International Supply Chain
Case Study
Group4
Ray Silvia Tiger
Lois Yang
Lucy
Present
DELL INC. IN 2009
Presentation Outline
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• Introduction of Dell • Key factor of success• Emerged Problem • Reactive actions• Evaluation• Transferable practice• Recommendation• Today’s Dell
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1984 •The establishment of the Dell company.
1992 •Dell suffered its first major setback then built a senior management team.
1994 •Dell launched Dell.com, with support information with price guides
2000 •First acquisition (To complement hardware sales) and achieve No1 PC firm in U.S at same year.
2001 •The number-one firm in global market share.
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Milestone of Dell INC.
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Game: piece 1
Customer can choose colors, Hard-drive, style of computer etc.
Dell can use standard components to meet customers’ specification.
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Game: piece 2
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• Customer order pull• kitting
Within 1 hour
• Final testing& labeling
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Game: piece 3
36 hours: whole process from customer order to loading onto a delivery truck.
Game: 3 pieces
standard components to meet
customers’ specification.
36 hours: whole process from
customer order to loading onto a
delivery truck.
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Game: PUZZLE
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Did YouGet it?
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Key Factors of Success
Direct sales business model Superior
relationship with suppliers
Build-to-orderSystem
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Direct Sales Business Model
Cut Cost
Delivery exactly
customer wantsBuild customer
relationship
Avoid Bull-whip Effect
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Build-to-order
Just in time (JIT)
Minimize the inventory cost
(logistic)
Achieve Effective Demand
Management
Lean Production
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JIT Inventory System
Extranet
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Superior Relationship with Suppliers
1. Efficiently meet inventory
requirements 2. Maintain low
cost3. Transfer uncertainty to
suppliers
1. Dell encourage suppliers use the website to track the orders and
inventories.2. Real time
information sharing with suppliers3. Facilitate JIT
inventory system11 of 35 The power to do more
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Direct
Sales
Model
Built-to-Order
Built-to-Order
Supplier Integration
System
Synergy between All Competences
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2002 •Dell's’ revenue fell, Dell Direct store appeared (shopping malls) in US.
2003 •Changed company name from Dell Computer Corporation to Dell Inc.
2004 •Kevin Rollins became CEO.
2006 •Losing share to HP, Apple and other vendors.
2007 •Michael Dell returned as CEO.
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Milestone of Dell INC.
UnderperformanceChanges Evaluations
Exiting Low-end Market
Increasing customers’ uncertainty
Fierce
Competition
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EXITING LOW-END MARKET
Sell Low Dimension Models InWal-Mart + Re-capture
neglected market
- Lower profit margin to intermediaries
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INCREASING CUSTOMERS’ UNCERTAINTY
1. Launched XPS series and low Dimension Models
+ Design, entertainment and overall product features are enhanced+ Reach broader market
- Existing competition
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INCREASING CUSTOMERS’ UNCERTAINTY (CON)
2. Separate design department into:
• Commercial• Consumer
+ Intra-firm cooperation facilitates information flow+ Specified divisional goals
-Potential conflicts of divisional interests
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3.Modified Manufacturing Model:• High-volume• Less
configuration• Time-to-
market4.Introduction of retailers
+ Expand service offering more than online order
Later analysis
INCREASING CUSTOMERS’ UNCERTAINTY (CON)
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FIERCE COMPETITION
PRICE FEATURES
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PRICE COMPETITION
Improving Technologies
Decreasing Manufacture Cost
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PRICE COMPETITION
Outsource Manufacture
Standardized Products
$3 Billion cost saving plan
1. Lower SC uncertainty2. Cut management cost
1. Economy of Scale2. Higher level of efficiency
General cost saving
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1.Redesign supply chain to optimize global manufacture
2.Cut down development time
3.Reduce compensation and benefit costs
4.Improve productivity and tighten discretionary spend
PRICE COMPETITION
Outsource Manufacture
Loss of power
Loss of competitive knowledge
Long negotiation and relationship building process
Objective conflicts
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PRICE COMPETITION
Standardized Products
Lower responsive
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PRICE COMPETITION
$3 Billion cost saving plan
Wide range of potential problems
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FEATURE COMPETITION
DELL
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FEATURE COMPETITION
Introduction of Retailers
Introduction of new product line
1. Reach customers easily & match their consumption behavior 2. Increasing sales
1. Wider range of products 2. Meet different customers’ need
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FEATURES COMPETITION
Introduction of Retailers
Decrease margin per unit sold
Bullwhip effect
Loss of core competency
New relationship
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FEATURE COMPETITION
Introduction of new product line
Existing competition
Increasing cost
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TRANSFERABLE PRACTICE
Separation ofDesign Departments into
Consumer
Commercial
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3. Education Factors
1. Interoperability of component
2. Focus on Developing Countries
4. New System and Network Building
Recommendation
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Recommendation
Match customer
needs based on
Postponement
Match Consumption
Behaviour
2. Focus on Developing Countries Point
of Differenti
ation
Recommendation
AutoCAD
for
Architecture
students
Provide Discounted Software
3. Education Sectors
SAS or SPSS
for
Satistics
students
Myob System
for Accounti
ng students
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Gain info of
inventory from
manufactures
Dell inc. Pass to
Retailer ‘s
reaction
Sales Info. From Retailer
Dell’s Demand Forecast
Supplier’s React to Forecast
Recommendation
4. New System and Network Building
4. New System and Network Building
Conclusion WHAT LESSONS we CAN learn
Matching its own products with the markets and costumers' needCompetitive strategy and supply chain strategy work together
Strategy FIT
Supply chain strategy should be reactive to environmental change
CHANGE
Advancement of relationship and networking
Relationship
Maintenance
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What Dell’s Doing NowBy 2011, the company has its best solutions portfolio ever and celebrates the largest single-year revenue increase in company history.Acquire Perot Systems and launch a new business called Dell™ Services that gives customers end-to-end IT services to help lower their total cost of IT ownership.Introduce Adamo and Latitude™ Z laptops — both the world’s thinnest laptopsenters the tablet arena with the Streak, a 5-inch device designed to provide the best on-the-go entertainment, social connection and navigation experience.Acquisition of Boomi®, Exanet, InSite One®, KACE™, Ocarina™ Networks, Scalent™ and Compellent®Further proof of our commitment to providing end-to-end IT solutions for our customers, we commit $1 billion to develop Dell data and solution centers around the world and open R&D centers in Israel and the U.S.
2009
Present
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THANK YOU
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Q & A
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