Customer places an Order (By phone or through the Internet on www.dell.com) Dell processes the order Financial evaluation (credit checking) Configuration evaluations (checking the feasibility of a specific technical configuration) Sends the order to assembly plant (any one in Austin, or any other) Plants build, test & package the product (about eight hours) Dell typically ship all orders (no later than five days after receipt) www.a2zmba.com 2-3 days through General rule for production is first in, first out SUPPLIERS REVOLVERS CUSTOMERS
www.a2zmba.com Build-To-Order Model Value Chain Program Revolver or SLCs (Supplier Logistics Centers)
i2 technologies software enables Dell to monitor the supply position of every part
www.a2zmba.com On a high level, the supply chain process is comprised of two steps: 1. Planning – which involves getting the needed materials positioned at SLC’s near the appropriate Dell factories. 2. Execution – which involves having the right materials on and at the factory to build each customer’s order.
This process frees Dell from having to manage inventories and the costs associated with them.
The component inventory reduced from seventy days to thirty to forty days, then to twenty days, then to nearly zero.
Returns grew disproportionately as the carrying costs and obsolete stock is avoided.
Saves enormous amounts of money on purchasing components because the component prices drop by 3 percent per month.
Reduces handling cost. Common factors that drive up holding costs include opportunity costs, increased rent required for the space of the inventory, higher premiums to insure the inventory, and cost of obsolete goods.