DELL
Team memberRitwik Sharma 90
Pratik Patel 62
Founded by: Michael Dell (CEO) in 1984.
The company is well known for its innovations in supply chain
management .
Dell is selling computer systems directly to customers. This direct
business model eliminates retailers that add unnecessary time
and cost, or can diminish Dell's understanding of customer
expectations.
Round Rock, TX, United States of America
INTRODUCTION
The direct model allows the company to build every
system to order and offer customers powerful,
richly-configured systems at competitive prices
PRODUCTS:- Laptop, Servers, Data Storage Devices, Network
Switches, Software, and Computer peripherals.
There are more than 65 supplier for Dell
Some of the suppliers
◦ Logitech
◦ NVIDIA
◦ Compeq
◦ Coolit System
◦ Delta Product
◦ Pegatron
◦ Alpha and Omega
Dell Current Suppliers
Dell choose it supplier carefully and if those
supplier don’t keep up, they are out
Dell goes for bigger supplier
There message is clear: Dell ways or the
highway
Dell’s new and improved design for a channel distribution model:
Order processing
Pre-production
Accessories ready
Configuration
Test
Boxing
Distribution preparations
Shipping(transportation)
DELL LOGISTICS NETWORK
Optimize inbound and outbound
transportation networks
Collaborate with the best logistics
and transportation providers
Mode of transportation –
By Ship
By Rail
By Air
“GREEN” INITIATIVES
TRANSPORTATION SYSTEM DESIGN
Dell has competitive advantage of lowest in the Industry
cost structure, and this cost Structure due in part to DELL
raw materials management strategy.
e-VMI(Vendor management inventory) and JIT combination of
management techniques
Increasingly zero inventory. Dell receives the exact
material every two hours to fulfill actual customer orders.
Dell’s factories have only 7 hrs worth of inventory .
The original parts are directly sent to the assembly line
STORAGE
DISTRIBUTION
LENGTH OF SUPPLY CHAIN
Supplier
Factory Warehouse
Customer
Dell has six production unit : Austin, Texas, USA
Nashville, Tennessee, USA
Eldorado do Sul, Brazil
Penang, Malaysia
Xiamen, China
Limerick, Ireland
Chennai .India
They carry large quantities of different products, to increase their leverage when
dealing with their customers.
90% supplies ordered online using integrated websites of supplier and Dell (B2B).
DISTRIBUTION
Virtual integration
Innovation on the assembly floor
Disintermediation (cutting out the middleman)
Enhancing customer value
Continued….
CASH: Dell maintains a negative cash conversion cycle
means the payment receive for product before it has to
pay for material.
COST: Dell’s direct sales and build-to-order model has
achieved superior performance in the PC industry in
terms of inventory turnover, reduced overhead, cash
conversion, and return on investment
Benefits to company by such distribution
Bypassing the reseller channel that causes further cost
reduction to company.
CRM: Direct customer relationship is the key to Dell’s
business model .
DEMAND FORECAST: Dell additional advantages is try
to forecast demand and ship products based on those
forecasts.
Tailored offerings from Dell in terms of add-
on products and services.
Very customizable systems at an affordable
rate, since Dell manufacturing builds
specifically for each customer.
Benefits to customer by such distribution
Dell demand price cut form the component
supplier
Dell - Take the Money and Run
Dell shares fell more than 30 percent over
the five years before the company
announced its sale plans in February
Conflict
Entering the server business
Dell’s problems caused due to faulty chips on its
computers
Product problem (Power supply)
Dell’s Price Fixing Claims Against Display Panel
Suppliers
Worker Dispute Halts Production at Chinese
Electronics Plant
Difficulties/Challenges
Different suppliers and partners involved, the location
decisions of these companies naturally vary by company and
location
Many parts and components are manufactured in Asia and
shipped to distribution centers near Dell facilities
This is usually the case for hard disk drives, floppy drives,
power supplies, CD-ROM drives, cables and connectors, and
many add-on cards such as modems, sound cards and video
cards
Difficulties/Challenges(Contd..)
Fullerton -- a Scottish company from Glenrothes that
does work for Dell and for IBM in Raleigh, NC;
Lightening Beech - a U.S. company that supplies
sheet metal;
Trend Tec--a company that does metal and plastics in
the U.S. and serves Dell and Compaq; and APW,
which bought two Irish companies and does chassis,
plastics, and metal
Example
For some specific components and peripherals, the locations are as
follows:
◦ Monitors- Europe and Asia (Phillips, Nokia, Samsung, Sony, Acer)
◦ PCBs- Asia, Scotland, and Eastern Europe (SCI, Celestica)
◦ Drives- Asia, mainly Singapore (Seagate, Maxtor, Western Digital)
◦ Printers- Europe (Barcelona)
◦ Box -builds Asia and Eastern Europe (Hon Hai/Foxteq)
◦ Chassis- Asia and Ireland (Hon Hai/Foxteq)
First, Dell requires that suppliers locate material
within a specified delivery time from its
assembly plants.
Asian suppliers (and U.S. suppliers producing in
Asia, such as disk drive makers) maintain
supply hubs near Dell assembly plants
worldwide, where material is pulled as it is
needed for production.
Dell major impact on its supplier
Second Dell requires that its suppliers
continually reduce the price they are
charging Dell;
In exchange it agrees to reward these
suppliers with larger orders and longer-term
contracts
Contd..
Third Dell requires that suppliers have
adequate inventory to supply the needs of
its direct, build-to-order production model
Dell makes extensive use of outsourcing,
but claims it will never outsource the final
assembly of configure-to-order products
Contd..
Dell only entered the PC business in 1985, it has become a
global company with global production networks spanning
the three major world regions
Dell has organized its operations by region and by country
Headquarters offices, assembly production and call
centers are centralized within each region (although not all
in the same country),
whereas sales, service and support are decentralized to
individual countries.
Conclusion
Thank You