戴尔公司成产管理报告(英文)

Contents

1、Preface

2、Introduction of Dell

—Dell’s story: Who they are (organization background of Dell) —Dell’s products and services:

3、The business modal of Dell

—Dell’s direct business modal Under Dell SCM

4、SCM in Dell

—Dell’s pull-push strategies —Contract Manufacturing

—Level 5 versus level 6 manufacturing

5、Dell’s “Build to Order” Manufacturing Process

—Dell’s global fulfillment network：

4、Advantage & Weakness about Dell

—Dell’s advantage： —Dell’s weakness ：

5、Conclusion

Preface

T he IT field in the world changes rapidly. A new product will soon be replaced by the next generation of products. Now Dell is the world’s leading providers of IT products services. Dell used the direct business model to develop the market successfully. And the direct business model enables the company sustained and rapid development. But there are also defects in direct model. In the international IT market competitive environment, Dell will have to face challenges of many strong companies, such as HP and Lenovo. This report focuses on analysis of Dell's operations strategy and production management under the direct business model; discusses the advantages and defects of Dell’s business, and thus makes recommendations on the future of Dell’s business strategy.

Dell’s story: organization background of Dell

Michael Dell founded Dell Company in 1984 in Austin, Texas, with $1000 and a unique vision of how technology should be designed, manufactured and sold. Dell is the worl d’s leading providers of IT products services, its services include helping clients to establish their own information technology Internet Infrastructures. Today, Dell connects with more than 5.4 million customers every day — by the phone, in person, on de ll.com and, increasingly, through social networking sites. Dell’s more than 100,000 team members around the world are committed to making technology work harder for customers and communities. Dell make technology more accessible to people and organizations around the world. They ship more than 10,000 systems every day to customers in 180 countries — that’s more than one every second.

Dell’s direct to consumer’s sales approach has increased their sales each year. Collaborative supply chain, direct service efficient marketing system combined into a whole for the Dell won the unparalleled competitive advantage. Dell started selling computers on dell.com in 1996, and now Dell have more than 4 million visits to the site every day, resulting in an order placed online every two seconds. Today, dell.com reaches customers in 166 countries and 34 languages around the world.

In fiscal year 2011, Dell’s net revenue grew 16 percent to $61.5 billion, marking the largest single-year dollar increase in company history. GAAP operating income grew 5.6 percent of revenue to $3.4billion (Table 1). And for fiscal year 2012, second quarter (ended July 29, 2011), Dell occupied 12.90% of the world PC market, shipped the world’s second-largest PC business (Table 2).

Table 1:

Source: Dell financial report 2011 “Fiscal Year 2011 in Review”

Source: Internet Data Center

Dell’s products and services:

● Enterprise Solutions and Services:

Enterprise solution: includes servers, networking, and storage products. Dell offer high performance rack, blade, and tower servers for enterprise customers and value tower servers for small organizations, networks, and remote offices, and customized Dell server solutions for large data center customers.

Services: include a broad range of configurable IT and business services, including infrastructure technology, consulting and applications, and product-related support services. ● Software and Peripherals:

Dell-branded printers and displays and a multitude of competitively priced third-party peripheral products such as printers, televisions, notebook accessories, mice, keyboards, networking and wireless products, digital cameras, and other products. ● Client Products:

Mobility: laptops, net-books, tablets and smart phones to Dell’s Commercial and Consumer customers. Desktops PCs: the Optiplex, Precision, and Vostro lines, which are targeted to Commercial customers, and the Inspiron, XPS, and Alienware lines ● Financial Services:

Dell Financial Services L.L.C. ("DFS"), a wholly-owned subsidiary of Dell, offers a wide range of financial services, including originating, collecting, and servicing customer receivables related to the purchase of Dell products. Dell’s direct business modal under Dell SCM:

Dell Company was founded by Michael Dell on a simple concept: by selling computer systems directly to customers, Dell can best underst and customers’ needs and efficiently provide the most effective computing solutions to meet those needs. Directly facing the customer, directly accepting customers’ orders, in accordance with the orders for the production, this will send products directly to customers. Dell, suppliers, customers are

The direct business model includes no retailers and starts and ends with the customer: a customer orders online or via phone a computer system according to his preferred configuration, Dell manufacturers this computer system, and Dell ships directly to the customer. Dell has been able to keep manufacturing costs lower than competitors’ costs because it not only builds to order, so raw material inventory is low. The direct model also reduces the time from customer order to receipt of the system. Moreover, the direct model provides a single point of accountability so Dell can more easily design its customer service

model in order to provide the necessary resources to satisfy its customers.

