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com

DELL COMPUTER CORPORATION.

1984 by: Michael S. Dell : (19) 1000$ : todaY,Chairman and CEO of a NOW worth
$58.2 BN Co.
Vice Chairman and CFO Donald J. Carty Jr.
Company headquartered in Round Rock, Texas U.S.A
Fastest growing - By 1999, Dell had become the No.1
PC seller in the U.S & number two worldwide.
2001, became the No. 1 computer systems company in the world.

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 Major competitors in the PC market are Compaq, IBM

and Hewlett-Packard.

AWARDS AND ACCOLADES.

Largest direct seller - bypassing retailers , thereby

avoiding the delays and costs of an additional stage

in the supply chain

Speciality customers specification.

Eg: customers could choose a color Mitsubishi monitor,

an extra powerful Intel
microprocessor and a host
of other options according to their choice

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Best of 2003 Service and Support

Site. (Computer Shopper Magazine,
February 2004)

Customer segments :

Relationship
(large corporate)
Home and small business
(sometimes called transaction customers)
Public sector customers
(government and educational)

The Co. receives 1 order every 5

seconds (approx.)

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2006 Sales (mil.)

$55,908.0

1-Year Sales Growth

13.6%

2006 Net Income (mil.)

$3,572.0

1-Year Net Income Growth

17.4%

2006 Employees

66,100

Dells product line

Desktop computers
Notebook computers
Network servers
Workstations

DESIGN CENTRES: ONLY 5

1. _ _ _ _ _ _ _ _
2.
3.
4.
5.

Storage products
Swicthes

Austin--- the largest

Shanghai
Singapore
Taiwan

Software Peripherals
Dell offers a total of 1.6 million different

possible product configurations for all its

product lines.

MAJOR SUPPLIERS
MICROSOFT

-for windows,
windows NT
operating system
INTEL-for micro processors
SONY- for monitors
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DELL -- BANGALORE

DELL CAME TO INDIA IN THE YEAR 1996.

FIRST CITY BANGALORE.
5 DESIGN CENTRE AT BANGALORE.
RETAIL OUTLET
first INDIAN CUSTOMER CONTACT CENTRE.( out of 50 in the world) followed
by a similar centre in Hyderabad 2003. Mohali 2005 and Gurgaon.
13,500 employees in India
3000 employees at the bangalore and hyderabad facilities.
The Company intents to open new offices at Pune, Kolkata and Mumbai.
NO ASSEMBLE LINES IN INDIA,SYSTEMS ARE SHIPPED FROM MALAYSIA.
Takes the Co. 10-15 working days to deliver the products to Indian customers.
ROI MALHOTRA, Dell Indias head of operations
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DINESH PAI - GM

KEY TO SUCCESSMINIMUM INVENTORY!

BUILD-TO-ORDER MODEL
DIRECT TO SELL

INVENTORY MANAGEMENT.

i) Just-in time inventory management

- 3 days.
ii) Focus on speed of inventory delivery process
MICHAEL DELL 8 days of inventory competitors 40 days, if intel comes out with a new
700 mega hertz chip,iam going to get that new chip to the market 32 days sooner
if the cost of material goes down ,u have got a big cost disadvantage
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INVENTORY
MANAGEMENT

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SUPPLIERS

Customer
places an Order

REVOLVERS

2-3
days

Dell
processes
the order

(By phone or
through the
Internet on
www.dell.com)

Sends the order

to assembly
plant
(any one in Austin,
or any other)

Plants build,
test &
package the
product
(about eight
hours)

through

Configuration
evaluations

Financial
evaluation

(checking the
feasibility of a specific
technical
configuration)

(credit
checking)

General rule for production is first in, first out

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Dell typically
ship all orders
(no later than five
days after receipt)

CUSTOMERS

Revolver

Build-To-Order
Model

or SLCs (Supplier
Logistics Centers)

Value
Chain
Program

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Dells Inventory Management

Build to order
In contrast to others who produce to stock, dell first receives

the order and the money and only then starts to build, using
that money to purchase from supplier

Therefore there is customization of products for each and every

customer.

While other companies had to guess, DELL knew exactly what

its customers wanted before manufacturing the product

Others had to maintain inventory as there existed middlemen,

so to support

reseller and retail channels.

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Revolvers (for revolving

inventory)
Material
Supplier

Transfer

Manufacturing

Factory / Merge
Center

(SLC)
Warehouse

To compensate for long lead times & buffer against demand variability,

Dell requires its suppliers to keep inventory on hand in the revolvers.

Revolvers or supplier logistics centers (SLCs) are small warehouses

located within a few miles of Dells assembly plants.

Each of the revolvers is shared by several suppliers who pay rents for

using their revolver.

Dell does not own the inventory in its revolvers; this inventory is owned

by suppliers & charged to Dell indirectly through component pricing.

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Lean Inventory Model

3 days of inventory - Inventory turns of 122 per year
Suppliers
Revolvers
(SLCs)

Dell Factory

Delivery

Local Suppliers

Supplier Owned

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Dell Owned

Customer

DELLS Inventory Model..

The inventory in the revolvers is called revolver inventory
The revolver inventory plus any inventory ordered but not yet

delivered is called system inventory

The average requirements during replenishment lead time is

called pipeline inventory

Safety stock protects against variability of demand during

lead time

To help suppliers make good ordering decisions, Dell shares

its forecasts with them once per month

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DELLS Inventory Model..

Dell has a special vendor-managed-inventory (VMI)

arrangement with its suppliers

Suppliers decide how much inventory to order & when to

order while Dell sets target inventory levels & records suppliers
deviations from the targets.

Suppliers decide when to send their goods to their revolvers. In

practice, most suppliers deliver to their revolvers on an average

3 times a week.

Dell withdraws inventory from the revolvers as needed--on

average every two hours.

It uses a quarterly supplier scorecard to evaluate how well each

supplier does in maintaining this target inventory in the revolver.

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I2 TECHNOLOGIES
i2 technologies software enables Dell to monitor
the supply position of every part

On a high level, the supply chain process is comprised of two steps:

1. Planning which involves getting the needed materials
positioned at SLCs near the appropriate Dell factories.
2. Execution which involves having the right materials on
at the factory to build each customers order.
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and

DELLS Inventory Model..

Value Chain Program
Value Chain is intended to extend Dells successful direct-sales

approach back into the supply chain

The goal of it is increasing the speed and quality of the information

flow between Dell and its supply base

The portal, valuechain.dell.com acts a secure extranet for Dell

suppliers to collaborate in managing the supply chain

Dell envisions using this site to exchange with suppliers current data,

forecasted data, new product ideas, and other dynamic information

It also provides suppliers a customized view of their materials at Dell.

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SUPPLIERS SELECTION AND

EVALUATION
SELECTION
i.
Quality
ii.
Price
iii. Delivery
iv. Response to feedback.
EVALUATION-to measure performance uses suppliers score

Cost

Delivery

Availability of technology

Velocity of inventory

Ways in which they did business with dell over the

internet.

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ADVANTAGES
This process frees Dell from having to manage inventories and the

costs associated with them.

The component inventory reduced from seventy days to thirty to

forty days, then to twenty days, then to nearly zero.

Returns grew disproportionately as the carrying costs and obsolete

stock is avoided.

Saves enormous amounts of money on purchasing components

because the component prices drop by 3 percent per month.

Reduces handling cost. Common factors that drive up holding

costs include opportunity costs, increased rent required for the

space of the inventory, higher premiums to insure the inventory,
and cost of obsolete goods.
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