Embed Size (px)
DESCRIPTION
Citation preview
www.a2zmba.com
www.a2zmba.com
DELL COMPUTER CORPORATION.
1984 by: Michael S. Dell : (19) 1000$ : todaY,Chairman and CEO of a NOW worth $58.2 BN Co.
Vice Chairman and CFO Donald J. Carty Jr.
Company headquartered in Round Rock, Texas U.S.A
Fastest growing - By 1999, Dell had become the No.1 PC seller in the U.S & number two worldwide.
2001, became the No. 1 computer systems company in the world.
Major competitors in the PC market are Compaq, IBM and Hewlett-Packard.
AWARDS AND ACCOLADES.
Largest direct seller - bypassing retailers , thereby avoiding the delays and costs of an additional stage in the supply chain
Speciality – customer’s specification.
Eg: customers could choose a color Mitsubishi monitor, an extra powerful Intel microprocessor and a host of other options according to their choice
www.a2zmba.com
Best of 2003 Service and Support Site. (Computer Shopper Magazine, February 2004)
Customer segments :
Relationship (large corporate)
Home and small business
(sometimes called transaction customers)
Public sector customers
(government and educational)
The Co. receives 1 order every 5
seconds (approx.)
2006 Sales (mil.)2006 Sales (mil.) $55,908.0$55,908.0
1-Year Sales Growth1-Year Sales Growth 13.6%13.6%
2006 Net Income (mil.)2006 Net Income (mil.) $3,572.0$3,572.0
1-Year Net Income Growth1-Year Net Income Growth 17.4%17.4%
2006 Employees2006 Employees 66,10066,100
www.a2zmba.com
Dell’s product line Desktop computers Notebook computers Network servers Workstations Storage products Swicthes Software Peripherals Dell offers a total of 1.6 million different
possible product configurations for all its product lines.
MAJOR SUPPLIERS
MICROSOFT -for windows, windows NT operating system
INTEL-for micro processors
SONY- for monitorswww.a2zmba.com
DESIGN CENTRES: ONLY 5 1. _ _ _ _ _ _ _ _
2. Austin--- the largest3. Shanghai4. Singapore5. Taiwan
DELL -- BANGALORE
www.a2zmba.com
• DELL CAME TO INDIA IN THE YEAR 1996.
• FIRST CITY – BANGALORE.
• 5 DESIGN CENTRE AT BANGALORE.
• RETAIL OUTLET
• first INDIAN CUSTOMER CONTACT CENTRE.( out of 50 in the world) followed by a similar centre in Hyderabad 2003. Mohali 2005 and Gurgaon.•13,500 employees in India13,500 employees in India•3000 employees at the bangalore and hyderabad facilities.
• The Company intents to open new offices at Pune, Kolkata and Mumbai.
• NO ASSEMBLE LINES IN INDIA,SYSTEMS ARE SHIPPED FROM MALAYSIA.• Takes the Co. 10-15 working days to deliver the products to Indian customers.
•ROI MALHOTRA, Dell India’s head of operations•DINESH PAI - GM
KEY TO SUCCESS……MINIMUM INVENTORY! BUILD-TO-ORDER MODEL
DIRECT TO SELL
INVENTORY MANAGEMENT.
i) Just-in –time inventory management - 3 days.
ii) Focus on speed of inventory delivery process MICHAEL DELL – “8 days of inventory – competitors 40 days, if intel comes out with
a new 700 mega hertz chip,iam going to get that new chip to the market 32 days sooner”
“if the cost of material goes down ,u have got a big cost disadvantage”
www.a2zmba.com
INVENTORY MANAGEMENT
www.a2zmba.com
Customer places an Order
(By phone or through the Internet on www.dell.com)
Dell processes the order
Financial evaluation
(credit checking)
Configuration evaluations
(checking the feasibility of a specific technical configuration)
Sends the order to
assembly plant
(any one in Austin, or any other)
Plants build, test &
package the product
(about eight hours)
Dell typically ship all orders
(no later than five days after receipt)
www.a2zmba.com
2-3 days
through
General rule for production is first in, first out
SUPPLIERS REVOLVERS
CUSTOMERS
www.a2zmba.com
Build-To-Order Model
Value Chain
Program
Revolver
or SLCs (Supplier Logistics Centers)
Build to order
In contrast to others who produce –to stock, dell first receives the order and the money and only then starts to build, using that money to purchase from supplier
Therefore there is customization of products for each and every customer.