In contrast, Dell’s competitors were delivering orders to intermediaries on a quarterly basis. Under the traditional mode, the computer production enterprise should forecast of the market trends in the future according to previous sales situation and make production plans and strategies. Besides, they should discuss with the material providers and put the parts together, followed by assembling and packaging, then transporting the finished products to the wholesales and shopkeepers who sell them to customers. But under the ‘direct business

model' of Dell's supply chain, there are no distributors. The customers can order by the Internet, telephone and some other ways. Then Dell Company will produce the products according to the orders. Finally, they delivered the products by logistics companies.

Due to the direct business model of Dell, there are some characteristics of Dell's supply chain.

1) Produce according to orders immediately. For customer, direct selling enables products of Dell to have

diversification and individuation. In this way, for Dell, direct selling does not need abundant accessories. On the one hand, it decreases capital take up effectively, on the other hand it increases working capital.

2) Contact with customers directly. The absence of intermediary business make company contact with customers

in not only obtaining of materials but also product marketing and thus reduces cost in circulation process. 3) The inventory management model of Dell is integration of material supplying, producing in order processing

and logistic delivery. The management needs to be connected with both production in order processing and customers.

Dell’s push-pull strategies:

In a push-pull strategy, some stages of the supply chain, typically the initial stages are operated in a push-based manner, while the remaining stages employ a pull-based strategy. By Dell’s build to order, the component inventor is managed based on forecast, but final assembly is in response to a specific customer request. Thus, the push portion of the manufacturer’s supply chain is that portion prior to assembly, while the pull part of the supply chain starts with assembly and is performed based on actual customer demand. The push-pull boundary is at the beginning of assembly (Figure 3).

Dell takes advantage of the fact that aggregate forecasts are more accurate. Indeed, demand for a component is an aggregation of demand for all finished products that use this component. Since aggregate forecasts are more accurate, uncertainty in component demand is much smaller than uncertainty in finished goods demand and this leads to safety

Figure 3: push-pull strategy

stock reduction.

Contract manufacturing

Now most PC makers utilized contract manufacturers to produce high-tech electronic products. To take advantage of labor cost differences, many original equipment manufacturers (OEMs) initiated business engagements with contract manufacturers (CMs). OEMs chose to let contract manufacturers own and manage part of the manufacturing process for the following reasons (Data from: Charles H. Fine and Dan Whitney, “Is the Make-Buy Decision Process a Core Competence?” 1996.):

1. Capability: The OEMs cannot make the item or easily acquire this capability and must seek a supplier. 2. Manufacturing competitiveness: The supplier has a lower cost, faster availability, and so forth. 3. Technology: The supplier’s version of the item is better.

Almost all the desktop PCs sold in the United States were initially produced by contract manufacturers in China. But Dell is one of the few American companies that still retained manufacturing facilities in the United States.

In Dell’s case, because customers can customize some components of their PCs when placing an order, manufacturing a fully finished product and shipping it by ocean from the contract manufacturer’s facility in China to the customers in the United States would be time-prohibitive, and manufacturing a finished product and air-freighting it would be too cost-prohibitive if it is a heavy or bulky desktop product. Therefore, for Dell’s desktop products, contract manufacturers in China produce and ship (by ocean) half-assembled products to Dell’s factories in the USA. Once the supply arrives and the components preferred by a customer are known, Dell factory associates perform further product fulfillment: building in the customized components (including the processor, memory, hard drive, speaker, etc.), installing the necessary software application, performing final unit testing, and

then delivering the filly assembled and functional product to the customer in a timely fashion.

Level 5 versus level 6 manufacturing

In desktop PC manufacturing, the degree of assembly can be broken down into 10 levels. The higher the level, the more fully integrated it is. This scale also can apply to the manufacturing of servers and storage

Level 5 (L5) includes the assembly of desktop PC chassis, floppy disk drive, and fan. Depending on the chassis configuration, it also can include the power supply in some cases. In Level 6 (L6), along with these components, the motherboard is also installed into the chassis. In other words, when a suppler performs Level 6 manufacturing, the supplier installs the motherboard in the chassis—an activity not performed in Level 5 manufacturing.

