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INTRODUCTION

Dell, Inc is a multinational technology corporation that develops, manufactures, sells, and supports personal computers and other computerrelated products. Based in Round Rock, Texas, Dell employs more than 82,700 people worldwide. Dell grew during the 1980s and 1990s to become (for a time) the largest seller of PCs and servers. As of 2008 it held the second spot in computer-sales within the industry behind HP. The company currently sells personal computers, servers, data storage devices, network switches, software, and computer peripherals. Dell is a trusted and diversified information-technology supplier and partner, and sells a comprehensive portfolio of products and services directly to customers worldwide. Dell, recognized by Fortune magazine as America's most admired company and No. 3 globally, designs, builds and delivers innovative, tailored systems that provide customers with exceptional value. Dell's remarkable climb to market leadership is the result of a persistent focus on delivering the best possible customer experience. Revenue for the past four quarters totaled $49.2 billion*. The company manufactures its computer systems at six locations: Central Texas and Middle Tennessee in the United States: Eldorado do Sul, Brazil; Limerick, Ireland; Penang, Malaysia; and Xiamen, China. Dell sells its products and services worldwide. Dell was founded in 1984 by Michael Dell, the computer industry's longest-tenured chief executive officer and currently, the company's chairman, on a simple concept: a direct model. Dell's Direct Model is built on the principle that by selling computer systems directly to customers, Dell could best understand their needs and efficiently provide the most effective computing solutions to meet those needs.

2.SUPPLY CHAIN SYSTEM

The Dell SCM system must handle an enormous number of transactions and pieces of information, and includes multiple core components necessary to keep operations running smoothly:

2.1 CONFIGURATION MANAGEMENT: The configuration management
component manages over 1 million Dell part numbers per year across approximately 200 product families, and over 2 million bills of materials

000 items per day. monthly. To streamline the procurement process. SUPPLY CHAIN MANAGEMENT Dell sells its computer systems directly to end customers. 2. and factory scheduling. Dell uses an automated application that includes workflow approvals and vendor communication and enables services such as defective part replacement.2 PROCUREMENT : The procurement component manages nearly 1.000 suppliers worldwide. BOMs listing component part numbers are created for manufacturing facilities to build assemblies and subassemblies for Dell products. invoices. negotiated terms. 2. .(BOMs) per year. location. and contact information. and end users. analysis. bypassing distributors and retailers (resellers).8 million purchase order lines per year from more than 5. the manufacturer (Dell).3 COST : The cost component runs mostly in batch mode to calculate the costs to Dell for all BOMs. and receipts. 2. 3. 2.4 INVENTORY : The inventory component manages more than 3 million inventory movements daily from stock rooms to factory floors across all Dell sites. These batch jobs run weekly. including payments to Dell suppliers. Dell's supply chain consists of only three stages— the suppliers. along with the corresponding 3 million messages transmitted to different systems for reporting.5 Accounts payable: The accounts payable component handles approximately 15. Vendor information includes vendor ID number. with each job aggregating total material costs. and quarterly.

analyze the requirements and profitability of each segment. and quality computers that are delivered on time. Each system was assembled . This helps Dell to plan for future besides better managing its supply chain. the customers gain both in time and cost. Dell also saves time on processing orders that other companies normally incur in their sales and distribution system. the company would be able to better understand the needs of its customers. low cost. Michael believed that by selling PCs directly to the consumers. These computer configurations are built up from components that are available. Another advantage Dell gets by directly dealing with the customer is that it is able to get the customers requirements regarding software to be loaded. Dell’s strategy is to provide customized.1 THE DIRECT MODEL Dell's direct selling model traces its origins to Michael's ( founder) idea of selling computers directly to the consumer eliminating the need for middlemen and distributors. Moreover. 3. and Develop more accurate demand forecasts. Thus. They can use the PC’s the moment they arrive. Dell successfully implemented this strategy through its efficient manufacturing operations. Dell takes orders directly from its customers. The first computer that the company introduced in 1985 Turbo PC. better supply chain management and direct sales model. either on phone or online.Dell’s direct contact with customers allows it to: • • • properly identify market segments. Dell matches supply and demand because its customers order computer configurations over the phone or online (Internet). was advertised in computer magazines and sold directly to customers. Dell reduces the cost of intermediaries that would otherwise add up to the total cost of PC for the customer. Dell loads the ordered software in its plant itself before dispatching it. By eliminating the need of a PC support engineer to load software. who guided consumers in their choice of systems. Dell also began employing computer literate sales personnel. by directly dealing with the customer Dell gets a clearer indication of market trends.