While other companies had to guess, DELL knew exactly what its customers wanted before manufacturing the product
Others had to maintain inventory as there existed middlemen, so to support reseller and retail channels.
www.a2zmba.com
Dell’s Inventory Management……
Revolvers (for “revolving” inventory)
To compensate for long lead times & buffer against demand variability, Dell requires its suppliers to keep inventory on hand in the revolvers.
Revolvers or supplier logistics centers (SLCs) are small warehouses located within a few miles of Dell’s assembly plants.
Each of the revolvers is shared by several suppliers who pay rents for using their revolver.
Dell does not own the inventory in its revolvers; this inventory is owned by suppliers & charged to Dell indirectly through component pricing. www.a2zmba.com
SupplierManufacturing
(SLC)Warehouse
Factory / Merge Center
Material Transfer
Customer
Local Suppliers
Dell Factory
Lean Inventory Model……
Revolvers(SLCs)
Suppliers
3 days of inventory - Inventory turns of 122 per year
Delivery
Supplier Owned Dell Owned
www.a2zmba.com
DELL’S Inventory Model………..
The inventory in the revolvers is called revolver inventory
The revolver inventory plus any inventory ordered but not yet delivered is called system inventory
The average requirements during replenishment lead time is called pipeline inventory
Safety stock protects against variability of demand during lead time
To help suppliers make good ordering decisions, Dell shares its forecasts with them once per month
www.a2zmba.com
DELL’S Inventory Model………..Dell has a special vendor-managed-inventory (VMI)
arrangement with its suppliers
Suppliers decide how much inventory to order & when to order while Dell sets target inventory levels & records suppliers’ deviations from the targets.
Suppliers decide when to send their goods to their revolvers. In practice, most suppliers deliver to their revolvers on an average 3 times a week.
Dell withdraws inventory from the revolvers as needed--on average every two hours.
It uses a quarterly supplier scorecard to evaluate how well each supplier does in maintaining this target inventory in the revolver. www.a2zmba.com
I2 TECHNOLOGIES
i2 technologies software enables Dell to monitor the supply position of every part
www.a2zmba.com
On a high level, the supply chain process is comprised of two steps:
1. Planning – which involves getting the needed materials positioned at SLC’s near the appropriate Dell factories.
2. Execution – which involves having the right materials on and at the factory to build each customer’s order.
Value Chain Program
Value Chain is intended to extend Dell’s successful direct-sales approach back into the supply chain
The goal of it is increasing the speed and quality of the information flow between Dell and its supply base
The portal, valuechain.dell.com acts a secure extranet for Dell suppliers to collaborate in managing the supply chain
Dell envisions using this site to exchange with suppliers current data, forecasted data, new product ideas, and other dynamic information
It also provides suppliers a customized view of their materials at Dell.
www.a2zmba.com
DELL’S Inventory Model………..DELL’S Inventory Model………..
SUPPLIERS SELECTION AND EVALUATION
SELECTIONi. Qualityii. Priceiii. Deliveryiv. Response to feedback.
EVALUATION-to measure performance –uses suppliers score Cost Delivery Availability of technology Velocity of inventory Ways in which they did business with dell over the
internet.
www.a2zmba.com
ADVANTAGES This process frees Dell from having to manage inventories and
the costs associated with them.
The component inventory reduced from seventy days to thirty to forty days, then to twenty days, then to nearly zero.
Returns grew disproportionately as the carrying costs and obsolete stock is avoided.
Saves enormous amounts of money on purchasing components because the component prices drop by 3 percent per month.
Reduces handling cost. Common factors that drive up holding costs include opportunity costs, increased rent required for the space of the inventory, higher premiums to insure the inventory, and cost of obsolete goods.
www.a2zmba.com
