Implementation Study: Dell IT Scales Supply Chain Management

INTRODUCTION: DELL FOUNDED IN 1984 it is a multinational technology corporation that develops,

manufactures, sells and supports personal computers and other computer related products.
Products: personal computers, servers, data storage devices, network switches, software and
computer peripherals.

The supply chain of dell includes: The customer Dell’s Website Dell assembly plant Dell’s suppliers
their suppliers.

Types of supply chains: depending on timing of execution Pull process (reactive process) Push
process (speculative process)

Process cycle of DELL: Customer order and manufacturing cycle - pull process Procurement cycle -
push process

Dell’s Supply chain strategy:

a) DELL To achieve high flexilibility and responsiveness Supply chain responsiveness: DELL
(capabilities of DELL’s supply chain)
b) Respond to wide range of quantities demanded Try to meet short lead times
c) Handle a large variety of products
d) Build high innovative products
e) Handle supply uncertainty

Drivers of supply chain: DELL Facilities:

a) Low facility costs Inventory:

b) High transportation costs Information:
c) Low inventory costs Transportation:
d) High information costs:

Distribution in the supply chain: Distribution refers to steps taken to move and store a product from
supplier stage to customer stage in the supply chain.

Types of distribution networks:

a) Manufacturer storage with direct shipping

b) Manufacturer storage with direct shipping and in transit merge
c) Distributor storage with carrier delivery
d) Distributor storage with last-mile delivery
e) Manufacturer or distributor storage with customer pickup. Retail storage with customer
pickup.
A Look into Dell’s SCM IT Infrastructure

The Dell supply chain management (SCM) database systems handle key business functions that
support worldwide manufacturing operations, including the efficient Dell inventory management
model and fast, direct delivery of computers, accessories, parts, and supplies. These systems must
be designed for reliability and cost-effective scalability: a failure can cost thousands of dollars per
minute in factory downtime, and the SCM systems must be able to handle increasing workloads as
the company grows.

When Dell was a smaller company than it is now, before the development of powerful, industry-
standard servers of the type that Dell manufactures, the Dell IT group ran its SCM database
applications on large, expensive, proprietary servers based on the UNIX® OS. However, as the
company grew, servers lacking the necessary capacity had to be replaced with even larger, more
powerful servers. And because the servers were not redundant, updating a single server often
required shutting down entire systems.

The increased performance of industry-standard Dell Power Edge servers, however, has enabled
Dell IT to create cost-effective, highly scalable systems using Oracle Real Application Clusters (RAC)
10g. By sharing a large database across multiple Power Edge servers, Dell IT can easily deploy
additional low-cost servers when necessary to handle increased workloads rather than buying
additional large, expensive, proprietary UNIX-based servers.

Dell IT has implemented this type of system for Dell operations at multiple locations around the
world. Using the same processes for disaster recovery, backup, and monitoring across all Dell
operations enables Dell IT to take advantage of a cost- effective and readily supported deployment
model. This article describes how Dell IT migrated its critical SCM applications from proprietary
UNIX-based servers to industry- standard Dell hardware.

The Dell SCM system must handle an enormous number of transactions and pieces of information,
and includes multiple core components necessary to keep operations running smoothly:

• Configuration management: The configuration management component manages over 1 million

Dell part numbers per year across approximately 200 product families, and over 2 million bills of
materials (BOMs) per year. BOMs listing component part numbers are created for manufacturing
facilities to build assemblies and sub- assemblies for Dell products.

• Procurement: The procurement component manages nearly 1.8 million purchase order lines per
year from more than 5,000 suppliers worldwide. To streamline the procurement process, Dell uses
an automated application that includes workflow approvals and vendor communica- tion and
enables services such as defective part replacement.

• Cost: The cost component runs mostly in batch mode to calculate the costs to Dell for all BOMs.
These batch jobs run weekly, monthly, and quarterly, with each job agree gating total material costs.

• Inventory: The inventory component manages more than 3 million inventory movements daily
from stock rooms to factory floors across all Dell sites, along with the corresponding 3 million
messages transmitted to different systems for reporting, analysis, and factory scheduling.
• Accounts payable: The accounts payable component handles approximately 15,000 items per
day, including payments to Dell suppliers, invoices, and receipts. Vendor information includes
vendor ID number, location, negotiated terms, and contact information.

