Running head: DELL INC.

: IMPROVING THE FLEXIBILITY 1

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 Dell Inc.: Improving the Flexibility of the Desktop PC Supply Chain
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Why does L5 incur higher manufacturing and logistics costs 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?

There are numerous factors that impact the manufacturing and logistic costs of L5 and

L6. In order to answer the questions pondered, we need to look at the reasons why Dell must use

the L5 Level. One of these reasons is Dell’s inability to timely provide Mother Boards to

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manufacturers. This may occur due to issues with new product introduction, engineering or

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forecasting. Additionally, as mentioned in the case study, there are many stakeholders involved in

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the process and this creates extensive inventory movement as well as “too many cooks in the
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kitchen”. The increased costs is the effects of the hurdles faced by Dell (Dimchi-Levi, Kaminsky,

and Simchi-Levi, 2008).

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When we compare the costs in L5 and L6 level, we are able to appreciate that L6
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eliminates the 3PI costs due to offshore integration in China which is cheaper than local

integration.
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Which of the six proposed manufacturing solutions should Dell implement, based on the

survey result (Table 6-1)?

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When considering all of the six manufacturing options for managing the assembly work

we can appreciate the different opportunities to resolve the problem. The first option identified
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by the taskforce was to keep the manufacturing the way it currently is, therefore making no

changes. Enabling Dell factories to perform L5 to L10 manufacturing work implementation

offline, keeping integration at the supplier logistic center or at a Dell leased building while

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 Dell Inc.: Improving the Flexibility of the Desktop PC Supply Chain
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keeping the L6 to L10 process unchanged, Managing 3Pi directly by Dell, or negotiating with

contract manufacturers and ask for support for Dell’s business.

Location decisions are critical decisions in the planned design of supply chain (Melo,

Nickel, & Saldanha-da-Gama, 2009). I believe that the best choice for Dell Inc. would be to

continue with the current L6-L10 process and to lease a separate building where the

motherboard-chassis integration takes place. With this better control the team can improve the

process allowing a more streamlined approach to the manufacturing process. The computer

industry has grown, and this growth comes with a lot of challenges including rapid changes in

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technology Kapuscinski, Zhang, Carbonneau, Moore, & Reeves, 2004).

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Why? What are the pros and cons of this recommendation?
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Cost would be lower if the team chooses option four due to many advantages including

control over 3Pi and therefore lower logistic costs and a lower number of stakeholders touching
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the process. Overseeing the 3Pi and owning that process will also mean better quality control.
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Many companies focus on improving their performances because improving performances

involves the methods utilized to get products into their customers’ hands and how to respond
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quickly to customers’ needs. These efforts are crucial in staying competitive in a dynamic market

(Al-Shboul, 2017).
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How easily sustainable is your recommendation for the previous question if the chipset

supply shortage further deteriorates?

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The option chosen to continue with the current L6-L10 process and to lease a separate

building where the motherboard-chassis integration takes place. Would be easily sustainable

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 Dell Inc.: Improving the Flexibility of the Desktop PC Supply Chain
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unless problems arise such as acute chipset shortages. The reason why the solution is sustainable

is because it addresses the main problem of operational complexity.

How good is the methodology employed by the BPI team to determine the optimal

manufacturing option for Dell? Are there more effective approaches?

I believe that the methodology of BPI team was very effective. Conducting survey

invo9lves teamwork and takes into consideration different experiences and points of views.

Another strategy that could be useful would be the push and pull strategy (Melo, et al, 2009).

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How can Dell effectively address the root causes contributing to the increase of L5

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manufacturing?

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The root causes of the increase cost of L5 were addressed appropriately. The cross-
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functional business process improvement team included members from different organizations
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and this allowed a robust integration of multiple ideas and point of views, but more importantly
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of experiences and background on struggles. We understand that when different team members

get together to solve a problem, it is very likely that differences, perceived expectations, and
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assumptions are probably and they may jeopardize the process. For this reasons the decisions
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made should be qualitative, suitable, and workable (Shetach, 2014).

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 Dell Inc.: Improving the Flexibility of the Desktop PC Supply Chain
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References

Al-Shboul, M. A. (2017). Infrastructure framework and manufacturing supply chain agility: The

role of delivery dependability and time to market. Supply Chain Management: An

International Journal, 22(2), 172-185. doi:10.1108/SCM-09-2016-0335

Dimchi-Levi, D., Kaminsky, P., and Simchi-Levi, E., (2008). Designing and Managing the

Supply Chain - Concepts, Strategies and Case Studies, 3rd ED., Boston, McGraw-Hill

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Kapuscinski, R., Zhang, R. Q., Carbonneau, P., Moore, R., & Reeves, B. (2004). Inventory

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decisions in dell's supply chain. Interfaces, 34(3), 191-205.

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doi:10.1287/inte.1030.0068
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Melo, M. T., Nickel, S., & Saldanha-da-Gama, F. (2009). Facility location and supply chain
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management – A review. European Journal of Operational Research, 196(2), 401-412.

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doi:10.1016/j.ejor.2008.05.007

Shetach, A. (2014). Supply chain management of teamwork: Six guidelines for success. Team
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Performance Management, 20(3/4), 178-190. doi:10.1108/TPM-09-2013-0030

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