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DELL’SDELL’SSUPPLY CHAIN MANAGEMENTSUPPLY CHAIN MANAGEMENT
Presented by:Group 3, FMG – 19 B
Ashima Mathur (191080)Manas Tripathi (191095) Neeraj Sharma (191098)Nishat Parveen (191099)
Parul Garg (191103)Yukti Mittal (191122)
COMPANY PROFILE
An American multinational information technology corporation based in US
Founded by - Michael Dell The 3rd largest PC maker in the world Listed at #38 on the Fortune 500 (2010) Listed as the #5 most admired company in its
industry by Fortune
DELL IS IN THE BUSINESS OF
DELL IN INDIA
PRODUCTS- FOR CORPORATES
PRODUCTS- FOR HOMES
MAJOR COMPETITORS
Apple, Hewlett-Packard, Acer, Toshiba, Gateway, Sony, Asus, Lenovo, IBM, Samsung, and Sun Microsystems
Dell and its subsidiary, Alienware, compete in the market against AVADirect, Falcon Northwest, VoodooPC (a subsidiary of HP), and other manufacturers.
SUPPLY CHAIN MANAGEMENT
Importance of an efficient SCM for Dell: Material Costs account for 74% ($21 billion)
of the annual costs for Dell Improving SCM by 0.1% has a greater impact
than improving manufacturing process by 10% in the PC business
Changing technology makes the materials value obsolete by almost 1% per week
Technology breakthroughs result in very short product life cycles in this business
COMPONENTS OF DELL’S SCM
DELL’S VALUE WEB
Physical flows, including products and services
Information flows
DELL
Logistics Companies
System Integrators
Customer
Repairs and
Support Companies
DistributorsThird Party
HW and SW
suppliers
Component Suppliers
OEMs
COMPETITIVE ADVANTAGE OF DELL’S SCM
90% supplies are ordered online using integrated websites of suppliers and Dell (B2B)
95% of Dell’s suppliers situated very close to assembly plants (within 15 minutes) hence coordination is easier
Dell’s factories have only 7 hours worth of inventory for most items while the industry wide it is around 10 days
15 suppliers provide almost 80% of the supplies
MANUFACTURING
DELL COMPUTER EXAMPLE – STRUCTURE & INFRASTRUCTURE
They focus on customer service, cost, and speed ERP system developed to allow customers to
order directly from Dell Product design and assembly line allow “make to
order” strategy – lowers costs, increases turns Suppliers ship components to a warehouse within
15 minutes of the assembly plant - VMI Dell set up a shipping arrangement with UPS
SUPPLY CHAIN MODELS
1. Direct sales model, usually referred as direct model
2. Build-to-order strategy
DISTRIBUTION CHANNEL OF DELL VS. A TRADITIONAL COMPANY
Indirect Distribution Channel of the PC Industry:
Dell’s Direct Distribution Channel:
DIRECT SALES MODEL Receiving orders directly from customers Manufacturing to the customer’s requirements Delivering it within days Implemented just-in-time (JIT) inventory-
management Pull based SCM
Advantages Price for performance Customization Latest Technology Service & Support
CUSTOMER SEGMENTS Wide customer mix
1. Large organizations (large companies or government institutions) - account for 70% revenue
2. Small and medium businesses 3. Personal consumers
Better forecast demand Facilities that bring Dell and its customers closer:
1. Premier Pages (Premier.Dell.com) –Customized IT procurement and support sites for big clients
2. Platinum Councils – regional meetings3. Dell’s Customer Experience Initiative, Dell
Forums, the Direct2Dell blog and the IdeaStorm
BUILD-TO-ORDER AND
INTEGRATION
WITH SUPPLIERS
A computer is built only after a customer has placed an order; then lean manufacturing and just-in-time production take place
This means that once an order is placed, configuration details are sent to the manufacturing floor and the assembly begins; once the computer is built and the requested software is downloaded, it is shipped by a 3PL to the customer
ADVANTAGES OF BUILD-TO-ORDER
Small level of inventories, low inventory costs and faster response to demand changes For instance, when a new microprocessor comes
out in the market, Dell can immediately order it from its suppliers, as there is no excess inventory to get rid of first
Pull based system For instance, it is common that customers pay
for an order before Dell pays its suppliers for the product’s components, thus letting Dell operate on a negative cash conversion cycle. This way, the customized products are offered, and instead of guessing, that is Dell knows exactly what its customers want before producing it
DISTRIBUTION NETWORK
Use of – Manufacture Storage Direct Shipping Distribution Method
Advantages – Centralized inventories created at the
manufacturer Holding of common equipments Postponing product customization Reduces fixed cost of storage facilities
USE OF RFID
Read at every stage of assembly and during distribution
Benefits: Production stops have reduced dramatically Returns due to wrong shipping of products have
been minimized
INVENTORY MANAGMENT
“High speed” inventory For instance, ask for 6.795 units to be delivered
at the door A3 of warehouse, instead of 5000 every two weeks
Average inventory holding time is less than 6 days of inventory, while that of competitors 6 weeks.
The main suppliers are required to maintain inventory near or in Dell’s plants- Either produce close or keep inventories in
revolvers or supplier logistics centers
DELL’S SUPPLIERS
To support direct sales strategy, Dell requires its suppliers to keep inventories within 15 minutes of the manufacturing locations
Every two hours, the factory planning system sends out a computerized message to suppliers detailing what parts the plant needs.
Benefits – Almost no inventory of parts or products in the
factory Gives working capital advantages Dell can sell computers that are about two months
newer than the competition
SELECTION OF SUPPLIERS
While selecting its suppliers, Dell makes sure that they conform to the same social and environmental responsibility (SER) standards that Dell observes
The primary SER principles required to be followed by these suppliers are in the following areas: Ethics Labor Environment Health and safety Management systems
HEADQUARTER LOCATIONS OF KEY DELL SUPPLIERS
MAJOR SUPLIERS
Some Major Suppliers for Financial Year 2010 included: Microsoft Corporation Texas Instruments Intel Corporation Hitachi IBM STMicroelectonics Inc. LG Philips LCD Co. Ltd. Samsung Electronics
USE OF INTERNET FOR SCM
Dell shares demand and production forecasts with its suppliers, so they can themselves decide on production levels, avoiding the bullwhip effect
Website ValueChain.Dell.com For information sharing Operates as an extranet between Dell and its
suppliers Suppliers can get informed about Level of inventory in the supply chain Supply and demand data Component quality metrics New part transitions
IMPLEMENTATION
ORDER FULFILMENT
REPAIR SERVICE HANDLING
INTEGRATING PEOPLE AND PROCESSES
COMPETITIVE ADVANTAGE
Dell competes on all four priorities
FOUR PROCESSES THAT MADE DELL INC. COMPETITIVE
RECOMMENDATIONS
REFERENCES
http://en.wikipedia.org/wiki/Dellhttp://content.dell.com/in/en/corp/d/corp-
comm/about-dell-india-country.aspxhttp://www.ups-scs.com/solutions/
white_papers/wp_supply_chain.pdfhttp://www.icmrindia.org/casestudies/
catalogue/Operations/Dell%20Supply%20Chain%20Management%20Practices.htm