In addition to these order-related transactions, the SCM system also runs several other batch
process jobs to aggregate data each week, month, or quarter.

In the North America region, the Oracle Database application for SCM consists of approximately
3,000 database objects (functions, packages, procedures, triggers, tables, and views). This SCM
system is supported by six PowerEdge 2650 application servers, five internally developed Web-
based applications, more than 50 system-to-system integrations, approximately 125 batch jobs,
and approximately 500 user interfaces.

What was wrong: Previous system: Proprietary UNIX-based servers (Slow and can’t handle
increasing load)

The previous Dell SCM system used Sun E6000- class UNIX-based servers running the Sun Solaris 8
OS and Sun Cluster 2.2 (see Figure 1). The primary and secondary servers, each with 16 processors at
336 MHz and 11 GB of memory, managed the production database on Oracle Database 8.0.6. The
disaster recovery server had 12 processors at 336 MHz and 6 GB of memory. Arrays running the
EMC® Symmetrix® platform provided disk storage.

To make the system highly available, Dell IT used Sun Cluster to cluster the primary and secondary
servers in an active/passive configuration connected to share disk storage, enabling the database to
fail over to the passive node if the active one failed. The failover was initiated when the passive node
no longer detected a heartbeat signal from the active node. The failover disconnected all users, who
would then have to reconnect to the newly active server.

Current system: Oracle RACon Dell PowerEdge servers (The corrections)

By 2005, the performance of the proprietary system was becoming a concern, with many of the
batch processes taking a long time to complete—the end-of-quarter batch process job, for
example, could take up to 31 hours. In addition, the Oracle Database version was out- dated and
unsupported, and because it did not support Oracle RAC, Dell IT could not add capacity by horizontal
scaling. To continue using this system would have required a large investment in upgrading these
large, expensive servers.

Instead, Dell decided to migrate to a cost- effective, industry standards–based platform, replacing
the Sun servers with Oracle RAC 10g clusters of Dell PowerEdge 6650 servers, each with four Intel®
Xeon® processors . The environment includes a primary cluster and two disaster recovery clusters.
While the previous system could not scale beyond one physical server, the current system allows
Dell IT to easily add servers to the clusters to handle increased workloads. The multi-node Oracle
RAC architecture can also provide higher I/O throughput than the previous system because of
the increased number of available interfaces.
Advantages of new system in Dell SCM IT Infrastructure

Performance increases

Dell engineers measured database performance for both the previous and current SCM systems.
Figure 4 shows the 10 longest end- of-month and end-of-quarter transactions. The most significant
time savings occurred in the data extraction for all material movements transactions, which
dropped from almost5 hours to just 35 minutes for an 88 percent improvement, while the time
for the entire end-of-quarter jobs processing decreased from 31 hours to 23 hours.

Cost-effective, scalable supply chain management

Supply chain management is essential to Dell operations around the world, with both factory
operations and internal systems dependent on SCM systems to provide real-time information about
key business functions. Running these systems on Oracle RAC 10g clusters of industry- standard Dell
Power Edge servers enables Dell IT to scale them efficiently and cost-effectively to handle increased
workloads. By moving the systems to Dell servers when it did, Dell IT avoided significant additional
expenditures for proprietary UNIX-based servers, enhanced performance, and provided a clear path
for future growth.

Figure 1. Performance gains for 10 longest database transactions in Dell supply chain management
systems
transaction time on previous time on current performance gain
system system
(hours:minutes) (hours:minutes)

entire end-of-quarter 31:00 23:00 26%

jobs processing

cost-per-order calculation 8:52 5:40 36%

Quarterly BoM calculation 7:30 1:56 74%

entire end-of-month 6:00 4:00 33%

jobs processing

new product material costs 5:56 2:17 62%

calculation

data summary for all 5:33 1:58 65%

levels of order details

data extraction for all 4:49 0:35 88%

material movements
transactions
costs roll-up (materials, 3:18 3:12 3%
royalties, and transportation)

Material management transac- 3:00 0:43 76%

tions creation based on inventory
transactions

Financial journal entries creation 2:37 0:40 75%