3. Dell collaborated closely with its suppliers. cost.quality. Thrice a day. The company's procurement decisions were based on four criteria . Dell was able to forecast demand with 75% accuracy. Suppliers were selected on the basis of cost (given a weightage of 30%) and quality.2 ROLE OF DELL SUPPLIERS In order to manage its operations with low inventory levels. In all the .according to the preferences of the customers. delivery and technology. service and flexibility (with a weightage of 70%). Through its forecasting techniques. in order to forecast demand. It also maintained a similar database for individual customers in order to cater to their future requirements for PCs. the changing demand patterns were communicated to the major suppliers. 3.3 BALANCING DEMAND AND SUPPLY Dell maintained a database to track the purchasing patterns of corporate customers and their budget cycles. This option helped customers to get computers at a price lower than other brands.

5% a week. Orders were received by business units. etc. 3. Customers could use Dell's website www. to configure their customized computer and place an order for it. ⇒ As Dell did not hold large inventory of finished products.countries in which Dell operated it had a direct sales force.5 times in IBM. Internet. educational institutions and healthcare institutions.5 THE BENEFITS ⇒ Dell maintained nearly zero inventories for some of its components. notebooks. home office customers. servers. ⇒ In 2004. Dell faced several problems. 3. small businesses. The website catered to different segments of customers like individuals. 3. large businesses and public sector customers like Government departments. etc. medium businesses. HP was able to surge . the choices available for the consumers also widened. With the value of inventory declining rapidly at an average of 0.4 PRODUCTION PROCESS Dell received orders via the telephone. With advancement in technologies. which was directed by the marketing department located at the headquarters. it did not have to sell technologically obsolete products at a discount. e-mail.com.5 times at HP and 17. the inventory turnover rate in Dell was at 107 times a year. printers.dell. Customers could choose from a variety of products ranging from desktops. holding a significant amount of inventory did not prove to be an advantage. compared to 8.5 THE PROBLEMS In the years 2005 and 2006. which downloaded the orders every 15 minutes. and lost its coveted position as the largest selling PC manufacturer to HP. ⇒ Dell was able to bring in new products according to the needs of the customers into the market faster than its competitors.

1 I2 SCM SOFTWARE PACKAGE Every 20 seconds. According to a survey by CIO Insight. . • • • • • 90% supplies ordered online using integrated websites of supplier and Dell (B2B). 4. Dell gets paid by customers and then pays to its suppliers. Those suppliers use an Internet portal to view the requirements and confirm their ability to commit their own inventory to Dell as the orders are placed. Dell then takes 30 minutes to unload the truck and place the materials – in the precise order in which they will be manufactured – onto the assembly line. whose stocking locations are situated no more than thirty minutes from the Dell factory. i2 SCM compares Dell’s on-hand inventory with its suppliers’ inventory. Dell’s suppliers have 90 minutes to pull the needed materials and drive them to Dell’s factory. Dell's problems included growing complexities in its product line and pricing system. technology spending among companies with revenues of US$ 500 million decreased by 1. DELL’S COMPETITIVE ADVANTAGE Dell is having one of the best SCM in the world. demand from the corporate buyers.3% in 2006. then creates a supplier bill of material to meet its order needs. Dell aggregates its orders. Dell’s factories have only 7 hrs worth of inventory for most items whereas industry wise it is around 10 days. analyzing the material requirements. This new system automatically converts Dell's sales orders into materials requirements. Dell is now linked with its core suppliers. INFORMATION SYSTEM & TECHNOLOGY 5. 95% of suppliers situated very close to assembly plant hence coordination is easier. 5. 15 suppliers provide almost 85% of all supplies.ahead of Dell by procuring components at a cheaper price and improving its supply chain management practices. Through a suite of web-based applications. These requirements are then instantly communicated to suppliers. At the same time. who accounted for a major share of Dell's sales fell.

