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DELL SUPPLY CHAIN MANAGEMENT
Transcript of DELL SUPPLY CHAIN MANAGEMENT
Which are the Golden Rules of Dell
Golden Rules of Dell
Reason behind Zero Inventory
Computers depreciate at a very high rate. Sitting in inventory, a computer loses a lot of value
for every 7 days a computer sits in Dell’s warehouses, it loses 1% of its value
“The Zero Inventory Strategy”
Dell follows the Build-to-Order strategy for selling PC’s.
The reason for Dells success in inventory management is due to the strategy of having low or “Zero Inventory”.
Dell required all its suppliers ready for any raw materials orders at any time
Low maintenance cost
Low risk of inventory
Reflected on Dell Financial Performance
Dell built a strong and effective sales force channel for its products
used media and Internet to sell directly
eliminate intermediate distributers
reduced the product price and made Dell more competitive
simplified the supply chain and made it easier to control
Global Supply Chain Efficiency
Which is the transformational challenge in DELL
The right product according customer needs that ensures compatibility with guidelines & laws with low cost and high quality
Uninterrupted supply due to synergy work
Output per work order
Assured purchase (produce what is going to be sell)
Zero inventory: Dell receives the exact material every two hours to full fill customer orders
Dell factories only have 7 hours worth of inventory
Six production unit:
Austin, texas USA
Nashville, Tennessee USA
El dorado do Sul BRAZIL
Cost: the direct sales and build to order in crease the return on investment
Cash: Negative Cash Conversion(receive pay for product before pay for material)
CRM (Direct customer relationship)
Demand Forecast and ship products base on that
Everyone working in logistics must remember that their job is to select, procure, store, or distribute products to meet customer needs
Supply on demand every 2 hours
Taken by internet or phone
Internal storing in the manufacturing plant
Merging centres combine all finished product to order
INTERNAL DELL SUPPLY CHAIN
Measuring the lead time of the outbound products
Why DELL needs the SCM?
OPPORTUNITIES IN SCM
*Carbon Disclosure Project
*Management of working hours
Corporate responsibility performance evaluation tools
Requirements of DELL to suppliers
Dell focuses on capability building and hosts multiple supplier workshops each year .
DELL -> World Class in SCM
Type of inventory : Cycle
6 days Cycle Inventory
On hiring people to track
Higher profit margin
Not just one product.
Decisions are dependent with suppliers orders.
Costs of order are not constant.
Know as ZERO INVENTORY in Dell
Cut down costs avoiding
Dell reacts to customer orders.
Demand activate production of computers.
JIT System in DELL
Line Flow Strategy
Global management phylosofy
management in all manufacturing build to order
production parts as needed
scheduling of inventory movement by the internet
“Zero inventory” strategy
(-) Inventory costs (Out-of-stock costs, Carrying costs and Procurement costs).
Demand and supply
Production and demand for Dell
NO EXTRA UNITS.
Forecasting is needed to keep low inventory level.
Produced what is already ordered.
Tools for Inventory Control
EOQ, ROP and Sawtooth Model.
Anticipatory Inventory Control and Response-based System.