Until 1997, Dell operated its assembly lines in traditional fashion, with each worker performing asingle operation. An order form accompanied each metal chassis across the production floor;drives, chips, and ancillary items were installed to match customer specifications. As a partlyassembled PC arrived at a new workstation, the operator, standing beside a tall steel rack withdrawers full of components, was instructed what to do by little red and green lights flashingbeside the drawers containing the components the operator needed to install. When theoperator was finished, the drawers containing the used components were automaticallyreplenished from the other side, and the PC chassis glided down the line to the nextworkstation. However, Dell had reorganized its plants in 1997, shifting to "cell manufacturing"techniques whereby a team of workers operating at a group workstation (or cell) assembled anentire PC according to customer specifications.
The shift to cell manufacturing reducedDell¶s assembly times by 75 percent and doubled productivity per square foot of assembly space.
Assembled computers were tested, then loaded with the desired software,shipped, and typically delivered within five to six business days of the order placement.Dell¶s build-to-order, sell-direct strategy meant, of course, that Dell had no in-house stock of finished goods inventories and that, unlike competitors using the traditional value chain model. Itdid not have to wait for resellers to clear out their own inventories before it could push newmodels into the marketplace²resellers typically operated with 60 to 70 days¶ inventory. Equallyimportant was the fact that customers who bought from Dell got the satisfaction of having their computers customized to their particular liking and pocketbook.
2) Quality Control Programs
All assembly plants had the capability to run testing and quality control processes oncomponents, parts, and subassemblies obtained from suppliers, as well as for the finishedproducts Dell assembled. Suppliers were urged to participate in a quality certification programthat committed them to achieving defined quality specifications. Quality control activities wereundertaken at various stages in the assembly process. In addition, Dell¶s quality control programincluded testing of completed units after assembly, ongoing production reliability audits, failuretracking for early identification of problems associated with new models shipped to customers,and information obtained from customers through its service and technical support programs. Allof the company¶s plants had been certified as meeting ISO 9002 quality standards.
3) Partnerships with Suppliers and Just-in-Time Inventory Practices
It made much better sense for Dell Computer to partner with reputable suppliers of PC parts andcomponents rather than integrate backward and get into parts and components manufacturingon its own. A central element of Dell Computer¶s strategy, was to evaluate the various makers of each component, pick the best one or two as suppliers, and partner with them for as long asthey remained leaders in their specialty. Management believed long-term partnerships withreputable suppliers yielded several advantages.
using name-brand processors, disk drives, modems, speakers, and multimediacomponents enhanced the quality and performance of Dell¶s PCs. Because of varyingperformance of different brands of components, the brand of the components was as importantor more important to some end users than the brand of the overall system. Dell¶s strategy wasto partner with as few outside vendors as possible and to stay with them as long as theymaintained their leadership in technology, performance, and quality.
because Dell¶s partnership with a supplier was long term and because it committed topurchase a specified percentage of its requirements from that supplier, Dell was assured of