Upload
sailesh-kumar
View
94
Download
5
Tags:
Embed Size (px)
Citation preview
MithraPraveen Padala
SaileshS P Varma
DELL Inc. Improving the flexibility of desktop PC supply chain
HISTORYStarted in Michael Dell’s dorm room at the university of Texas in 1984.
Has “3” major manufacturing facilities in US
Dell’s revenue for FY 2005 was $56 Billion
Their approach was direct business model.
Case Synopsis
CM: Contract manufacturers( By 2001, its worth was $178 billion )
OEM: Original equipment manufacturers
Reasons for opting contract manufacturers:
Capability Manufacturing competitiveness Technology
By 2005, most of the products of CM are from China
Critical components of Desktop PC
Different levels in manufacturing process of DELL desktop PC
Different levels in manufacturing process of DELL desktop PC
DELL SUPPLY CHAIN ISSUES
L6 Manufacturing:
Chassis and MB are integrated at china Integration plant
Optimized cost
MB
Chassis
5 WeeksChina
IntegrationDell
ManufacturingCustomerSupplier
Logistics Center
DELL SUPPLY CHAIN ISSUES
L5 Manufacturing:
Components arrive at the SLC
3PI integrates the components and delivers back to SLC
More cost
MB
Chassis
5 Weeks
1 WeekDell
Manufacturing
CustomerSupplier
Logistics Center
3rd Party Integrator
(managed by Equipment
Manufacturers)
Dell Worldwide L5 vs. L6 Shipments Received
from a Typical Contract Manufacturer
89% 93% 94% 95% 96%86%
91% 94% 96%90%
85%
73%
11% 7% 6% 5% 4%14%
9% 6% 4%10%
15%
27%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Jul-04 Aug-04 Sep-04 Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05
L5%L6%
DELL worldwide L5 versus L6 shipped percent
6 times
DELL SUPPLY CHAIN ISSUES
Reasons for opting L5 manufacturing rather than L6.
4 main reasons:
Chipset supplier decommit Quality / engineering issues Dell forecast accuracy New product integration
24%
8%
4%
63%
Dell AMF expedite expenses by root cause
Quality / engineering issues
Dell forecast accuracy
NPI
Chipset suppler decommit
DELL’S BPI TEAM
Task Force employed by dell.
Consisted employees from different organizations of DELL
Mainly from organizations affected by CHIPSET SUPPLY SHORTAGE.
SIX manufacturing options.
Keep as current Dell America Operations (DOA) Offline Integration at the SLC Offline integration at a dell-leased building 3PI managed directly by DELL L6 from equipment manufacturers’ MEXICO plants
Option 1Option 2(original)
Option 2(revised) Option 3A Option 3B Option 4 Option 5
Worldwide Procurement 10 1 1 1 1 5 10Regional Procurement 8 5 5 5 5 5 10Master Scheduler 5 5 5 5 5 5 5Production Control 5 10 10 7 7 7 5Operations 1 10 10 5 5 1 1DAO Quality 5 10 10 5 5 1 1Processing Engineering 1 10 10 5 5 1 1Supplier Quality Eng(Regional) 10 1 1 1 1 5 7Supplier Quality Eng(Global) 1 1 1 1 1 1 10Cost Accounting 5 1 1 10 10 10 1Inventory Control 1 5 5 5 7 10 1Logistics 5 1 1 5 5 5 10
Total: 57 60 60 55 57 56 62Cost per Box $10.07 $7.00 $7.90 $7.54 $7.70 $7.61 $7.00
Complexity and cost analysis of the six potential manufacturing plants
Legend: The “Cost per Box” data has been modified to respect Dell’s data confidentiality.Option 1: EM-managed 3PI Option 2: Integration at DAO work cellsOption 3A: Integration at SLC/hub Option 3B: Integration at Dell-leased
bldgOption 4: Dell-managed 3PI Option 5: Integrated chassis from Mexico
QUESTIONS
1. Why does L5 incur higher manufacturing and logistics cost 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?
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?
3. How easily sustainable is your recommendation for the previous question if the chipset supply shortage further deteriorates?
4. How good is the methodology employed by the BPI team to determine the optimal manufacturing option afro DELL? Are there more effective approaches?
5. How can Dell effectively address the root causes contributing to the increase of L5 manufacturing?
QUESTIONS
Questions??