dell's supplay chain management

AHND‐EHND‐SCM–FirstAssignment S11‐2011

BassamBadran,Ph.D. Page1

Syrian Virtual University (SVU) Semester S11 for 2010-2011

High National Diploma (HND)

In Computing and Business Application

Course: Supply Chain Management (SCM)

Assignment One – Singular

Unit Supply Chain Management Subject HOW DELL IS MANAGING ITS SUPPLY CHAIN Writer Bassam Badran IV Nada Ghneim Date of delivery 15-9-2011 Due date (submittal) 10-10-2011 Grade 20% References Compiled from several articles in Business Week

(1997 through 2001); cio.com (2001); dell.com, accessed March 27, 2003; Hagel (2002).

1. Principals and Reasons

In this project you would understand the concept of managing the supply chain in Dell Computer Company.

2. Results

Dell Supply Chain Components.

Knowing SC elements The strategy of the company.

Explain the knowledge of using the IT and E-commerce over the net in

accelerating the delivery of Dell Computers. Operations that Dell used to regain the market share. Processes such as CRM that helped in the integration of different

part of SCM and Value Chain Networks.

Explain how the strategies taken in organizing, developing and maintaining successful supply chains:



Defining suitable strategies in developing better sales and customer satisfaction.

Submitting useful information in on how we can add value with every part of the supply chains.

Defining the operation management:

o Explaining the importance of information technologies and its effect on the transaction in the supply chain management.

o Suggestions on how we could increase our service to our customer.

3. Summary

Writing a good report with no more than 2500 words. Understanding the problem that Dell faced. Finding the right answers such as integration and e-commerce in

regaining the market.

4. Personal Skills Development

The personal skills that you are going to develop in completion of your

project are:

Developing required skills: How to plan your time schedule so you could submit report in time.

Problem solving and management skills: using different resources such as internet, newspapers, and magazines.

5. Grading System

Passing Grade (P): In order to pass this project you have to prove that you can understand and define what were the problems and the solutions at Dell Company. Merit Grade (M): You have to submit a detailed report on the supply Chain at Dell Company and the effects of integration and IT technologies used. Note: You have to fulfil the passing grade in order to get merit grade. Distinction Grade (D): You have to define the effect of using newer technologies at Dell Company by doing more research. Note: You have to fulfil the merit grade in order to get the distinction grade.



Passing grades (50 points):

1. Listing all the actions taken by Dell to improve its supply chain and facilitated by IT (10 points)

2. Divide the actions in question 1 into the upstream, downstream, and internal parts of the supply chain (20 points)

3. List the collaborative actions with business partners in this case (10 points). 4. Maintaining efficient supply chain at Dell (10 points).

Merit grades (30 points):

1. Expanding on passing grades items with more detailed information and reasoning (15 points).

2. Writing a professional and effective report (15 points). Distinction Grades (20 points).

1. Showing research elements and analysis (10 points). 2. Detailing the points of the report in professional manner (10 points).

Project Due Dates. The due dates for the project are as follow:

- Submittal date to students: 15-9-2011 - Last day to hand in you project is: 10-10-2011

Note: Assignments has to be uploaded on the ISIS. No grading for the assignments that will be sent by emails or any other means. Please try to upload before time to be safe.

6. Case Study: How Dell is managing its supply chain.

The Problem

Michael Dell started his business as a student from his university dorm by using a mail-order approach to selling PCs. This changed the manner in which PCs were sold. The customer did not have to come to a store to buy a computer, and Dell was able to customize the computer to the specifications of the customer. The direct-mail approach enabled Dell to underprice his rivals, who were using distributors and retailers, by about 10 percent. For several years the business grew slowly, but Dell constantly captured market share. In 1993, Compaq, the PC market leader at that



time, decided to cut prices drastically to drive Dell computers out of the market. As a result of the price war, Dell Computer, Inc., had a $65 million loss from reduced sales and inventory write downs in the first 6 months of 1993 alone. The company was on the verge of bankruptcy.

The Solution Dell realized that the only way to win the marketing war was to introduce fundamental changes, termed business process reengineering, in its own business, and along the supply chain from its suppliers all the way to its customers. In addition to competing on price and quality, Dell started competing on speed. Since 2000, if you order a customized PC on any working day, the computer can be on the delivery truck in 2 to 3 days; a complex, custom-made PC will be delivered in 5 days or less. Among the IT-supported innovations were the following.

