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Dell Supply Chain

Dell Supply Chain

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Published by: shkmff on May 06, 2011
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12/24/2012

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Dell Supply Chain

Stephen Cook, Director Americas Demand/Supply

10/22/05

1 of 14

Dell Product Portfolio Desktop Portables Workstation Servers/ Storage Networking Displays Printers Electronics Services Dimension Optiplex Inspiron Latitude Precision Powervault Poweredge Powerconnect Projector Flat Panel Inkjet PDA (Axim) Professional Managed TVs Laser MP3 (Dell DJ) Musicmatch Deployment Support/Training Dell/EMC 2 of 14 .

5 days <6 hours ~$50 per system ~230 DPPM (5σ) 84% 5.9M per year (~33M Customer Calls) ~$40 per system .2% (Q4FY04) 9.5 days $41.What a Supply Chain!! FY04 Supply Base – Spend – Suppliers – Represented Countries $38B >500 Production.Factory – Days Sales Inventory – Factory Cycle Time – Transformation Cost $100M per day ~30M units per year (~85k per day) >100 per year 4 per day 2.Hub – Inventory Turns .6% (Q4FY04) Quality & Customer Experience – Factory Supplier Quality (VLRR) – Deliver on Time (DTT) Service – Service Parts Dispatches – Warranty Cost – Days Sales Inventory Financials – Revenue – Cash Conversion Cycle – Gross Margin – OpEx 3 of 14 .4B -36 days (Q4FY04) 18. >5000 GP >35 Factory – Factory Consumption – Build to Order – Inventory Turns .

Tennessee Eldorado do Sul.5M Units 3 Plants 1. Brazil Limerick. Malaysia Xiamen.9M Units 20% 1 Plants 5.4M Units FY04 12% 2 Plants 3.4M Units Penang. Texas Nashville. Ireland 4 of 14 .2M Units 68% 4 Plants 17.1M Units DAO 9% 70% 7 Plants 10. China Austin.Mass Customization APAC FY01 Dell Supply Chain Close to Customer EMF 21% 3 Plants 3.

Service & Support Real-time CE feedback loop 5 of 14 . Mfg.Dell Supply Chain Supply Chain has been designed for optimal flexibility & predictability… Supplier Orders Sales Supplier SLC Hubs Dell Supplier Customer Merge Center 1 –30 days 2-5 days 1-7 days Suppliers E-Tools & Processes Supply/Demand Visibility Concentrated Spend Real-time Quality Feedback Hubs Flexibility Off Balance Sheet 2 Weeks Inventory Factory/Merge Mass Customization Demand Shaping 6 Hrs. Cycle Time Customer Customization Best Value Reliability.

1) Dell facilities act as Manufacturing Centers. not Warehouses – only inventory needed for next 2 hours of orders is on site 2) Provides direct signal of Dell customer demand for suppliers 3) Dell’s performance to customer orders is directly linked to our suppliers’ level of support 4) Absolute synchronization between manufacturing and sales keeps the process balanced.Velocity = Direct Demand Feedback “push” Buy-to-Plan “pull” Build-to-Order Customers Material requested to build customer orders Suppliers SLC Dell Manufacturing All material is tied to a customer order – nothing is built without an order. 6 of 14 .

Quality Cost Worldwide Procurement Delivery Regional Materials Shared responsibility Separating contracting from commerce 7 of 14 .Procurement Responsibilities….

Continuity of Supply Intense Focus through: • Separate internal organizations • Supported by unique processes and systems • Looking at a different parts of the inbound supply chain • Dealing with different people at the supplier y eg t ra St Pl ng ni an io ut c xe E n Time Horizon: Org (people): Supplier Interface: Beyond lead-time Worldwide Procurement (6X) Executive 3 days to order lead-time Regional Materials (4X) Operations 0 to 3 days Factory (X) SLC Low inventory does not equal Supply Issues But it does equal operational efficiencies… 8 of 14 .

000 $9.000 $3.0% 0.000 Total = $29.0% 80.0% 20.000 $1.000 $7.2B FY04 Spend Cum Spend % 120.0% 40.000 $A M AL AY S IA CA IPPIN ES SING AP O RE MEX ICO THA ILAN D J AP AN TAIW AN INDO NE S CZE IA CH R EPU BLIC UNIT ED K INGD OM POR TUG AL ITAL Y IREL AND HUN GAR Y GER MAN Y CHIN KOR US A TA R I EA PHIL COS 9 of 14 % of Spend $M .000 $4.000 $8.000 $2.0% $5.Production Spend (By Country) Moving to low cost regions… $10.000 $6.0% 100.0% 60.

quality & consistent execution Embrace innovation in business tools & processes 10 of 14 . and long-term relationships Reward technology.Supplier Management Our Philosophy Work as Cross-functional / Matrix strategy teams Focus on fewer leveraged supply partners – Develop & value direct. focused. advantaged cost.

Business Strategy Teams (BST) Healthy tension creates optimal strategy… Strategy Sourcing Supply Chain Design Contracts Continuity of Supply Cost – Multi-sourcing – – Alliances Internet Negotiations Product Concept Ready To Ship End Of Life End Of Warranty 11 of 14 Procurement Engineering BST Marketing Service .

Quarterly Business Review (QBR) Measuring performance and awarding business accordingly breeds better value for Dell… Data driven discussion/ decisions Identify actions/ commitments Mutual agreement of future performance targets Measure and reward performance Field Service Cost Leadership Technology/ Time To Volume Quality Continuity of Supply 12 of 14 .

Quarterly Business Review (QBR) 100 Best In Class *Example* 90 80 70 60 50 Q 1' 0 1 Q 2 ' 0 1 Q 3 ' 0 1 Q 4 ' 0 1 Q 1' 0 2 Q 2 ' 0 2 Q 3 ' 0 2 Q 4 ' 0 2 Q 1' 0 3 Q 2 ' 0 3 Q 3 ' 0 3 RMSD Supplier X Total of 100 possible points Benchmark each supplier against Best In Class supplier Identify improvement plans for future quarters Performance = TAM 13 of 14 .

savings on to manufacturing & Efficient customer distribution Model with Lowest process Cost Structure Drive Supplier Volume Competitive Pricing Competitive pricing ignites demand Drives Market Share Lower cost drives increased demand 14 of 14 .SCM Fuels Direct Model Industry's most efficient Pass cost procurement.

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