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A Supply Chain Case
Study on
Ish GirwanKumar AbhishekMayank KumarPratyush RajSaurabh Singh
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Mission Statement
In the words of Michael Dell-
"Dell's mission is to be the most successful
computer company in the world at delivering
the best customer experience in markets weserve
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Company Background
y Founded in 1984 by Michael Dell
y Emerged as the leading PC supplier in India (in the year2010 with 15.2%
y market share followed by HP-14.3% )
y 2nd in global PC supply with 16% market share, next onlyto HP(19%)
y Known for its highly appreciated supply chain
y Efficient operational strategy which support cost cutting
in productiony Among fortune 500 companies
y Current worth is around $60 billion dollar
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Market Share
Indian Market
Global Market
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Snapshot of recent financial performance
(in millions) FY11 FY10 Change FY11 FY10 Change
Revenue $15,692 $14,900 5% $61,494 $52,902 16%
Operating
Income
(GAAP)
$1,145 $510 124% $3,433 $2,172 58%
Net Income
(GAAP)
$927 $334 177% $2,635 $1,433 84%
EPS (GAAP) $0.48 $0.17 182% $1.35 $0.73 85%
Fourth Quarter Fiscal Year
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Dells supply chain includes
y Customers
y Dells website/Dells Distributers/ Retail Distributers
y Dell Assembly plant
y Dells Suppliers
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He orders dell PC on internet
Do I need a
Computer?I think I
do
Yippee.!!
!
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Highlights of Dell SupplyChain(Earlier)
y Implemented Direct sales strategy
y A combination of Push(Suppliers) & Pull(Customers) strategy
y Used to keep its inventory to a minimum level (JIT)deliberately
y Supplier integration which caused cost cutting
y UsedAssemble to Order
y Orders could be placed only through internet
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Direct Sales
y It helps to cut costs
y Allows to build relationships with customers
y Deliver exactly what the customer wants
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Assemble-to-Order
A Assemble-to-Order system allows Dell to:
y Increase inventory velocity
y Reduce inventory cost
y Assemble exact what the customer wants
y Minimize the need for forecasting
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Supplier Integration
Supplier Integration at Dell allows to:
y Treat the suppliers as partners
y Make combined efforts and investments to better the
existing process
y Facilitate better information flow within the supplychain
y Undergo collaboration and thus create synergy
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Customers
y Customer base for Dell ranges from governmentinstitutions to individual buyers
y Dell benefits from segmenting its customers as it
helps in understanding the customer needs: whatand when
y Direct Sales allows Dell to pass on the values to itscustomers
y Dedicated Dell forums act as interface for interactionbetween customers and Dell executives
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Problems In SupplyChain for Dell
Some of the problems that crop-up are:
y Thin inventory levels require very precise demandforecasts; a few years ago Dell over estimated the
forecasts and it cost Dell heavily in terms ofinventory management
y Dell did not have retail stores, in a few locations, tillsome time ago and that was also a problem because
many customers want physically check the productbefore buying
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Problems In SupplyChain for Dell
y In the year 2006, Dell couldnt fulfill the overshootdemand of PCs in India.
y Assembly Line: Dell had only one assembly line
which is used for the production of both, low & highconfiguration PCs. As a result the net profit marginfor low configuration PCs was very low.
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Solution Space
y Reduce the dependability on the suppliers and shifttowards in-house production
y Maintain sufficiently high inventory
y Look for better methods of demand forecast
y Make the product comparatively cheaper so thatpeople will choose Dell instead of other PCs and startordering via internet
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Suggested Solution
y Open new assembling plants in various parts of theworld. These centers will help to contain thefluctuation in demand
y
The supply chain should also have retail distributorsy For the customers of India & China, where the
number of internet users are very low, it shouldaccept orders through retail distributors
y There should be two assembly lines for the two typesof configurations . This will increase the fixed cost
but decrease the variable cost and on a long run willcreate profit for the company
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