Dell Computer Systems

8/4/2019 Dell Computer Systems

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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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Documents

Dell Computer Systems