at each step in value chain .before getting paid from customers .of hot products- lost sales.of slow selling products .With about 2,000 product transitions a year, the ability to reduce
Since its inception, Dell has thrived by challenging conventional business wisdom. By taking direct-to-customer and build-to-order techniques to a global scale, Dell has earned a reputation for delivering exactly the right products on schedule, and at a competitive price. The result is that Dell does not begin assembling a single computer until the company has an order from a specific customer. The order may be for an individual, a small business looking for a few PCs, or a major corporation or government agency that needs thousands of specially-configured servers, storage products, notebook computers orother products delivered to field locations worldwide. Everyassembled computer has a waiting customer and a short lead-time delivery date. The success of this approach is reflected in Dell's expected US$6.5 billion growth this year. As the company has grown, so has the challenge of balancing evolving computer preferences and demand with a volatile marketplace for the materials and components the company needs to build the computers. To compound the problem, changing technology obsoletes those materials sometimes as rapidly as 2% of value per week. In true Dell fashion, the company chose a completely new solution for an old problem and once again reinvented its supply chain. Here's how it works. Through a suite of web-based applications, Dell is now linked with its core suppliers. This new system automatically converts Dell's sales orders into materials requirements. These requirements are then instantly communicated to suppliers, whose stocking locations are situated no more than thirty minutes from the Dell factory. Those suppliers use an Internet portal to view therequirements and confirm their ability to commit their own inventory to Dell as the orders are placed. As Dell factories receive orders and schedule assemblies, a "pull" signal to the supplier triggers the shipment of only the materials required to build current orders, and suppliers deliver the orders directly to the appropriate Dell assembly lines. The factory schedule is refreshed every two hours. As a result, when actual demand varies from forecasted demand, all suppliers, factories and logistics providers are quickly and concurrently notified and can adjust their own inventory allocations and production accordingly. Dell's inboundinventory is kept to a minimum, its non-ordered finished goods inventory is kept at zero, customer orders are immediately sent upon completion and customers receive what they ordered on the promised date. The efficiency of Dell's solution has been lauded by business and technology publications alike:"Dell's new approach takes the concept of just-in-time operations to new levels. The company's most efficient factories . . . order only the supplies required to keep production running for the next two hours. As the two-hour clock winds down, suppliers-who keep gear in a warehouse near Dell's factories-are electronically told what to deliver so Dell can build the next two hours' worth of computers."-David RocksBusiness Week Behind Dell's information revolution are a series of projectsdesigned to deliver a leading-edge decision-support system coupling i2 Technology's Rhythm Collaborative Planner, Factory Planner and Supply Chain Planner and Dell's direct-sales model to create enhanced planning and scheduling capabilities. The Dell supply chain management program has delivered a business tool that the people at Dell use to interact more efficiently with their suppliers, helping both Dell and its suppliers to respond to the shifting demand in the marketplace. The ultimate objective of this project was to reduce customer lead-time while creating efficiencies within planning and manufacturing operations. The program has delivered a new business capability which: * Simplifies the jobs of Dell employees who are responsible for managing material supply,* Allows Dell to transact business for specific order-drivenpurchases of materials and supplies,* Provides Dell with a global picture of what supply and demand look like at any point in time,* Gives Dell's planners the ability to focus on exception situations, relieving them of the drudgery of examining every possible supply constraint,* Makes it nearly impossible for components to grow obsolete in warehouses, and* Allows Dell to see potential supply constraints earlier and react quickly to correct an out-of-balance situation. In the case of a global shortage, this may mean offering suitable alternatives to its customers to ensure that they receive the products they need when they need them. Customers always receive the latest technology, exactly how and when they need it, all at a competitive price. This commitment to customer service enables Dell to sustain its leading marketplace position. Business-to-business interaction via the Internet is the main pursuit for many companies in today's electronic environment. But Dell's commitment to its enabling technologies and its willingness to rethink traditional ways of doing business makes it the first corporation to fully leverage the potential of the medium. This new system that Dell has created is the first truly private business-to-business exchange with dynamic supply-chain business transacted on the Web. As noted by The Wall Street Journal, Dell now has: "[some] of the most advanced computer assembly plants in the world if measured by integration with the Internet. Up to 50% of the orders flow directly from customers on the Internet to the aptly named 'air-traffic control room' in the plant where procurement, assembly and shipping are managed. It sits directly above the sprawling main plant floor."-John Dodge Innovative applications of technology seen in Dell's solution include:* Use of complex mathematical models to identify and predict supply constraints,* Advanced collaborative techniques using the Web as a communications medium, and* New methods of synchronizing demand and supply to minimizeinventory and material handling, thereby reducing cycle time.<BR>Within the system, customer orders are reviewed and compared to supplier inventory every two hours. Dell then issues pull orders for only the materials needed to complete the next two hours of order-building, a capability that represents an industry best. This extremely short cycle helps ensure that the very latest customer demand picture is being addressed.