can be deployed in days. most suppliers deliver to their revolvers on average three times a week. Dell had been setting inventory targets based on empirical data and judgment with no clear reference to any desired service levels. Suppliers decide when to send their goods to their revolvers.6. Dell often withdraws components from one supplier for a few days before switching to another. INVENTORY MANAGEMENT Dell has a special vendor-managed-inventory (VMI) arrangement with its suppliers: ⇒ Suppliers decide how much inventory to order and when to order while Dell sets target inventory levels and records suppliers' deviations from the targets. 6. ⇒ Dell heuristically chose an inventory target of 10 days supply. and it uses a quarterly supplier scorecard to evaluate how well each supplier does in maintaining this target inventory in the revolver.1 EASILY DEPLOYED The Dell Software Inventory & Usage Management service enables IT administrators to remotely inventory and monitor software usage on any managed corporate PC connected to the Internet. the Dell Software Inventory & Usage Management service works without infrastructure investments or upgrade servers. parts from different suppliers are completely interchangeable). 6. and is easy to maintain without end-user involvement. Dell hypothesized that it could reduce revolver inventory markedly by using a more rigorous approach and gaining better visibility of the inventory throughout the supply chain. ⇒ In practice. on average every two hours. ⇒ Dell withdraws inventory from the revolvers as needed. Once it determined an optimized inventory level. even if they are not connected to the corporate network. Dell can withdraw (pull) those components from any subset of the suppliers.2 AUTOMATES THE SOFTWARE INVENTORY PROCESS Dell Software Inventory & Usage Management automates the software inventory process by discovering application executables on PCs enterprise-wide – without requiring connection to the corporate network. PC software usage can be automatically tracked anytime the user connects to the Internet. If the commodity is multisourced (that is. Dell could collaborate with its suppliers to eliminate excess inventory. Unlike traditional on-premise solutions that require up-front investments. Dell has a dedicated team of software experts who monitor industry changes and product releases in order to maintain a comprehensive .

6. 7. IBM. Dell is more efficient and therefore more profitable because it can buy its component parts based on the customer’s demand and not have to worry about building up its supply of inventory that may or may not be used. DEMAND MANAGEMENT Dell controls its inventory and costs by being a demand-pull company. versions and bundles/suites for easy comparison with license agreements so that unused or under-used software licenses can be easily identified. E-COMMERCE AND PROCUREMENT B-2-B E-commerce solutions Dell delivers business to business (B2B) transactions that allow an organization to lower their procurement costs. Reports can be run on multiple levels from an individual system or across an entire organization – capturing a multitude of attributes for every covered application. we can shop online from within our . 8.titling database. you can also run reports on hardware assets to give you a comprehensive inventory of all IT assets. IBM has to be good at forecasting what the customers will need. 2003). is strictly a supply-push company and operates in a more traditional manner. because it sold what it had on hand. When combined with Dell Asset Management. date of installation and usage history.3 PROVIDES ROBUST REPORTING With the Dell Software Inventory & Usage Management service you can run on-demand software inventory reports. including publisher. With a B2B solution. “The result was that the company wound up with essentially no carrying costs for inventory while maintaining excellent turnaround on orders. collected from customers in an average of a few days. title.” Dell continues to use this successful formula to keep its competitive edge over its customers. This database allows millions of executables to be automatically resolved into their licensed parent applications. while Dell makes the computers to order. and didn't have to pay suppliers for several weeks (Henricks. whereas one of its top competitors.

