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Dell Slides

  1. 1. Supply Chain Excellence
  2. 2. Dell’s Product Portfolio PowerEdge Servers PowerVault & Dell|EMC Storage OptiPlex Desktops Latitude Notebooks Software & Peripherals PowerConnect Switches Precision Workstations
  3. 3. Dell Facts ~80% Corporate & Institutional ~20% Consumer Customer Base (Revenues) Revenue by Region 70% Americas 11% APAC 19% EMEA Global Manufacturing <ul><li>Austin, Texas, USA </li></ul><ul><li>Nashville, Tennessee, USA </li></ul><ul><li>Eldorado do Sul, Brazil </li></ul><ul><li>Limerick, Ireland </li></ul><ul><li>Penang, Malaysia </li></ul><ul><li>Xiamen, China </li></ul>~41,800 employees worldwide Revenue $38.4B (last 4 qtrs.) <ul><li>Revenue by Product </li></ul><ul><li>Desktops = 51% </li></ul><ul><li>Enterprise = 21% </li></ul><ul><li>Notebooks = 28% </li></ul>
  4. 4. Suppliers Customers Direct Model <ul><li>Continuity of Supply </li></ul><ul><li>E-business Collaboration </li></ul><ul><li>Technology Leaders </li></ul><ul><li>Low-cost Manufacturers </li></ul><ul><li>Best Customer Experience </li></ul><ul><li>Low Cost Efficiency & Highest Quality </li></ul><ul><li>Partnering/Virtual Integration </li></ul><ul><li>Product Quality </li></ul><ul><li>Price for Performance </li></ul><ul><li>Customization </li></ul><ul><li>Reliability, Service and Support </li></ul><ul><li>Latest Technology </li></ul>
  5. 5. The Power of Virtual Integration <ul><li>Dell acts as the single point of accountability while focusing on our core competency – custom-configured computing solutions. </li></ul><ul><li>Seamless integration with best-in-class partners leverages their core competencies for the benefit of Dell’s customers. </li></ul>Software E-Business Services Technology BLUECURRENT EMC² SOLUTION Customer
  6. 6. Inventory Management Experience 1991 0 50 100 Days Sales Inventory 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Q103 10 20 30 40 60 80 70 90 5 15 X                   
  7. 7. Procurement Responsibilities…. Separating contracting from commerce Cost Quality Delivery Worldwide Procurement Regional Materials Shared responsibility
  8. 8. Continuity of Supply Execution Planning Strategy <ul><li>Intense Focus through: </li></ul><ul><li>Separate internal organizations </li></ul><ul><li>Supported by unique processes and systems </li></ul><ul><li>Looking at a different parts of the inbound supply chain </li></ul><ul><li>Dealing with different people at the supplier </li></ul>Low inventory does not equal Supply Issues But it does equal operational efficiencies… Time Horizon: Beyond lead-time 3 days to order lead-time 0 to 3 days Org (people): Worldwide Procurement (6X) Regional Materials (4X) Factory (X) Supplier Interface: Executive Operations SLC
  9. 9. Quickly Make Product after Sale = Cost Advantage Consistent Supply Globally Immediate Response to Customer Needs Lowest Cost Consistently Customer Benefits Time Cost of Components Today Customer Places Order Dell Procures Components, Assembles, & Ships Dell Cost VAR Gets Product from Distributor Channel Inventory 3 Weeks Ago Distributor Gets Product from Mfr 4 Weeks Ago Mfr Assembles Product 6 Weeks Ago Mfr Buys Components 8 Weeks Ago Cost to Competitors Mfr Inventory
  10. 10. Velocity = Direct Demand Feedback <ul><li>Dell facilities act as Manufacturing Centers, not Warehouses – only inventory needed for next 2 hours of orders is on site </li></ul><ul><li>Provides direct signal of Dell customer demand for suppliers </li></ul><ul><li>Dell’s performance to customer orders is directly linked to our suppliers’ level of support </li></ul><ul><li>Absolute synchronization between manufacturing and sales keeps the process balanced. </li></ul>SLC Dell Manufacturing Buy-to-Plan Build-to-Order Suppliers Material requested to build customer orders All material is tied to a customer order – nothing is built without an order. “ push” “ pull” Customers