Dell uses a mass customization approach to production. Though the approach

wasn’t a new one, Dell was the first to use it in making and selling computers.

Dell builds many computers only after they are ordered. This is done by using just-in-time manufacturing, which also enables quick deliveries, low inventory levels, little or no obsolescence, and lower marketing and administrative costs.

Component warehouses, which are maintained by Dell’s vendors, are located within 15 minutes of Dell factories. Dell gets components quickly, and it can get components that are up to 60 days newer than those of its major competitors by using Web services.

Most orders from customers and to suppliers are placed on the Web.

Shipments, which are handled by UPS and other carriers, are all arranged

electronically. Dell collaborates electronically with its major buyers to pick customers’ brains

for new product ideas.

Dell’s new PC models are tested at the same time as the networks that they reside on are tested. This cooperation with other vendors reduced the testing period from 60 or 90 days to 15.

Using the Internet, Dell’s employees constantly monitor productivity and rate of return on investment (ROI) on all products.



Most significant for Dell has been the emergence of electronic commerce. In 2003, Dell was selling more than $8.0 million worth of computers each day on its Web site, and this amount was growing by an unheard of 6 percent per month. In 1999, Dell added electronic auctions (dellauction.com) as a marketing channel. Dell’s goal is to sell most of its computers from its Web site (dell.com). In addition to computers, Dell sells servers, printers, and other hardware. Dell frequently is cited as an example of a top customer relationship management (CRM) provider. The e-CRM activities are integrated electronically with customers’ ordering and order fulfillment. For example, customers can track their orders online to see if the computers are in production or already on the shipping track. They also can access detailed diagrams of the computers and get information about troubleshooting. By using viewer-approved configurations and pricing for its customers and by eliminating paperwork, Dell has been able to cut administrative process expenses by 15 percent. In addition, Dell created customized home pages for its biggest corporate customers, such as Eastman Chemical, Monsanto, and Wells Fargo. These sites, known as Premier Pages, enable customers’ employees to use Dell’s provided configuration and workflow software to design computers, get an order approved inside the client organization, and place orders quickly and easily. These employees also can order PCs for their own homes and receive the corporate price. The electronic ordering makes customers happy, but it also enables Dell to collect payments quickly. After orders are received, they are transferred electronically to the production floor. Intelligent systems prepare the required parts and components list for each computer and check availability. If they are not in stock, components are ordered electronically directly from suppliers, which can sometimes deliver in less than 60 minutes. Dell uses several other information technologies, including e-mail, EDI, video teleconferencing, electronicprocurement, computerized faxes, an intranet, DSS, and a Web-based call center. Computerized manufacturing systemstightly link the entire demand and supply chains from suppliers to buyers. This system is the foundation on which the build-to-order strategy rests. Dell also passes along data about its defect rates, engineering changes, and product enhancements to its suppliers. Because Dell and its suppliers are in constant communication, the margin for error is reduced. Also, employees are now able to collaborate in real time on product designs and enhancements. In turn, suppliers are required to share with Dell sensitive information, such as their own quality problems. It was easy to get suppliers to follow Dell’s lead because they also reap the benefits of faster cycle times, reduced inventory, and improved forecasts.



In addition, Dell uses the Internet to create a community around its supply chain. Dell’s corporate portal has links to bulletin boards where partners from around the world can exchange information about their experiences with Dell and its value chain. In 2000, Dell was a first mover to the use of Web services to expedite communication between its manufacturing plants and its vendor-managed hubs and parts’ suppliers. (See Hagel, 2002.)

The Results By 2000, Dell had become the number-one PC seller. It is considered one of the world’s best-managed and most profitable companies. The Web services system alone reduced in-plant inventories by about 85 percent and vendors’ inventories by 10 percent to 40 percent (Hagel, 2002).

Sources

1. Business Week (1997 through 2001).

2. Cio.com. “Supply Chain Integration: The Name of the Game Is Collaboration.” CIO Magazine, November 1, 1999, special advertising supplement.(2001).

3. dell.com, accessed March 27, 2003.

4. Hagel, J., III. Out of the Box. Boston: Harvard Business School Press, 2002.

dell's supplay chain management

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