DellComputers1

8/7/2019 DellComputers1

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Dell Supply ChainOverview


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Michael Dell:

Founders milestones:

1965 Born on Feb 23,

1983 Starts rebuilding PCs,

1984 Drops out of college,

1985 At 20, his company reaches 34 million,

1995 Becomes the youngest CEO ever

to make the fortune 500,

1997 At 32 he has over 4 Billion in Dells stocks


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Expanding the operations frontier:Dells revolution in the PC

market Dells competitive advantage: Provide customized PCconfigurations, with short delivery times and affordable prices.

Dells success in PC market:


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Current DELL Supply ChainChallenges - Product Scope

Desktop DimensionOptiplex

Portables InspironLatitude

Workstation Precision

Servers/Storage

PowervaultPoweredge

22 Product

Families

1998175 Product

Families

2004

PRODUCT COMPLEXIT

Desktop DimensionOptiplex

Portables InspironLatitude

Workstation Precision

Servers/Storage

PowervaultPoweredge

Dell/EMC

Networking Powerconnect

Displays ProjectorFlat Panel TVs

Printers Inkjet Laser

Electronics PDA (Axim) MP3 (Dell DJ)Musicmatch

Services Professional

Managed

Deployment

Support/Training
http://www1.us.dell.com/content/products/productdetails.aspx/inspn_xps?c=us&cs=19&l=en&s=dhshttp://www.dell.com/us/en/gen/topics/segtopic_dimen.htmhttp://catalog.us.dell.com/CS1/cs1page2.aspx?CS=04&kc=6W463&br=6&fm=10328


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Supplier CustomersDistribution

ChannelsPlant

1 Industry Model:

3 Virtual Integration

Supplier CustomersPlant

2 Dells direct model:

Supplier Plant Customers

Evolution to a faster model


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Suppliers Customers

Direct Model

Continuity of Supply

E-businessCollaboration

Technology Leaders

Low-costManufacturers

Best Customer Experience

Low Cost Efficiency &Highest Quality

Partnering/VirtualIntegration

Product Quality

Price for

Performance Customization

Reliability, Serviceand Support

Latest Technology


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Hard Drive

Supplier

DellsFactory

(Texas)

Sony

MonitorsFactory

(Mexico)

CustomerUPS

Orders

DELL SUPPLY SYSTEM


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Inventory Velocity is tracked closely

Real time information on demand

Communicate replenishment needsregularly, to some suppliers hourly

Fine - tune the sales forecast with majorcustomers, individually.

MAKE IT FAST .


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Quickly Make Product afterSale = Cost Advantage

Consistent

Supply

Globally

Immediate Response

to Customer Needs

Lowest

Cost Consistently

Customer

Benefits

Time

Costo

fCo

mponents

Today

Customer Places

Order

Dell Procures

Components,

Assembles, &

ShipsDell Cost

VAR Gets

Product from

Distributor

Channel

Inventory

3 Weeks

Ago

Distributor Gets

Product from

Mfr

4 Weeks

Ago

Mfr Assembles

Product

6 Weeks

Ago

Mfr Buys

Components

8 Weeks

Ago

Cost to

Competitors

Mfr Inventory


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VMI (supplier owns until title transfers) TitleTransfer

Embedded Costs

Supplier

Manufacturing (SLC)

Warehouse

Factory /

MergeCenter

Material

Transfer

Explicit Costs

GCM and Supplier Negotiate Total Landed Cost by Embedded Cost Bucket.

Dell Vendor ManagedInventory Approach


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Dell Supply Chain Model

4) SCM coordinates information, materials,

and logistics to support customer requirements

5) Supply constraints are continuously

communicated to sales and managed @ POS

6) Focus on continuity of supply and direct vendor

relationships ensure material availability

Supplier

Supplier

Dell Customer

Demand/ supply

management

Global \ regional

procurement

Continuity of supplyContinuity of supply

Demand managementDemand management

Build to customer specificationsBuild to customer specifications

Sales

Materials ordering cycle 10-180+ days

5-10 days 1 - 5 days

I

Orders

___

___

Orders

______

I

SLC

1) No system is ever built without aspecific customer order

2) Systems are custom built in ~8 hours

and shipped to customers

3)Material is pulled & delivered from SLC

to the factory every two hours


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Heart of Dell Operations = amixed model

1) Dell facilities act as Manufacturing Centers, not Warehouses only inventory needed for few hours of orders is on site

2) Provides direct signal of Dell customer demand for suppliers

3) Dells performance to customer orders is directly linked to our suppliers level of support

4) Absolute synchronization between manufacturing and sales keeps the process balanced.

SLC DellManufacturing

Buy-to-Plan Build-to-Order

Supplie

rs

Material requested to build

customer orders

All material is tied to a

customer order nothing

gets built without an order.

push pull

Custom

ers

Every Week Multiple times a day in each mfg center


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VirtualI n

tegrati o

n

Customer

Dell

Suppliers

Dell Supply Chain

PUSH

PULL

PC SUPPLY CHAINS

Typical PC Supply Chain

(Compaq, HP, IBM, etc.)

Customer

Distribution

Channels

Manufacturer

Suppliers

PUSH

PULL


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The CSFs underlying Dellscompetitive advantage

Very high product (configurable) variety masscustomization!

Direct fulfillment - no intermediaries No production launch until customer order booked (pure pull!)

Very low finished goods inventory (costs) high inventoryturns (raw material inventory influenced by recommendedconfigurations)

High velocity material flows & fulfillment


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Emerging factors and trendsenabling Dells strategy

The commoditization of the PC industry

Standardized and interchangeable components

Emergence of reliable manufacturing service providers

Recent advances in Supply Chain Management

Information Technology (IT) platforms that allow the effective andefficient information exchange and coordination across the entire

supply chain

3rd party logistics service providers

Emerging emphasis on virtual rather than vertical company

integration


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1. Virtual Integration (Flexibility)

2. Change the focus from how muchinventory there is, to how fast its

moving.(Responsiveness)

KEYS TO SUCCESS


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a Use of technology to enable coordinationacross boundaries to achieve new levels ofproductivity

b Partners are treated as if theyre inside thecompany

c Focus on creating value for their customers.

VIRTUAL INTEGRATION


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If Intel comes up with a 500 Mhtz MMX

processor in Oct-1, Dell would deliver it to you

69 days sooner:

Dell = Oct-11

Industry Avg.. = Dec-20

69 Days11 Days

SPEED TO MARKET


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Supporting Dells competitiveadvantage through a new

operational model Focused on strategic 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 Computers

impressive financial performance.

Dells 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

Documents

DellComputers1