If a customer is not currently capable of integrating their procurement systems and processes with their suppliers. Once this electronic requisition is approved. Benefits: • • • • Better align Dell with customer procurement processes Ease the purchasing process and reduce errors by eliminating duplicate data entry Reduce costs for clients by eliminating paper purchase order/fax processes Reduce customer cycle times for ordering approval and payment 9. saving us hours or days in processing time. These orders flow directly into Dell's manufacturing system where our orders are built immediately. PRODUCT DESIGN CONSIDERATIONS . it can become an electronic purchase order and be transmitted instantly to Dell. Dell can provide the necessary hardware. To quickly integrate with customers who are capable today 2.Enterprise Resource Planning (ERP) "procurement" application and return the contents of our shopping session back to our ERP system electronically. and consultation to help build and deploy a solution that not only connects the customer to Dell. Dell's has two objectives with its B2B integration initiative: 1. software. and integrate this dynamic commerce functionality into their internal procurement systems. The electronic requisition can now be routed through our standard ERP workflow where it can be approved electronically. No longer are we required to enter duplicate information in order to purchase. but one that can to connect to even other suppliers or customers. This brings us the latest technology at the quickest pace. To help customers build a B2B solution for rapid deployment and connectivity Dell has built a solution that extends its existing Internet infrastructure and ECommerce capability to easily integrate with any customer who supports open. industry document standards of XML and EDI. This allows Dell to provide the same customized catalog most customers use today with Premier Pages.

Despite the complexity of this worldwide product development effort. printers. Dell has a consistent track record of meeting its product release dates. Not only are manufactured products themselves becoming increasingly sophisticated. however.In today’s world. Dell has used PTC Pro/ENGINEER software successfully in regional product design centers for more than a decade. and numerous remote team members all contributing to the design and development of its industry-leading hardware platforms. For more than a decade. including sophisticated 3-D modeling and simulation capabilities. To be successful in a global environment. Dell has five globally distributed design centers. Dell is no stranger to global product development. Dell deploys hundreds of Dell Precision M90. notebooks. the development of manufactured products is often a complex affair that traverses the globe. Failure to do so can lead to delayed product releases. workstations. In fact. Dell Precision 490. desktops. and automated generation of associative tooling design. GREEN ISSUES Dell’s focus on efficiencies and customer satisfaction are seen in the products and services it supplies to the businesses it works with. an integrated architecture that supports the design process all the way from concept to manufacturing. That same focus helps drive Dell's . but the companies that make such products increasingly rely on geographically distributed development organizations to help design them. By deploying Pro/ENGINEER Wildfire on standards-based Dell Precision workstations running Microsoft Windows. Pro/ENGINEER Wildfire offers several key features. and even televisions (see Figure 1). missed market opportunities. assembly instructions. eight original design manufacturers (ODMs) in nearly a dozen locations. 10. Dell has relied on PTC Pro/ENGINEER Wildfire computer-aided design (CAD) software running on Dell Precision workstations to design complex products and manage product information and development processes effectively. and Dell Precision 690 workstations running the Microsoft Windows XP OS and Pro/ENGINEER Wildfire CAD software to design and develop the entire Dell product line—including servers. and ultimately lost revenue. Currently. Dell can scale product design and development efforts quickly and cost effectively in response to changing business requirements around the globe. and Dell products have been regularly hailed as technology leaders. a company must efficiently and effectively manage product development both within and across its design facilities. and machine code.

" Dell is technology partners your campus can count on to vigorously pursue environmentally sound programs that conserve product energy consumption.3 KEEPING TECHNOLOGY OUT OF THE TRASH • . This commitment to the environment hasn’t gone unnoticed. energy savings are built-in. reduce or eliminate materials for disposal. Across the range of Dell products. this results in up to three times the performance per watt over previous generations. From the first moment Dell engineers begin to design everything from flat panel displays to servers. Dell’s longstanding efforts to promote individual producer responsibility were recognized for its leadership in recycling computer equipment and its global policies making it easier for customers to become effective environmental stewards. When combined with impressive performance gains. they're thinking about energy efficiency and other ways they can ensure Dell products are "earth friendly.environmental stewardship program to conserve product energy consumption. 10.2 ENERGY SAVING HARDWARE DESIGN Dell’s focus on product energy efficiency is designed to help customers decrease electricity usage and system operating cost. Dell hardware and services talk the talk and walk the walk. reduce or eliminate materials for disposal. 10. The latest Dell PowerEdgeTM servers consume up to 25% less energy than previous generations. prolong product life span and provide effective and convenient equipment recovery solutions. Dell helps minimize stress on the environment while achieving speed. responsiveness and cost savings that are passed along to customers. Dell was recently awarded the National Recycling Coalition’s ninth annual Recycling Works Award. Current Dell Latitude notebooks consume up to 70% less energy on average than the previous generation OptiPlex GX620. prolong product life span and provide effective and convenient equipment recovery solutions. 10. The energy saved results in a reduction of pollution to the environment.1COMMITMENT TO THE ENVIRONMENT When it comes to being an environmentally friendly company. • Targeting server power efficiency is one of Dell's primary design objectives. By streamlining business steps and processes to be as efficient as possible.