  11. 11. Quarterly Business Review (QBR) <ul><li>Senior leadership involvement </li></ul><ul><li>Data driven discussion/ decisions </li></ul><ul><li>Identify actions/ commitments </li></ul><ul><li>Mutual agreement of future performance targets </li></ul><ul><li>Measure and reward performance </li></ul>Quality Cost Leadership <ul><li>Performance to Targets </li></ul><ul><li>Structural Cost Analysis </li></ul><ul><li>Advantaged Pricing </li></ul><ul><li>Internet Negotiation </li></ul>Service Technology/ Time To Volume  Continuity of Supply <ul><li>Warranty Cost </li></ul><ul><li>VLRR, 90-day FIR </li></ul><ul><li>Process Capability </li></ul><ul><li>5 Sigma </li></ul><ul><li>Product Leadership </li></ul><ul><li>Roadmap Alignment </li></ul><ul><li>Joint Qualification </li></ul><ul><li>RTS Predictability </li></ul><ul><li>Corrective Action </li></ul><ul><li>Global Support </li></ul><ul><li>Failure Analysis </li></ul><ul><li>Quality Metrics </li></ul><ul><li>Supply Chain Optimization </li></ul><ul><li>Capacity/Capability </li></ul><ul><li>Globalization </li></ul><ul><li>Flexibility </li></ul>
  12. 12. Continuous Improvement <ul><li>Initial Six Sigma efforts started in 1994. </li></ul><ul><li>Formal “belting” process in manufacturing - 1998. </li></ul><ul><li>Company-wide program started in 2000. </li></ul><ul><li>Master Black Belt focused on supplier BPI beginning 2001. </li></ul><ul><li>Foundation for Dell’s Winning Culture Initiative. </li></ul><ul><li>Over $1B saved during life of program … </li></ul>Business Process Improvement <ul><li>Certification Levels </li></ul><ul><li>Yellow Belt </li></ul><ul><li>Green Belt </li></ul><ul><li>Black Belt </li></ul><ul><li>Master Black Belt </li></ul>1. Define What’s the problem? Who can fix it? What’s the process? 2. Measure Can I explain a problem with data? 3. Analyze What’s the real problem? 4. Improve Let’s improve the process! 6. Report Tell others. 5. Control Did we improve? Did we save money? BPI Model
  13. 13. Low Cost Leader Dell consistently provides superior value <ul><li>Dell’s low operational costs mean lower prices for customers: </li></ul><ul><li>State-of-the-art supply chain management </li></ul><ul><li>Efficient technologies: </li></ul><ul><ul><li> </li></ul></ul><ul><ul><li> </li></ul></ul><ul><ul><li>Globally available Premier Pages </li></ul></ul>Operating Expense Over Time (% sales) 8% 10% 12% 14% 16% 18% 20% 22% 24% 26% 28% Q1 CY02 Q2 CY 02 Q3 CY 02 Q4 CY 02
  14. 14. Dell’s Direct Model = Perpetual Success Competitive Pricing Drives Market Share Efficient Model with Lowest Cost Structure Help Drive Supplier Business Pass cost savings on to customer Competitive pricing ignites demand Lower cost drives Increased demand Industry's most efficient procurement, manufacturing and distribution process
  15. 15. Dell’s Strategies for Success <ul><li>Organize around Customers – “Be Direct” </li></ul><ul><li>Manage Business Fundamentals – cashexpenses </li></ul><ul><li>Stick to Core Competencies – leverage partners </li></ul><ul><li>Focus on Velocity – compress time </li></ul><ul><li>Continuous Improvement – cultural mandate </li></ul><ul><li>Simplify Complexity – “Easy as Dell” </li></ul><ul><li>Critical Ingredients = People and Processes </li></ul>Structural advantages – part of Dell’s DNA …
  16. 16. Thanks! SCM@Dell - Velocity Matters!