From – I2 SCM ROI i2’s ContributionEvery 20 seconds, Dell aggregates its orders, analyzingthe material requirements. i2 SCM compares Dell’son-hand inventory with its suppliers’ inventory, thencreates a supplier bill of material to meet its order needs.Dell’s suppliers have 90 minutes to pull the neededmaterials and drive them to Dell’s factory. Dell thentakes 30 minutes to unload the truck and place thematerials – in the precise order in which they willbe manufactured – onto the assembly line.Here's how it works. Through a suite of web-based applications, Dell is now linked with its core suppliers. This new system automatically converts Dell's sales orders into materials requirements. These requirements are then instantly communicated to suppliers, whose stocking locations are situated no more than thirty minutes from the Dell factory. Those suppliers use an Internet portal to view therequirements and confirm their ability to commit their own inventory to Dell as the orders are placed. As Dell factories receive orders and schedule assemblies, a "pull" signal to the supplier triggers the shipment of only the materials required to build current orders, and suppliers deliver the orders directly to the appropriate Dell assembly lines. The factory schedule is refreshed every two hours. As a result, when actual demand varies from forecasted demand, all suppliers, factories and logistics providers are quickly and concurrently notified and can adjust their own inventory allocations and production accordingly. Dell's inboundinventory is kept to a minimum, its non-ordered finished goods inventory is kept at zero, customer orders are immediately sent upon completion and customers receive what they ordered on the promised date.
Prof. Sakunt Jadav
“It’s amazing to me that our
competitors think the customer is the
“Sales Leader: Tops in Global Basis.”
• Michael Dell:
“The only constant
thing about business is that
every-thing is changing. We
have to take advantage of
change and not let it take
advantage of us.”
Introduction about Michael Dell
• Michael Saul Dell (born February
23, 1965) is an American business
magnate and the founder,
chairman and chief executive
officer of Dell Inc.
• He is the 44th richest person in
the world, with a net worth of
US$14.6 billion in 2011.
Michael Dell is the chairman of the Board
of Directors of Dell, the company he
founded in ’84 for $1,000.
With an unprecedented idea---build
relationships directly with consumers
(born in February ‘65).
Dell’s commitment to consumer value, to
the team, to being direct, to operating
responsibly and, ultimately to winning.
Continues to differentiate Dell from other
Dell Inc.- Company Intro
• CEO: Michael Dell
• Registered as 'PC's Limited‘ in 1984
• From his condominium in Austin, TX
• Capital: $1,000
• Sold IBM PC-compatible computers
• Known for its innovative customer service and
product custom configuration
• Dell’s collaboration with other computer
software companies has allowed it to become
a leader in CRM
• It is not an inside-out company but outside-in
“To be the most successful computer
company in the world at delivering
the best customer experience”
Dell Business Strategy
• Faster inventory turnover and reduced inventory
• Incorporate new technologies and components into
its product offerings.
• Online support to onsite customer-dedicated
Highlights for direct model and crm
• Contacting with the customer directly & capturing as
much information as possible
• Eliminating middlemen
• Building computers based on customer’s needs.
• Engaging with customer on each touch point as
productive & efficient as possible.
Dell’s Direct Model
Direct relationship, most efficient path
Low cost and best value
Built to order
Superior, tailored service and support
Highest quality and most relevant technology
Why SCM is so Important in PC business
• Material costs
• Improving SCM
• Changing technology
• Rely on market forecasting to drive Production.
• Technological breakthroughs cause very short Product life
• Need to hold inventory
• Have to pay suppliers first
• Caught with short supplies
• Stuck with excess inventories
• Product time to market is critical.
