Dell 2009

International Supply Chain

Case Study

Group4

Ray Silvia Tiger

Lois Yang

Lucy

Present

DELL INC. IN 2009

Presentation Outline

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• Introduction of Dell • Key factor of success• Emerged Problem • Reactive actions• Evaluation• Transferable practice• Recommendation• Today’s Dell

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1984 •The establishment of the Dell company.

1992 •Dell suffered its first major setback then built a senior management team.

1994 •Dell launched Dell.com, with support information with price guides

2000 •First acquisition (To complement hardware sales) and achieve No1 PC firm in U.S at same year.

2001 •The number-one firm in global market share.

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Milestone of Dell INC.

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Game: piece 1

Customer can choose colors, Hard-drive, style of computer etc.

Dell can use standard components to meet customers’ specification.

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Game: piece 2

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• Customer order pull• kitting

Within 1 hour

• Final testing& labeling

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Game: piece 3

36 hours: whole process from customer order to loading onto a delivery truck.

Game: 3 pieces

standard components to meet

customers’ specification.

36 hours: whole process from

customer order to loading onto a

delivery truck.

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Game: PUZZLE

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Did YouGet it?

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Key Factors of Success

Direct sales business model Superior

relationship with suppliers

Build-to-orderSystem

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Direct Sales Business Model

Cut Cost

Delivery exactly

customer wantsBuild customer

relationship

Avoid Bull-whip Effect

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Build-to-order

Just in time (JIT)

Minimize the inventory cost

(logistic)

Achieve Effective Demand

Management

Lean Production

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JIT Inventory System

Extranet

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Superior Relationship with Suppliers

1. Efficiently meet inventory

requirements 2. Maintain low

cost3. Transfer uncertainty to

suppliers

1. Dell encourage suppliers use the website to track the orders and

inventories.2. Real time

information sharing with suppliers3. Facilitate JIT

inventory system11 of 35 The power to do more

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Direct

Sales

Model

Built-to-Order

Built-to-Order

Supplier Integration

System

Synergy between All Competences

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2002 •Dell's’ revenue fell, Dell Direct store appeared (shopping malls) in US.

2003 •Changed company name from Dell Computer Corporation to Dell Inc.

2004 •Kevin Rollins became CEO.

2006 •Losing share to HP, Apple and other vendors.

2007 •Michael Dell returned as CEO.

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Milestone of Dell INC.

UnderperformanceChanges Evaluations

Exiting Low-end Market

Increasing customers’ uncertainty

Fierce

Competition

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EXITING LOW-END MARKET

Sell Low Dimension Models InWal-Mart + Re-capture

neglected market

- Lower profit margin to intermediaries

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INCREASING CUSTOMERS’ UNCERTAINTY

1. Launched XPS series and low Dimension Models

+ Design, entertainment and overall product features are enhanced+ Reach broader market

- Existing competition

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INCREASING CUSTOMERS’ UNCERTAINTY (CON)

2. Separate design department into:

• Commercial• Consumer

+ Intra-firm cooperation facilitates information flow+ Specified divisional goals

-Potential conflicts of divisional interests

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3.Modified Manufacturing Model:• High-volume• Less

configuration• Time-to-

market4.Introduction of retailers

+ Expand service offering more than online order

Later analysis

INCREASING CUSTOMERS’ UNCERTAINTY (CON)

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FIERCE COMPETITION

PRICE FEATURES

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PRICE COMPETITION

Improving Technologies

Decreasing Manufacture Cost

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PRICE COMPETITION

Outsource Manufacture

Standardized Products

$3 Billion cost saving plan

1. Lower SC uncertainty2. Cut management cost

1. Economy of Scale2. Higher level of efficiency

General cost saving

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1.Redesign supply chain to optimize global manufacture

2.Cut down development time

3.Reduce compensation and benefit costs

4.Improve productivity and tighten discretionary spend

PRICE COMPETITION

Outsource Manufacture

Loss of power

Loss of competitive knowledge

Long negotiation and relationship building process

Objective conflicts

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PRICE COMPETITION

Standardized Products

Lower responsive

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PRICE COMPETITION

$3 Billion cost saving plan

Wide range of potential problems

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FEATURE COMPETITION

DELL

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FEATURE COMPETITION

Introduction of Retailers

Introduction of new product line

1. Reach customers easily & match their consumption behavior 2. Increasing sales

1. Wider range of products 2. Meet different customers’ need

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FEATURES COMPETITION

Introduction of Retailers

Decrease margin per unit sold

Bullwhip effect

Loss of core competency

New relationship

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FEATURE COMPETITION

Introduction of new product line

Existing competition

Increasing cost

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TRANSFERABLE PRACTICE

Separation ofDesign Departments into

Consumer

Commercial

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3. Education Factors

1. Interoperability of component

2. Focus on Developing Countries

4. New System and Network Building

Recommendation

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Recommendation

Match customer

needs based on

Postponement

Match Consumption

Behaviour

2. Focus on Developing Countries Point

of Differenti

ation

Recommendation

AutoCAD

for

Architecture

students

Provide Discounted Software

3. Education Sectors

SAS or SPSS

for

Satistics

students

Myob System

for Accounti

ng students

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Gain info of

inventory from

manufactures

Dell inc. Pass to

Retailer ‘s

reaction

Sales Info. From Retailer

Dell’s Demand Forecast

Supplier’s React to Forecast

Recommendation

4. New System and Network Building

4. New System and Network Building

Conclusion WHAT LESSONS we CAN learn

Matching its own products with the markets and costumers' needCompetitive strategy and supply chain strategy work together

Strategy FIT

Supply chain strategy should be reactive to environmental change

CHANGE

Advancement of relationship and networking

Relationship

Maintenance

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What Dell’s Doing NowBy 2011, the company has its best solutions portfolio ever and celebrates the largest single-year revenue increase in company history.Acquire Perot Systems and launch a new business called Dell™ Services that gives customers end-to-end IT services to help lower their total cost of IT ownership.Introduce Adamo and Latitude™ Z laptops — both the world’s thinnest laptopsenters the tablet arena with the Streak, a 5-inch device designed to provide the best on-the-go entertainment, social connection and navigation experience.Acquisition of Boomi®, Exanet, InSite One®, KACE™, Ocarina™ Networks, Scalent™ and Compellent®Further proof of our commitment to providing end-to-end IT solutions for our customers, we commit $1 billion to develop Dell data and solution centers around the world and open R&D centers in Israel and the U.S.

2009

Present

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THANK YOU

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Q & A

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