Professional Documents
Culture Documents
Overview
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Michael Dell:
Founder’s milestones:
2
Expanding the operations frontier:
Dell’s “revolution” in the PC
market
Dell’s competitive advantage: Provide customized PC
configurations, with short delivery times and affordable prices.
Dell’s success in PC market:
3
Current DELL Supply Chain
Challenges -PRODUCT
Product Scope
COMPLEXITY
1998
22 Product
2004
175 Product
Families
Families
Desktop Dimension
Optiplex Desktop Dimension
Optiplex
Portables Inspiron
Latitude
Portables Inspiron Workstation Precision
Latitude
Servers/ Powervault Dell/EMC
Storage Poweredge
Workstation Precision
Networking Powerconnect
Distribution
Supplier Plant Customers
Channels
6
Direct Model
Suppliers Customers
• Product Quality
• Continuity of Supply • Best Customer Experience
• Price for
• E-business • Low Cost Efficiency & Performance
Collaboration Highest Quality
• Customization
• Technology Leaders • Partnering/Virtual
Integration • Reliability, Service
• Low-cost and Support
Manufacturers
• Latest Technology
7
DELL SUPPLY SYSTEM
Dell’s
Hard Drive Orders
Factory
Supplier
(Texas)
UPS Customer
Sony
Monitors
Factory
(Mexico)
8
MAKE IT FAST ….
9
10
Quickly Make Product after Sale = Cost Advantage
Mfr Buys
Components
Mfr Assembles
Product Distributor Gets
Cost of Components
Dell Procures
Components,
Channel Assembles, &
Inventory Ships
Dell Cost
11
Dell Vendor Managed
Inventory Approach
VMI (supplier owns until title transfers) Title
Transfer
Embedded Costs Explicit Costs
Materi Factory /
Supplier
al Merge
Manufactur
Transf Center
ing (SLC) er
Warehouse
GCM and Supplier Negotiate Total Landed Cost by Embedded Cost Bucket.
12
Dell Supply Chain Model
Global \ regional Demand/ supply
procurement management Demand management
Orders
Orders
Continuity of supply
___
___
___
___ Sales
13
Heart of Dell Operations = a
mixed model
“push” “pull”
Buy-to-Plan Build-to-Order
Every Week Multiple times a day in each mfg center
Material requested to build
customer orders
Customers
Suppliers
Dell
SLC
Manufacturing
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PC SUPPLY CHAINS
Customer Customer
PULL
Virtual Integration
Distribution
Channels
PULL
Dell
PUSH
Manufacturer
Suppliers
PUSH
Suppliers
16
Emerging factors and trends
enabling Dell’s strategy
The commoditization of the PC industry
Standardized and interchangeable components
integration
17
KEYS TO SUCCESS
18
VIRTUAL INTEGRATION
19
SPEED TO MARKET
Dell = Oct-11
11 Days 69 Days
20
Supporting Dell’s competitive
advantage through a new
operational
Focused on strategicmodel
partnerships: suppliers down from 200 to 47
Suppliers maintain nearby ship points; delivery time 15 minutes to 1
hour
Suppliers own inventory until used in production
Demand pull throughout value chain – “information for inventory”
substitution
Demand forecasting is critical – changes are shared immediately
within Dell and with supply base
Customers frequently steered to “recommended configurations” with
high availability to balance supply and demand
External logistics supplier used to manage inbound supply chain
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Dell performance
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Dell Computers
Logistics strategy plays an important role in Dell Computer’s
impressive financial performance.
Dell’s direct distribution eliminates as much as 2 months of
warehouse and retail storage.
Component prices fall while on the shelves at 30% per year.
The consequences of logistics delays are overpriced products and
possible obsolescence.
Direct sales also helps Dell in forecasting.
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THANK YOU
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