Supply Chain Management: What's the Big Deal?

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Supply Chain Management: What's the Big Deal?

If you have read about Dell in the past, chances are you’ve seen articles about the direct model—a process that allows us to build customized systems and ship them directly to customers. Many times, supply chain management is an integral part of the discussion. Our supply chain enables the build-to-order process behind the direct model. Recent coverage in the media and blogosphere, however, indicates that advantage is shrinking. What’s the reality?”

Well, it may depend on what part of the supply chain you are looking at ... on the components or supply side of our business, Dell customers (along with all consumers of electronics) continue to benefit from the effects of Moore's Law—as the density of transistors on a silicon chip continues to increase, we all get to purchase better technology cheaper and, though some suggest that the pace of Moore’s Law will slow down overall, it still helps us keep cost low. When component costs decline, it allows us to pass those savings on to customers. We don't have to stock a bunch of inventory—as of Q2, we maintained about 5 days of inventory in the last year, and those levels have been pretty consistent over the last 6 years. Our productive inventory is measured in hours instead of days or weeks.

Have some of our competitors improved in terms of efficiency? Sure, but we’re not standing still. Another key strategy for us is building systems close to our customers. We currently operate a network of 7 manufacturing facilities around the world, and we just announced new manufacturing locations in Poland and India. This global reach allows us to deliver custom products to our customers in a matter of days. Our ultimate goal is to make it easier for consumers and business customers to purchase the latest technology at a fair price.

There’s a lot of work that goes on behind the scenes to make this happen. I’ve just scratched the surface of Dell’s supply chain management, and I look forward to sharing more details on a variety of related topics here in the future.

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  • Why hasn't Dell extended their build-to-order model to products beyond PC's?  How much advantage do you really have with "me too" products like plasma TV's, printers, etc. that aren't customized, that are build in Asian contract manufacturer facilities (hardly "close" to your U.S. customers)??
  • Mark: Thanks for your question.  Short answer is because printers and TVs are a bit different in that they are not customizable like PCs and servers are.

    Customers generally buy specific TVs and printer models based on  functionality and according to how and where they will be used. The PC, in contrast, is a more open platform.  A customer who wants to edit videos might buy a system with a fast processor and lots of memory and hard drive space, where a customer doing email and surfing the web can build a more basic system.

    To be clear though, we do put a lot of work into feature set, specs, and design of all of our products though—including the TVs and printers that you mention.
  • Mark: Thanks for your comment. To add to Lionel's response, we are constantly looking at ways to improve our build-to-order advantage and drive it's efficiency and effectiveness across the extended supply chain … in fact, we have been offering a service to our corporate customers called Customer Factory Integration (CFI) for over a decade. Using these services, our corporate customers can 'blur the lines' between our supply chains and wring out inefficiencies.  Thousand of our customers have taken advantage of these services.


    The advantage we give our customers on the accessories side of our business is a lean supply chain as we have eliminated steps between the manufacturer (mostly in Asia as you pointed out) and them.  They don't have to pay for the added mark-ups as the product travels through a traditional retail channel and they can buy from a trusted source—the epitome of our Direct model ... no middleman, direct to customer.

  • I am trying to find a way for my boss to talk with Mike Gray.  She is the President of the ONLY end-to-end supply chain & logistics IT conference - The D/C Expo & Conference (check out www.dcexpo.net) .  She would like to talk with Mike about being a speaker at our conference. 

    Please provide me with contact information so we can begin discussions.

  • Sandy: Will do... thanks for the interest.
  • 1. Why do newer Dell laptops not have an audio line-in socket? 2. Why do Dell laptop keyboards have blank panels above the left and right arrow keys? Why not add Home/End keys and make the keyboard useful, instead of putting the Home/End keys out of reach at the top of the keyboard?
  • I had the privelegde of touring the Dell facility in Austin in late September. The benefits of an on-demand supply chain can't really be shared in a brief comment nor fully understood without actually seeing the model "real time".

    Our key staff were so inspired by the factory tour that we now collectively choose to view our production and purchasing in a new light. Rather than throwing more people and product at a task, we now look to streamline procedures and processes and eliminate inefficiencies.  To ultimately convert our purchasing to a JIT model such as Dell's is now developed into our business plans for the future.

    Thanks to our informative tour guide Ken for his time, and to Dell for opening up their facility to small businesses such as ours.

  • Mike,

    Can you please give me some information on your "Evangelist" role.

    I think the title accurately describes what my aspirations are within our company (there is no such role ....yet!) - but would love some more information.

    Thanks

  • Greetings Kieran …

    I response to your post … I created my title of supply chain evangelist about 3 years ago as it fit my role of 'customer executive education' a bit better than my previous title of Senior Manager of Global Supply Chain Strategies.  It has certainly provoked a lot of conversation. 

    I am customer-facing in my role and spend my time meeting with customer executives and describing how our supply chain works and how they could apply our techniques to their business—I created this role about 5 years ago after spending the first part of my 15 year Dell career managing big parts of Dell's supply chain.  I am the only person of Dell's 79,000 teammates that does this full time.  As I spend time with customers understanding their business I run across best-practices on their side and bring them back to my colleagues who are running our supply chain … I often end up being the point-of-contact for benchmarking efforts. 

    I'll e-mail more details to you directly so you can get a better idea of my background—after spending the last 28 years of my life as a supply chain practitioner in various roles and companies I feel privileged to represent the best managed supply chain on the planet—good luck with your quest!

  • nice :) ;))
  • I have ordered dell inspiron 1420 in india. and my delivery date is given as 12 aug. The current status shipped. earlier it was under custom clearance. What does these means

     

    winny

  • I ordered a handheld (Pharos 525+ Traveler) through you guys a few weeks ago in addition to an Inspiron 1720.  I have noted the Inspiron and XPS delays on the internet and this blog, but was hoping that my handheld would not be a problem.  However, I got a "First Notification of Order Delay" for my handheld yesterday.  Are you also experiencing supply issues with handhelds in addition to the laptops?

     

    Thanks for your answer on this.

    John

     

  • I have two questions:


    1- Critically review how Dell has used Internet technology to achieve   competitive advantage.

    2- What is Dell business model exactly?

     

    Thanks 

  • hye,

    i have these few que.can u pls give me ans. of these pls.as soon as u can.thanx

    1.      Critically review how Dell has used Internet technology to achieve competitive advantage.

    2.      Critically appraise the business models deployed by both Dell and HP. In addition provide a brief review of the legal factors that companies should consider before exploiting new markets

    3.      Critically review Dell’s marketing and CRM strategy.

    4.      Review the emergence of Dell and HP as virtual organisations and how their businesses have continued to evolve.

    5.      Assess how businesses such as Dell can create economic value (the gap between price and cost) by exploiting opportunities within the ‘value system’ and the supply chain.

    6.      Critically review Dell’s current performance and assess whether a proactive management style could have mitigated any problems identified.

    7.      Synthesise your findings to provide an analysis of the key e-business elements, which can continue to provide competitive advantage to Dell and how Dell can counteract the threat of its main rival.

  • Is there any challenges when Dell using Supply Chain Management?

    And how can Dell company deal with it?