Dell Inc

ByAnish S Mathew
Jithin P Gopal
Sandeep Balachandran
Sajith Sudhakar
Gr 8

Case Question 1
Why does L5 incur higher manufacturing and
logistics costs than L6? What are some of the
costs that are incurred in L5 but not in L6? Are
there any costs that apply to only L6 but not
L5?

Gr 8

SOLUTION
L6

L5

Integrated offshore & outside a Dell

facility
Integrated motherboard-inside chassis
shipped on water
Labor savings
MB air-freighting costs are eliminated
Reduced motherboard packaging
costs

Gr 8

Integrated inside a Dell facility

Chassis shipped on water
Motherboards shipped by air
Increased motherboard air-freighting costs
3rd-party integration cost in US
Separate logistical costs for chassis and motherboards

 Root causes of increasing L5 manufacturing

Dells inability to provide motherboards in a timely
fashion to CMs
Chipset Supplier decommit or supply issues
Creates a disruption in the desktop PC supply chain
Accounted for more than 60% of L5 manufacturing

Quality/engineering issues
Leads to dysfunctional or problematic motherboards
Create additional demand for motherboards

Dell forecast accuracy

Due to faulty forecast, Dell needs to source its extra
chipsets or risk not meeting the customer demand
Long Lead Time in chipset makes things difficult for the
supplier

New Pdt Introduction

Actual demand for new PC pdt is volatile, so need to air
freight extra motherboards

Gr 8

SOLUTION
(cont..)
Cost incurred in L5

Motherboard packaging cost

Motherboard air freight/expedite cost
Chassis and motherboard US transportation cost
Local/regional integration cost
Motherboard rework cost at DELL

Cost incurred in L6
China assemblers cost (Foxconn performing L6)

Gr 8

Case Question 2
Which of the six proposed manufacturing
solutions should Dell implement, based on the
survey result? Why? What are the pros and
cons of this recommendation?

Gr 8

SOLUTION
Option 3A: Integration at SLC/Hub
Advantages
Less Complex for Worldwide Procurement
Supplier quality engineering management is reduced

Disadvantages
Most Complex for Cost Accounting
Extra Production control & Inventory control
headcounts are required.

Gr 8

Case Question 4
How good is the methodology employed
by the BPI team to determine the optimal
manufacturing option for Dell? Are there
more effective approaches?

Gr 8

SOLUTION
Methodology of BPI team was GOOD

Process smoothness & sustainability

Cost per box
Pdt Quality
Capital Investment
Material Handling
Logistics

Some other effective approaches can be

Push & Pull strategy
Geographical Location of suppliers

Gr 8

Case Question 5
How can Dell effectively address the root
causes contributing to the increase of L5
manufacturing?

Gr 8

10

SOLUTION
By providing motherboards in a timely fashion to CMs
Ensuring that Chipset supplier dnt decommit or have other
supply issues
Have Multiple Suppliers
Have some safety stock

Reduce Quality/engineering issues

TQM
Benchmark Standard Operating procedures

Forecast Accurately to avoid demand fluctuations

Plan demand in a better way for New Product introduction

Gr 8

11

Thank You

Gr 8

12