protection (cost caused by changing value of the inventory held by HP’s channel partners) Excess/ obsolescence costs (including cost of inventory adjustments, end-of-life write-offs, scrap, material obsolescence and obsolete product rebate programs) Frequency Monthly Who measure Finance department Source of data Operational processes Who act on the data Operational
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