the hard drive of each system we recycle is overwritten to help protect the security of your data 10.All hardware will eventually reach obsolescence.C.5 GLOBAL RESPONSIBILITY Dell recognizes the role that product design. Options include: 10. Dell has Asset Recovery and Recycling Services that helps ensure your obsolete or excess computer systems are resold or recycled in an environmentally friendly way. 10. Dell’s pioneering direct business model optimizes manufacturing and distribution efficiencies. PERFORMANCE MEASURES Dell has fewer stages in the S.3. We are focused on implementing features that reduce the energy required to operate our products.3. But where it goes once it's replaced makes the difference.3Value Recovery Gain value from used equipment. resulting in lower cost-of-ownership through good environmental practices. 11. Along with removing identifying tags and labels. as well as educating customers about the importance of using these features. Comments on the characteristics follow: Type of products Product introduction More Faster .3.1 Disposal Frees up physical storage space by recycling used or obsolete computer equipments.2Donation Donate your computers to the National Cristina Foundation to help disabled and economically disadvantaged children and adults in your community. Greater part of the S. which can be resold. asset recovery and other environmentally friendly actions play in our responsibility toward global stewardship.C. 10. 10. operates in “pull mode”.4DELL ASSET RECOVERY AND RECYCLING SERVICES Utilize Asset Recovery Services for the logistical and disposal capabilities to recover and dispose owned and/or leased computer equipment in a secure and environmentally safe way.

SWOT ANALYSIS 12. revenue enhancement More flexible: Price revisions depending on stocks 12.1STRENGTHS .Response time Stages Payments Longer (products not immediately available) Fewer: increased profit margin through cost reduction e-funds transfer: faster pay-in slower pay-out negative working capital (matter of negotiation with partners) Lower: Lower: Through aggregation and delayed differentiation Fewer facilities (mainly retail outlets) Inventory Facilities costs Transport costs Increased:Distribution on a personal basis (whose cost is it?) However Transport cost small fraction of price and cost 24-hour service Price More customers.

Dell is a computer maker. and then adds items and upgrades until the PC is kitted out to the customer's own specification. • . representing a growth of around 28%. that there is the occasional product recall that can cause Dell some embarrassment. So a customer selects a generic PC model.4 million laptop adapters because of a fear that they could overheat. and to an extent is locked in for periods of time (i. You can even keep track of your delivery by contacting customer services. The Dell brand is one of the best known and renowned computer brands in the World. In 2004 Dell had to recall 4. based in India. the company is reliant on a few large suppliers. The finished goods are then dropped off with the customer by courier. It buys from a group of concentrated hi-tech component manufacturers. causing electric shocks or fires. never by Dell.2 WEAKNESSES • The company has such a huge range of products and components from many suppliers from a plethora of countries. Dell cuts out the retailer and supplies directly to the customers. allowing Dell to focus on marketing and logistics. not a computer manufacturer. unable to switch supply dues to the lack of large suppliers in the World). Components are made by suppliers. Whilst this is a tremendous advantage in terms of business operations. Profits for the 3 months to July 2005 were in excess of $1 billion US. For the last couple of years it has held its position as market leader (it took it from rivals Hewlett-Packard).e. It uses information technology. and Customer Relationship Management (CRM) approaches to capture data on its loyal consumers. Dell has total command of the supply chain.• Dell is the World's largest PC maker. PC's are assembled using relatively cheap labor. • 12.

