A Supply Chain Case Study on

Ish Girwan Kumar Abhishek Mayank Kumar Pratyush Raj Saurabh Singh

Mission Statement
In the words of Michael Dell"Dell's mission is to be the most successful
computer company in the world at delivering the best customer experience in markets we serve

Company Background
y Founded in 1984 by Michael Dell y Emerged as the leading PC supplier in India (in the year y y y y y y

2010 with 15.2% market share followed by HP-14.3% ) 2nd in global PC supply with 16% market share, next only to HP(19%) Known for its highly appreciated supply chain Efficient operational strategy which support cost cutting in production Among fortune 500 companies Current worth is around $60 billion dollar

Market Share

Indian Market

Global Market

Snapshot of recent financial performance

Fourth Quarter
(in millions) Revenue FY11 $15,692 FY10 $14,900 Change 5% FY11 $61,494

Fiscal Year
FY10 $52,902 Change 16%

Operating Income (GAAP) Net Income (GAAP) EPS (GAAP)

$1,145

$510

124%

$3,433

$2,172

58%

$927

$334

177%

$2,635

$1,433

84%

$0.48

$0.17

182%

$1.35

$0.73

85%

Dells supply chain includes

y Customers y Dells website/Dells Distributers/ Retail Distributers y Dell Assembly plant y Dells Suppliers

Yippee.!! ! He orders dell PC on internet

Do I need a Computer? I think I do

Highlights of Dell Supply Chain(Earlier)

y Implemented Direct sales strategy y A combination of Push(Suppliers) & Pull y y y y

(Customers) strategy Used to keep its inventory to a minimum level (JIT) deliberately Supplier integration which caused cost cutting Used Assemble to Order Orders could be placed only through internet

Direct Sales
y It helps to cut costs y Allows to build relationships with customers y Deliver exactly what the customer wants

Assemble-to-Order
A Assemble-to-Order system allows Dell to: y Increase inventory velocity y Reduce inventory cost y Assemble exact what the customer wants y Minimize the need for forecasting

Supplier Integration
Supplier Integration at Dell allows to: y Treat the suppliers as partners y Make combined efforts and investments to better the existing process y Facilitate better information flow within the supply chain y Undergo collaboration and thus create synergy

Customers
y Customer base for Dell ranges from government

institutions to individual buyers y Dell benefits from segmenting its customers as it helps in understanding the customer needs: what and when y Direct Sales allows Dell to pass on the values to its customers y Dedicated Dell forums act as interface for interaction between customers and Dell executives

Problems In Supply Chain for Dell

Some of the problems that crop-up are: y Thin inventory levels require very precise demand forecasts; a few years ago Dell over estimated the forecasts and it cost Dell heavily in terms of inventory management y Dell did not have retail stores, in a few locations, till some time ago and that was also a problem because many customers want physically check the product before buying

Problems In Supply Chain for Dell

y In the year 2006, Dell couldnt fulfill the overshoot

demand of PCs in India. y Assembly Line: Dell had only one assembly line which is used for the production of both, low & high configuration PCs. As a result the net profit margin for low configuration PCs was very low.

Solution Space
y Reduce the dependability on the suppliers and shift

towards in-house production y Maintain sufficiently high inventory y Look for better methods of demand forecast y Make the product comparatively cheaper so that people will choose Dell instead of other PCs and start ordering via internet

Suggested Solution
y Open new assembling plants in various parts of the

world. These centers will help to contain the fluctuation in demand y The supply chain should also have retail distributors y For the customers of India & China, where the number of internet users are very low, it should accept orders through retail distributors y There should be two assembly lines for the two types of configurations . This will increase the fixed cost but decrease the variable cost and on a long run will create profit for the company