Dell’s Competitive Advantages
Dell is having one of the best SCM in the world.
• 90% supplies ordered online using integrated websites of
supplier and Dell (B2B).
• 95% of suppliers situated very close to assembly plant hence
coordination is easier.
• Dell’s factories have only 7 hrs worth of inventory for most items
whereas industry wise it is around 10 days.
• 15 suppliers provide almost 85% of all supplies.
• Dell gets paid by customers and then pays to its suppliers.
i2 SCM S/W package
• i2 serves almost 70% of the SCM market.
• Every 20 sec the S/W aggregates orders,
analyzes material requirements ,compares Dell’s
on-hand inventory with its suppliers’ inventory
and then creates a supplier bill of material to
meet its order needs .
• Instead of forecasting the daily supply needed,
Dell receives the exact material every two hours
to fulfill actual customer orders.
• Tracks backlog numbers, stock status and supplier
Business To Business (B2B) Model
• Business model for dealing with large business
• Server- to- server communication over internet
integrating both supplier & buyer system.
• Shopping online with customer’s ERP
Procurement Application with simultaneous
• No duplicate information entry.
• Easy process, less cycle time, less errors.
Dell’s Objectives With B2B Integration
• To quickly integrate customers who are capable
• Built a solution to integrate any customer who
supports open industry standard of XML,EDI
• To help customers built a B2B solution for rapid
deployment & connectivity.
• Providing hardware, software & consultation to help
build a system which not only connects to Dell but
even to other suppliers.
DELL’S CRM STRATEGY
Make segmentation and identify customers
Listen to their customers
Learn from customers
Each member is a student who is
responsible of learning from the customers.
• Backbone of Dell computers
• Based on segmentation, company takes its
positioning and modifies its offerings for each
“An Important element of virtual integration with customers is
segmentation. The finer the segmentation, the better able Dell is to
forecast what customers are going to need and when. Then
coordination of flow of strategic information comes to stage all the
way back to suppliers, effectively substituting information for
• Focusing on Personal Users
– In the early 2000s, Dell attempted to diversify its
business by targeting personal consumers, such as
families and students that needed to purchase
• Dell's Retail Strategy
– In the fall of 2007, Dell announced partnerships
with major computer retailers, including WalMart, Best Buy and Officeworks
• In 2007 BBDO to Working Mother Media
• Continue Change in Slogan
– “Work it Out”
– “Yours is here”
• Benjamin Bowmar Curtis
• an American actor and former
spokesman for Dell Computers.
• from 2000 to 2003.
• "Dude, you're getting a Dell.“
• The campaign was a huge success
and not only helped bring
prominence to Dell, but to Curtis
social media content: You do not own the content you
create… your customers do
Producing content via the same social media tools
your customers use allows 3 things:
1) Makes your content sharable
2) Gets your content to customers where they are
3) Gives you a reason to connect with fans
SOCIAL WEB STARTING TO EVOLVE
How do we reach
customers in different
We’re still in the early
stages of the social
Shared ID options
Dell on other sites
Forrester’s Five Eras of the Social Web Jeremiah Owyang
Zero Concept at Dell
Zero time organization
CSR - Green initiatives
• Establish a product-recycling program.
• On February 6, 2007, the National Recycling
• Dell Bans E-Waste Exports
• Bamboo — Nature's Eco-Friendly Packaging
LESSONS FROM MICHAEL DELL
1. Every customer is important, regardless of size
2. Innovation is incremental and continual
3. Innovators are their own market research departments
4. Collaboration leads to the best ideas
5. Customers want to help their peers
6. Don’t decide alone for your customer
LESSONS FROM MICHAEL DELL
Participation is powerful
Follow through is the middle name of collaboration
Become your own incubator
10. Realize that innovation and collaboration are cousins
Success Mantra – Michael Dell
• “When you get a business that changes very quickly, you get
some of that naturally.”
• “You just have to change. To be successful, what you have to
do is have an acceptance of risk and you have to be pretty
explicit about that, because if you don’t accept risk, you
don’t get any innovation. And that means part of risk is you
have to accept failure because not everything works.”
“Be willing to take risks and
change,” if you want to stay