When a contract manufacturer in China produces an L6 desktop PC chassis, the chassis is not a functional unit yet and still requires customized parts such as the processor, memory, hard drive speaker, and so forth. The contract manufacturer ships the L6 chassis from China to Dell’s factories in the USA and Ireland, and then Dell factory associates install these customized parts to make the unit “Level 10.” A Level 10 product is a fully assembled and functional product that can be shipped to the customer. Figure 4 shows the similarities and differences between the L5 and L6 value chains.

L5 manufacturing has higher overall manufacturing and logistics cost than L6. But in recently years, Dell’s manufacturing cost was rising, caused by an increase in the utilization of L5 manufacturing (Data from Dell’s Worldwide Procurement organization).

Some of Dell’s products, such as handhelds and printers, are manufactured to Level 10 by the contract manufacturers. This means that Dell does not have dedicated manufacturing resources or capability to manufacture these products. Rather, the contract manufacturers produce these products, include the user manuals in the packaging, and ship the products to Dell’s merge centers. These products are then “merged” with PCs manufactured by Dell factory associates into the same shipment, so the customer can receive a single shipment with all of the items in the order. Dell sues this shipping strategy to create a more satisfying customer experience.

Dell’s “Build to Order” manufacturing process

While Dell does not manufacture its own components or subassemblies, it does handle final assembly for nearly all of its desktop PCs and servers. Dell began manufacturing its own brand of PCs in Round Rock, Texas in 1985. And it subsequently expanded to new production sites outside the United States. Dell organizes manufacturing by region, operating one or more assembly plants to serve its major markets.

Plants in the Austin, Texas and Nashville, Tennessee areas serve North America; Eldorado do Sul, Brazil serves Brazil and South America; Penang, Malaysia serves the Asia-Pacific region; Xiamen, China serves China and Japan;

And Limerick, Ireland serves Europe, the Middle East and Africa. (From Dell’s web site)

Dell’s global fulfillment network

Dell’s global fulfillment network consists of the facil ities for located across the globe. This capability includes manufacturing senders for assembly customs configure computing products. For film and senders, to ensure rapidly delivery of similar items and to provide additional technology rollout services.

All of Dell manufacturing centers use the same processes and able by the same systems and admeasure the same way. This ensures consistent a world winning quality across a global network and allows to identify and implement best practices.

Figure 5 is Dell manufacturing center. Manufacturing processes includes 7 steps.

Step 1: Customer Order Pull

Dell’s build to order model was designed to build customers’ orders exactly as needed. The order is right to the manufacturing center closed to customer’s ship to destination. At that point, the order like electronically transfer from dell’s order management system to the manufacturing scheduling system, where all orders are sequent into the production schedule every 2 hours. Every manufacturing center across the globe as a network of dell service that act as a brain of the facility. They were save orders from order entry system. The servers keep track a working process at associate, serialize part was unique serial number of each machine. Unique software images are stored for download the customer machines as they move through the process. This portion of custom factory integration (CFI) allows Dell’s customers to eliminate software installation upon receipt. Step 2: Kitting

Dell’s build to order process generate request for the material require for customers’ orders every 2 hours. During which the material is delivered to the factory and built to order. Since there are no warehouses part inventories are low, Dell’s process is unique in that way serial realize at our front of our line. A unique identifier, the computer’s name or server text number is created and printed down to a label in both human readable and machine readable bar-code format. The server’s text number is used throughout the life of machine and it is based for our quality system. Scanning the server’s tag indicated to Dell’s teammates which components to place into a reusable protective container or tote. By the time, the tote has traveled the entire link of the kidding line or the parts required for the customer unique machine are in place. The last step of kidding process is matching a chassis with the parts in the tote. Step 3: Build

The first action after complicated arrives in the build area to scan the server’s tag. This scan delivers uniq ue construction based on the customers’ requirements to the builder’s control panel that guys through the assembly process step by step. As Dell’s teammates assemble the machine, they can scan the serial number of each part to associate the parts serial number with the service tag number of that machine. This simple lag allows dell and customers to have a completed history over the life of the machine, and namely a process to drive quality and

capability throughout the supply chain.

Step 4: Software installation and Testing

Since the system servers tag number is attracted throughout the manufacturing facility. The brains of the facility take over and test the machine to insure all components are present and operating as expected. After this faith, the customer request software including custom images is downloaded on to the machine. Step 5: Final Test & Labeling

Final texting finished the process, and the machine is then transported to the boxing area. This fission uses a machine to machine communication coupled with several pattern to process innovations insures concisely high quality product.

