The Evolution of Supply-Chain-Management Models and Practice at Hewlett-Packard

TLDR

In the late 1980s, HP faced billions‑dollar inventory levels and poor order fulfillment, and its supply chain spans integrated‑circuit manufacturing to final delivery, with academic partners contributing real‑world experience. HP aimed to reduce inventory and improve order fulfillment by forming an internal team of industrial engineers and management scientists with academic partners. The team employed an iterative process that combined model development with application, integrating industrial engineering, management science, and academic expertise. HP gained benefits beyond manufacturing, with the mature supply‑chain methodology now being transferred into product divisions.

Abstract

Late in the 1980s, Hewlett-Packard (HP) faced inventories mounting into the billions of dollars and alarming customer dissatisfaction with its order fulfillment process. HP produces computation and measurement products whose supply chains include manufacturing integrated circuits, board assembly, final assembly, and delivery to customers. To reduce inventory and improve order fulfillment, HP called on an internal team of industrial engineers and management scientists augmented by academic collaboration. The team used an iterative process, enriched by the interaction of model development and application. HP reaped benefits well beyond its manufacturing operations, extending to diverse functions throughout the organization. Similarly, the academic partners have infused their research with real-life experience. The supply-chain methodology is now mature, and HP is transferring the technology into the product divisions.