retaliation from competitors and new entrants to the market poses potential threats. being global in its marketing and operations. Although it is a very lean organization. orders do have to be placed some time ahead due to their size or value. is exposed to fluctuations in the World currency markets. Despite founder Dell's massive success. The PC's are unbranded and should not be recognized as being Dell when the consumer makes a purchase. • • 12.even sourcing the same or similar components from the same or similar suppliers. • . new blood and a change in management thinking could lead the company into a new. but now also included LCD televisions and other non-computing goods.3OPPORTUNITIES • Kevin Rollins replaced Michael Dell in 2004 as Dell's Chief Executive Officer. not a PC manufacturer. and founded Dell in 1984 with $1000 whilst studying at the University of Texas. but there is nothing stopping competitors doing the same . Remember. Dell remained the company's Chairman. Dell sources from Far Eastern nations where labor costs remain low. Changes in exchange rates could leave the company exposed to potential loses in parts of its supply chain. This initially has meant good such as peripherals including printers and toners. Dell. low-price computers to PC retailers in the United States. He became the youngest Fortune 500 CEO in 1992. and will be a tough act to follow.12. So Dell competes against iPod and other consumer electronics brands. Dell was born in 1965. Rebranding and rebadging for retailers. Dell is a PC maker. even more profitable period.4THREATS • The single biggest problem for Dell is the competitive rivalry that exists in the PC market globally. As with all profitable brands. Dell is pursuing a diversification strategy by introducing many new products to its range. Dell is making and selling low-cost. gives the company new market segments to attack with the associated marketing costs. although a departure for Dell.

REFERENCES:  www.bus.wikipedia. May 12). James (2000. Retrieved April 3.com  Boone.ucf.Exchange rates could leave the company exposed to potential loses in parts of its supply chain.edu/jcourtney/EcommPPT/DellAdvantage. 2004 from University of Central Florida. http://www. Dell's Competitive Advantage.ppt .

. Tiong Tey. SWOT Analysis DELL.D. Not Inventory dated 6/2/2003 Harvard Business School. Ph. www. May 2007.com/oracle  Go Green with DELL Commitment to the Environment. review by by Jonathan Byrnes  Performance measurement & Risk management at Dell by Thomas Meredith. Todd Muirhead. September 01.dell. 1998 .com/techcenter www.  Dell Manages Profitability.2000  Implementation study: DELL IT Scales supply chain Management with Oracle RAC 10g By Dave Jaffe. April 2007. Energy Saving Hardware Design. Raveendra Avutu Dell Power Solutions. Global Responsibility Keeping Technology Out of the Trash. Marketing Teacher Est.dell.com/oracle10g www.dell.

......................................... 18 ....2 Energy Saving Hardware Design ..........................................................................1Strengths ...................12 12.................1 3..........................................................................................6 5........................................CONTENTS 1...............5 3...........................................3 Balancing Demand and Supply.....................................................................................3Opportunities...........................................9 10............................ DEMAND MANAGEMENT.........................................................................................4Threats..................................... PERFORMANCE MEASURES............................................................................................................................................................................8 9.5 3............................................11 10.........15 12.............................................1 2........................................8 8.............SWOT ANALYSIS....................................................................................................13 12...................................................................................... GREEN ISSUES......15 References:..........5 4..... DELL’S COMPETITIVE ADVANTAGE.............................................2 3..................................7 7......................... E-COMMERCE AND PROCUREMENT....................6 5............................13 12................................1 I2 SCM Software Package.........................................4 Production Process..................................................4 3................................................................................................2 Role of Dell Suppliers.....................................................................5 The Problems...............11 10.........................................................1 The Direct Model................................ 11 11........10 10...........................5 The Benefits.......................................................................................................................................SUPPLY CHAIN SYSTEM............................................................... PRODUCT DESIGN CONSIDERATIONS........................ INVENTORY MANAGEMENT...............................................4 3......3 3....................................................3 Keeping Technology Out of the Trash .........................6 6.......1Commitment to the Environment.................................14 12................. INFORMATION SYSTEM & TECHNOLOGY....... 16 Contents................................INTRODUCTION....................... SUPPLY CHAIN MANAGEMENT..........................................................2 Weaknesses..........

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