Dells Supply Chain

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DellsSupply ChainE-Commerce

Onur Eren Sürgit Deniz Utku
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Company Background

• Founded in 1984, by Michael Dell
• Headquartered in Austin, Texas
• Worlds No. 1 computer systems company
• Founder of Direct Sales for computer systems
• Only PC manufacturer that still makes a profit
  from PC sales

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Background

• Became global with an expansion to the UK in 1987
• Now have global locations in
• Europe
• Asia-Pacific
• South America
• Australia
• Middle East Africa
• 13 percent of the global PC business, 40 percent
  over the next several years

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Business Model

• Build-to-Order System
• Value Stream
• For Buyers-
• Reduced product search
• Tailored to buyer based purchasing type
• Customization
• Financing

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Business Model

• Value Stream
• For Sellers-
• Reduced inventory cost
• Reduced sales force cost
• Reduced business transaction cost

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Business Model

• Revenue Stream
• Increased revenue over BM companies
• Increased revenue based on tailoring to customers
  wants
• IS solutions
• Outreach supply chain services

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Business Model

• Logistical Stream
• All integration between Dell suppliers
• On-line supply forecasting
• Position manufacturing centers in proximity to
  suppliers
• 3rd Party Logistics for shipments

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Supply Chain Management

• Definition
• Managing the events that occur in the process of
  moving goods from the customer order through the
  stages of the products completion.

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Analysis of Dells Supply Chain

• Customer-linked Supply Chain
• Make-to-Order
• Ties close relations with customer
• Easy-use Internet Sales
• Convenient
• Visually Friendly
• Customized Consumer Web Pages

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B2B

• Allows suppliers and buyers to interact in
  virtual communities
• Direct buying and selling on-line
• Direct forecasting for suppliers
• Immediate response to transactions

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Pre-Dell E-Commerce

• Customer orders were handled by a procurement
  staff
• Suppliers were contacted via e-mail, phone, or
  fax
• Critical suppliers utilize Supply Logistic
  Centers (SLCs) / HUBS near Dell Factories

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Supply Chain Integration

• Dell uses e-commerce B2B technologies to enhance
  production efficiencies (TradeMatrix and
  WebMethods)
• Vendor relations TradeMatrix
• Seamless solutions to material requirements
• Created a paperless process and a single
  recording system
• Privacy between partner relationships
• Global forecasting solutions
• Long-term materials requirements
• Worldwide view of supplies necessary at all Dell
  Locations

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Production Efficiency

• Production doesnt begin until order is placed
• Order only 2-4 hours of inventory
• Parts delivered to Work staions where assembly is
  completed
• Product is tested
• 15 hour time lapse from time customer clicks
  Buy to time order is shipped
• This leads to lower cost

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E-Commerce System

• The Challenge
• Customers have their own purchasing systems
• Integrate Dells order processing with their
  customers purchasing system

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E-Commerce System

• The Solution
• B2Bi Solution Suite
• Able to collaborate in real time with buyers
• Transferring e-business knowledge to customers

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Bullwhip effect
Dell eliminates wholesaler and distributors
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E-Commerce System

• The Results
• Increased efficiency and margins
• Dell.B2B.com
• Customer-Specific Solutions
• Disadvantages
• Higher shipping costs
• No economy of scale

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What sets Dell apart

• Price for Performance
• Efficiency in procurement, manufacturing, and
  distribution higher quality products at comp
  prices
• Customization
• Built to customers unique order
• Reliability, Service and Support
• Gains information from customers before and after
  sale to provide the customer with superior
  customer service
• Latest Technology
• Is able to turn over inventory every five days on
  average which reduces excess of inventory
• Superior Shareholder Value
• Stock has appreciated about 29,000 percent since
  Dells initial public offering in June of 1988

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Questions???