Dell's I 2 Supply Chain System example essay topic

THE SUPPLY CHAIN OF DELL COMPUTER INTRODUCTION Appealing to exactly what the customer wants would ultimately be an ideal organisational objective for a business entity if it is aiming for profits. And being able to do it without an additional cost to the customer, would be too good to be true! This however, is actually the edge for Dell Computer when it took the computer industry by storm with its direct model distribution and build-to-order manufacturing. And amazingly, Dell's prices are very competitive, in fact, cheaper than most of its competitiors' off-the shelf models! Not surprisingly in 2001, Dell emerged as the number 1 computer systems company in the world and earned the number 7 spot on the Fortune magazine list of the world's most admired companies (ZDNet India, 2002).

So, what can the secret be for this infant computer company to be able to offer such 'ideals' to customers? To a large extent, Dell's supply chain configuration and operations has a major role to contribute to this capability. Dell's supply chain is chosen to discuss the issue in this assignment because of its compelling role in contributing to Dell's outstanding performance in a highly competitive industry. This essay will examine the unconventional structure and design of Dell's supply chain as influenced by the nature of products and services offered by Dell.

In addition, the mensurability of the performances of these supply chain design will also be addressed. DELL'S PRODUCTS AND THE BUSINESS ORIENTATION Having positioned itself as one of the leading world-class computer corporation over a relatively short period, Dell's main product categories are typically: o servers, storage and networking o notebooks and desktops o printers o handheld products o software and peripherals, and o related services. This product range serves virtually any computing need of the industry and home customers globally. Dell builds customised systems as ordered by customers and delivers them in a few days - to their doors, across the globe, and in the way they wanted it.

To do this, there is a critical link all the way from its materials and component suppliers extended to the customer. Dell has manufacturing facilities in each of its four worldwide operational regions: the Americas region, the Europe, Middle East and Africa region, the Asia -Pacific and Japan region, and the China region. The advent and proliferation of the internet made Dell's business model a perfect fit. Customers make their queries, selection and orders online. And this kind of supply chain management, maintaining high level of speed and service demanded from consumers has to be the cornerstone of Dell's corporate success in the competitive world of high-tech.

DELL'S SUPPLY CHAIN The Challenge. Dell has to achieve global, end-to-end supply chain visibility and management, to enhance its supply chain process for efficient materials management, improved inventory planning, forecasting and execution. In addition, inventory levels in its factories has to be reduced from days to hours. On top of these, transactions have to be online and real time. Imagine the criticality of a component in a computer system used by air traffic controllers. Should the system go on a blink, the results can be devastating.

And systems like this will not wait for days to be restored to perfect working conditions. The Solution. Physically, materials needed are in close proximity to Dell factories, meaning, suppliers have their Supply Logistic Centres or hubs near the manufacturing plants. Procurement of inventories from these suppliers are done over the web in real time and materials are 'pulled' into the factories every two hours based on orders.

The overall process is comprised of two steps: planning - involves getting the needed materials positioned at supplier hubs near the appropriate factories execution - which involves having the right materials on hand at the factories to build each customer's order Dell employs the i 2 Supply Chain software as the system tool for its supply chain processes. This is illustrated below (Dell Corp, 2001): Report Users Supply Chain Planning Users Factory Planner Users Real-time Access And Transactions The Planning module of the i 2 system is deployed region-by-region while the Execution module is on all factories. This provides a global view of the long and short-term materials needs in each Dell factory. Since every link in the chain is connected, every participant is working with accurate and timely information. This means that the supply chain operations are based on facts rather than forecasts, thereby reducing waste, improving efficiency and responding immediately to customer needs (ZDNet India, 2002).

A typical structure of the processes in the planning and execution module of i 2 is as illustrated: Execution with i 2 Planning with i 2 The i 2 software solution has enabled Dell to gain global visibility of its entire supply chain and by sharing these data with its suppliers, a collaborative value chain is created. The i 2 system, suppliers' collaboration and the global visibility had promoted Dell to achieve 90 percent of its direct material supplies online. Dell used to work with more than 1000 suppliers. And with the i 2 and valuechain. dell. com, that number is now reduced to about 100. User End Customer Service. Dell initiated the 'direct to courier hub' model with an express company for shipments that fit the courier profile.

To support large business customers who require time definite delivery schedules or customer specific software integration, Dell employs the 'Delivery Plus's ystem. This is Dell's answer to the value-added services traditionally handled by resellers (CTL, 1999). The direct ship to courier allows the realisation of compressing cycle time for delivery. And by removing 'touches' that do not add value to the distribution process, cost is further reduced. Field Service parts aspect of the supply chain is handled by another courier organisation.

Service parts are managed and warehoused at strategic locations. This is complemented by Dell's 'Critical Care' response available in large business centres, which is designed for businesses that cannot sustain a systems shutdown for lengthy periods (CTL, 1999). Typically, when the customer calls, Dell diagnosed the problem over the phone and despatch its service provider to pull the required parts from the inventory and go directly to the customer site for the service. Dell also created a recommended stocking list for each customer installation to ensure that each part failure is met within the small service window. THE E-COMMERCE EDGE E-Commerce has realised most of the supply chain processes' efficiency and accuracy. Real-time web-based reporting, inventory management based on facts, and custom-built operations planner had maximised both, operational efficiency and customer satisfaction and at the same time responding immediately to changes in the marketplace.

Dell's supply chain tools have gained the cost-effective, flexible solution it needs to sustain a global competitive business edge in its operations. MEASURING THE PERFORMANCES Contrary to the perceived complications of computer networking, Dell's supply chain management had proved eminently decisive and accurate to support management and business decisions. Due to the massive computer applications, most of the business processes are indeed measurable and readily made 'visible'. This is vindicated by the achievement of global visibility, reduced operations and action time, accurate and timely forecasting, and reduced inventory at the factories.

These capabilities have in turn reduced waste, improved efficiency, eliminate multiple handling and offer the ability for immediate response. Backed by a huge and reliable database, Dell's i 2 supply chain system, valuechain. dell. com and the various subsidiary systems had leveraged Dell's overall performance to be in the lead over a short period of time. CONCLUSION Dell's supply chain management had shortened the cycle between the component, the manufacturer and the end customer (ITAC, 2001). Not only that, the system had even led to changes in the workplace like administrative and purchasing staff now filling up roles as supplier relationship managers. They can step in if a human touch is needed to resolve delays, invoice discrepancies or quality concerns.

Eventually, enhanced relationships with suppliers and appealing to customers are but the fundamental ideals for business sustenance. Investing in a sophisticated, worldwide supply chain system is perhaps the competitive edge for Dell. Its supply chain infrastructure has proven to be a cost-effective solution for a high-volume, high-growth global company (Dell Corp, 2001). Looking at the developments now, this must be the way of supply chain for the future.

Bibliography

Dell Corporation, (Dec 2001) 'Dell's Supply Chain: Improving on a World-Class Process', web (05 Apr 2003).
Information Technology Association of Canada (ITAC 2001-2003), 'Dell Computer Corporation - Best Practice Case Study', web (05 Apr 2003).
Canadian Transportation and Logistics (CTL), (Nov / Dec 1999), 'Built for Web-based Sales, Build-to-Order PCs, and Direct Distribution Make Dell's Supply Chain the Cornerstone of its Business', web (03 Apr 2003).
Dell Corporation, (2001), 'Dell's Supply Chain', web (3 Apr 2003).
ZDNet India (2002), 'Dell: Building a World-Class Supply Chain', web (03 Apr 2003).
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