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HP Transforms Product Portfolio Management with Operations ResearchSummary on a Case StudySubmitted By:Nabendu Paul (M120006MS)Christy Mathew Jacob (M120007MS)Paresh Pandurang Vengulkar (M120008MS)Patel Jay Hemantkumar (M120009MS)Navin Joseph (M120012MS)Introduction Case HP (Hewlett Packard ) problem faced while following its strategy to increase its market share through product diversification and drive sales.

Two problems 1. Introduction of new products 2. Management of variety of launched products

This case highlights how M/s Hewlett Packard overcame its challenges to a large extend using the various techniques of Operations Research

2Problems faced by Hewlett Packard1. High operating and Inventory cost .

2. Forecasting accuracy decreased

3. High cost of lost sales

4. Confusion and complexity between customers and sales people

5. Average order cycle time was unpredictable

6. Product line cost was hidden and the same would not be captured in standard accounting system.

7. Absence of data-driven approach.

8. Customer dissatisfaction- PSGOR Methodology approach as a Solution:

Solution 1 First solution was to screening of the new product proposals before introduction based on a data driven approach.

Detailed analysis of cost structure and drivers in each business and product line was done(throughout the complete life cycle), which could not be captured in accounting systems.

Two types of cost structure were studied :I ) Variable Complexity Cost -volume costs, storage cost, depreciation, expediting cost, cost of lost sales etc II ) Fixed Complexity Cost - R&D Cost, testing cost, outsourcing cost, manufacturing switching costs, returns cost etc.

Calculation of ROI using the above costs to take decision about introduction of new products.

Solution 2The Revenue Coverage optimization tool was used by HP Benefits to HP:

PSG states that the Order Cycle time (OCT) is reduced by 4 days on notebook and 2 days on Core Desktop. Each day of OCT improvement saves $38 Million annually.The RCO enabled the elimination of 3300 products from a product portfolio of 10,000 of one of the units of HP, which resulted in $11 Million Cost savings.Company wide profits had improved by $500 Million for a period of three years.4. Improved Customer Satisfaction.5. Product line complexity reduction.Reduced confusion among customers and sales representatives and hence less return costs.7. Increased organizational effectiveness .8. Increased visibility of OR within HP.

Conclusions:

This case of HP demonstrates the utility of OR in the practical Field of business and how it can improve organizational performance. They provide a powerful and comprehensive tool for business decision making.Thank you