Supply Chain Management
Of
PC Industry
Prepared By:Sulabh Maheta (08084)Amin Pattani (08100)Bhavna Thakker (08112)
Introduction of Industry
1. Computer Software Industry :- Computer software means all those application programs, which we cannot touch but see and computer software industry means that providing the business opportunities and employment in the field of computer software development.
2. Computer Hardware Industry :-
Computer hardware means all those parts, which we can touch and see and computer hardware industry means that providing the business opportunities and employments in the field of computer hardware development.
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COMPUTER INDUSTRY - MAJOR PLAYER IN INDIA
• Hewlett Packard (HP)
• HCL
• Toshiba
• Compaq
• Dell Computers
• Sony
• Lenovo.
HP has the largest market share of 21% in the Indian market.
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• Dell = 17.3%
• HP = 15.5%
• Lenovo = 7.4%
• Acer = 4.5%
• Fujitsu-Siemens = 3.7%
Worldwide Market Share
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Growth of Laptop Market in India
• Indian Laptop market is now in sync with global market.
• In 2005 that sales of laptops surpassed the sales of desktop computers for 1st time.
• Laptop market has registered 79% Year-on-Year (YoY) growth during 2006.
• Market share of laptops would be 35-40% in the next two years.
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Distribution Channel of PC Industry
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Supplier PC maker Distri- butorsRetailersResellers
IntegratorsFinal Customer
• Dell’s headquarters was in Austin, Texas
• Michael Dell founded the company in 1984
• Dell opened its first manufacturing centre in the Asia-Pacific region in 1996 in Penang Malaysia.
DELL
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• Dell is a global company operating in 43 countries in three world regions.
• Dell is the World's largest PC maker having Build To Order model.
• No 1 in profitability for the computer systems industry
• For the last couple of years it has held its position as market leader (it took it from rivals Hewlett-Packard).
Dell’s Global PresenceThe Americas EMEA Asia Pacific China
Sales Offices in 43 countries Sales presence in 170 countries 6 Manufacturing Sites
XiamenChina
PenangMalaysia
LimerickIreland
AustinTexas
NashvilleTennessee
Eldorado do Sul Brazil
LOCATION
Dell selects specific locations based on a combination of factors including :
• Labour costs,
• transportation and information infrastructure,
• proximity to markets
• government incentives.
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Dell’s Direct Approach: A Fundamentally Different Model
Dell Direct Model
Suppliers Suppliers Customers Customers
Ownership of the value chain
Loss of control over product & information flow & customer relationships
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Supplier PC maker Distri- butorsRetailersResellers
IntegratorsFinal Customer
Competitor Model
Benefits of Dell Direct Model
• Better understand customer needs
• Customers receive exactly what they want: not standard solution
• Minimized inventory
• New technology delivered immediately
• Dell’s use of the direct approach reportedly provides it with nearly a 14-16 % cost advantage compared to indirect sellers.
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The Benefits of Low Inventory
90
95
100
105
110
115
120
TypicalDell
RelativeComponentCost
Weeks Relative to Delivery
With 3 DaysInventory,Dell Buys Here
With 90+ Day’s Manufacturerand Reseller Inventory, ChannelManufacturer Buys Here
10-12% Cost Advantage
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Performance Indicator:DELL versus the Industry, 2008
Source: eScholarship_UC_item_4kq2q43h.pdf
Customer
Local Suppliers
Dell FactoryLogistics Hubs
Suppliers
Results: 3 days of inventory - Inventory turns of 106 per year
Delivery
Supplier Owned Dell Owned
Inventory Model
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Supplier/Partner Location
• Dell is using direct model that’s why company manage its operations with low inventory levels.
• Dell collaborated closely with its suppliers.
• The company's procurement decisions were based on four criteria - quality, cost, delivery and technology.
• Suppliers were selected on the basis of cost (given a weightage of 30%) and quality, service and flexibility (with a weightage of 70%)
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Customer
Check Configuration
YES
Manufacturing Floor
Push the inventoriesNO
Assembling of hardware Print out
Software Installation
Testing
Packing
Delivered
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DELL order process
Balancing Demand and Supply
• Dell maintained a database to track the purchasing patterns of corporate customers and their budget cycles, in order to forecast demand. It also maintained a similar database for individual customers in order to cater to their future requirements for PCs
• Through its forecasting techniques, Dell was able to forecast demand with 75% accuracy.
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Open Innovation And Effective R&D
• The traditional approach to innovation tends to produce proprietary technologies and products that are often hard to migrate from as a customer. Dell have a more open and effective approach to R&D.
• Dell spends little on product research and development - $440 million a year, vs. $4 billion a year at Hewlett-Packard.
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• Effective Network repair Logistics
• Repair cycle time dropped from
43days 24 days 17 days
Reverse logistics
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Direct Repair Service Handling
ContractService
ContractService CustomersCustomers
CSRCSR
3PL3PLWarehouse
Repair Serv
ice Request
Servicing
Parts DeliveryShipment Order
Service Order
Service Request
Message
PartsOEM
Ship returned Parts
Invoice
Receipt
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Disadvantages
• High Cost Involved- $350 million
• Time Lag – 60 Days
• Decrease in Customer Focus
• Need for Maintaining Stock in Ware House
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Repair Services Handled by OEM Suppliers
CustomersCustomers
CSRCSR
ContractService
Warehouse
Repair Serv
ice Request
Servicing
Parts Delivery
Service Order
Service Request
Message
PartsOEM
3PL3PL
Invoice
Receipt
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Scenario After SCEM Deployment
CustomersCustomersCSRCSR
ContractService
Repair Service Request
Servicing
Parts Delivery
Ser
vice
Ord
er
PartsOEM
3PL3PL
Invoice
Receipt
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Hewlett Packard
• Since Hewlett-Packard was founded in 1939.
• HP is a technology company that operates in more than 170 countries around the world.
• HP is the world's 2nd largest IT company, with revenue totalling $114.6 billion for fiscal 2009.
• HP’s online store was launched in early 1998.
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HP Supply Chain Facts
• Over 600 contracted materials and manufacturing suppliers
• More than 340,000 workers at audited sites that produce HP products
• More than 1 million printers shipped per week
• 48 million PC units shipped annually
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• In order to help hpshopping.com increase responsiveness to its customer base, FedEx placed both restored -and finished-goods inventories .
• Late cutoff times enable hpshopping.com customers to order as late as 10:00 p.m. and still have their orders shipped the same day.
• HP decreases returns cycle times by 80% and per unit return product costs by 70%.
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Thank You
TWO golden rules at Dell : `Disdain inventory' `Listen to the customer'