Step 6: Boxing

After the machine has been built and tested, it is transported to boxing line and service tag is scanned upon arrival. The machine is securely placed into a shipping box which trivial down the conveyor, where additional customer specify parts are scanned as they are placed inside the box. This highly engineering global process insures that Dell delivery exactly what the customer expects. The boxes then sealed and send easier script to shipping or to an order accumulation area. Step 7: order Accumulation

While all machine to complete customers’ order are started that the same time. They may not finish at the same time due to process varied ability. To insure Dell ship the completed order to customers, Dell stage finished machine until the final machine is done, they entire orders release to shipping for delivery to Dell’s customers through a merch center.

Dell operates merch centers across the globe to perform an entrain match customer system with additional items to complete their orders. For example, monitors, printers and computers manufacture other dell’s location are combined into one shipment.

Dell manages the complexity of this network so that their customers get exactly what they ordered when they need it.

Dell’s advantage

1．Market Share

Dell’s global market share is very high, which is currently ranked the second. In the second quarter of 2011, Dell in PC market share was 12.9% all over the world, as shown in the Table 2. Although the ranked of the market share was behind HP, Dell still occupied a large market share.

2. Price Advantage

The magic bringing Dell huge success is low cost strategy in the full range of products supported by a direct model. The direct sales model abandons the intermediate in order to accelerating the rate of cash flow, reducing costs achieving a price advantage. It also provides possibility producing computers in accordance with customers’ demand. According to statistics, the products sold in the direct model are 15%-20% cheaper than the similar

product sold in other ways.

3. Zero Inventories

DELL trend of raw materials to zero inventory strategy in their production factories to save at the most productive use for the 8-hour parts inventory, the whole production process all orders and there is absolutely no more than 3 days. Zero inventory strategy has led to savings of storage space and cost of raw materials, but such a strategy to DELL stock itself and its suppliers, staff have put forward a very high demand; and because the residence time of raw materials of such a strategy is very short, requires the supply of operators can make a quick response to production needs, while the supply of products to protect the high quality of reliability; And then there are such strategies require DELL must ensure that the lowest failure rate of production machinery and equipment replacement time for each process should be carried out quality inspection, the only way to ensure smooth production.

Let’s see Dell’s balance sheets (Table 3) and HP’s balance sheets (Table 4).

Table 3: Balance Sheets of Dell

Source: Dell financial report 2011 “Fiscal Year 2011 in Review”

Table 4: Balance Sheets of HP

Source: HP financial report 2011 “External HP 2011”

The inventory cost of Dell accounts for 4.48% of the total assets. But the inventory cost of HP accounts for 13.20% of the total assets. Dell’s low inventories can minimize the costs in production storage; also have no risk in the marketing estimation.

Dell’s weakness

1. The direct model is not suitable for some emerging markets

For Dell’s direct sales model, most growth in market come from the U.S. market, while the direct model does not really fit emerging mark ets as its major weaknesses. Currently, the world’s largest PC markets with potential growth are China, India other emerging markets. However, Dells direct sales cannot take its advantage in these emerging markets. It seems very difficult to implement due to relatively low trust of the consumers to the emerging markets. The consumers are more willing to buy a computer a retail store, which undoubtedly will make direct sales model at a disadvantage.

2. Disadvantage in the consumer PC market

Not long ago, HP regained the leading position of worldwide PC Dell which might rely on the rapid development in the consumer market. Lenovo’s success in the Chinese market was also based on the consumer market. However, Dells consumer market is currently a disadvantage in market competition. Dell major clients are divided into two categories: one is big business, government industrial customers, occupying 90% of the company’s overall business sales; another one is the small medium enterprises individual consumers, only occupying 10% of the company’s overall business sales. Obviously, Dell has too much emphasis on the consumers of high-end enterprise “ignores” PC consumers of the small medium enterprises or individual consumers.

Conclusion

Dell is the world’s leading providers of IT products services, its services include helping clients to establish their own information technology Internet Infrastructures. Dell’s succeeds are closely linked to the direct sale model, which provides better price of production, very convenient communication between Dell its clients, matching the demands of clients, etc. However, as the marketing development, Dell’s problems were exposed, such as imitation of its competitors, direct sale model’s limitations in some situations, worries of developing distribution channels in Dell, etc.

By researching the supply chain management of DELL and Dell’s “build to order” manufacturing processes under direct business model, this report attempt to explain Dell company’s operation management strategies. We find direct model takes advantages to Dell. But Dell need make multi-faceted. It will bring competitive advantage for Dell.

References

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