1

Life as a “Buyer” Life as a “Buyer”

2

OutlineOutline

life of a buyer a purchasing manager of Dell

Dell and Michael Dell sourcing components and finished goods for manufacturing

a purchasing manager of a discount store sourcing goods to sell

a fashion buyer sourcing clothes to sell

3

Dell and Michael DellDell and Michael Dell

4

BackgroundBackground

development of the semi-conductor industry and the computer industry

early days 1950’s: mainframe big, heavy, expensive 60’s to 80’s: minicomputer

to suit the demand of a mid-range company gradually outdated by the development of PC

(microcomputers)

80’s onwards: microcomputer (PC)

5

BackgroundBackground

commodizatoin of microprocessors in Early 70’s early 70’s: Intel 8008 8-bit processor (1972); Intel 8080 sold US$360 (1974

); Intel 8086 (1978)

development of PC needs of small business and home computers

1975: Micro Instrumentation Telemetry Systems MITS Altair 8800 Basic interpreter in Altair (Paul Allen and Bill Gates)

1976: Apple I by Steve Wozniak and Steve Jobs

1977: Apple II by Apple and Commodore PET by Commodore

1977: Spreadsheet VisiCalc and word processor Wordstar

1981: IBM PC, open architecture; MS-DOS by Microsoft, the standard operating sysetm of IBM-compatible PCs

1985: Windows operating system

…

Selling Computers Selling Computers in Early 80sin Early 80s

selling through retailer chains

traditional make-to-stock mode in multi-echelon supply chains

manufacturers forecast demand, e.g.,

quarterly produce various models in

large quantity forecast and production in

rolling-horizon fashion

manufacturer

distributor distributor…

retailer retailer…

customers

retailer

retailer …

retailer

retailer

…

7

Selling Computers Selling Computers in Early 80sin Early 80s

drawbacks of the traditional selling model intermediary

eats up margin

does not really understand computers

shields customer demands and market information from manufacturers

mis-match of demand and needs

holding inventory

easy obsolete products in a fast evolving market

8

Dell Inc. and Dell Inc. and Michael Dell

selling direct without any intermediary

83: assembling computers in his dorm room customized IBM compatible computers

marketing practically by word of mouth

84: formed Dell orders through mail, phone, and (later fax) customized IBM

compatible PC

operations: assembly, software installation, testing, quality control, and repairing

revenue US$ 6 million

manufacturer

9

Dell Inc. Dell Inc.

85: launched Dell’s first DC Turbo PC; revenue US$ 40 million

86: fastest 286-based PC

88: went public, though inexperience leading to tight cash flow and unsold inventory

89: too many computer chips, and plan to develop server dropped

90/91: also indirect sales 91: launching first notebook 92: encountering technical difficulty, especially in the

notebook market

10

Dell Inc.Dell Inc.

93 canceling a series notebook development top five computer companies in the world the first quarter loss ever since

94: loss US$ 36 million; Lithium-ion battery notebook 95: rebounded, with profit US$ 149 million 96: Dell.com, selling through web 98: Xiamen, China 99: number 1 in PC (the third in 2012, after HP and Lenovo)

02: other products …..

11

A Purchasing Manager of DellA Purchasing Manager of Dell

12

Life of Mr.Life of Mr. 方國健 in Dellin Dell (1)0:00; (2) 3:15-6:05; 8:00-8:30; (3) 8:00-09:30(1)0:00; (2) 3:15-6:05; 8:00-8:30; (3) 8:00-09:30

life before Dell

early life in Dell one-man band, installing software, handing

correspondence, etc.

sourcing, quotation, sample mailing, etc.

company in progress office rental and personnel recruitment

selecting outsourcing partners

tour guide in site visits for overseas colleagues

13

Life of Mr. Life of Mr. 方國健 in Dellin Dell

general work organizer of internal and external social functions screen, maintain, and manage, and develop suppliers

partner with suppliers and their quality engineers on product development

contract negotiation with suppliers especially on disputes, e.g., Inventec Corporation( 英業達 ) 、 Compal( 仁

寶 ) 、 Acer Inc. ( 宏基 ) 、 Twinhead International Corp ( 倫飛 ) on money spent on design, mould, and parts when Dell cancelled orders

market analysis and industry analysis on new products, new orders, competitors on problems in markets

ensuring operations matching company goals and objectives select regional distribution centers and sourcing regional

headquarters

14

Qualities of Qualities of Mr.方國健

…

15

A Purchasing Manager A Purchasing Manager for a Discount Storefor a Discount Store

16

Purchasing for a Channel

identification of market trend, both short and long term interviewing suppliers to screen and negotiating with

suppliers to develop products judge quality, value and market potential of products

marketing activities of suppliers match with position of company

product assortment types, brands, and prices of products

maximization of revenue and profit balance profit and sales quota when necessary

consistency with company policy and objective inventory planning

2nd: 00:00:55 to 00:17

17

Purchasing for a ChannelPurchasing for a Channel

material to be filled in …

4th: 00:03:43 to 00:07:10

4th: 00:12 to 00:22:27

18

A Fashion BuyerA Fashion Buyer

19

Life of a Fashion BuyerLife of a Fashion Buyer

fast fashion Next plc

20

Life of a Fashion BuyerLife of a Fashion Buyer

generally responsible for a specific type of customers and of products, though affected by the size of a company small company: more variety, less involvement in design and

technical issues large company: more hierarchical, and finer division of products

travel to trade shows and to meet suppliers and designers qualities: versatile and flexible, from paperwork to

communication, from technical to artistic issues requirements: experience, qualification, enthusiasm, and

self-motivation

21

Life of a Fashion BuyerLife of a Fashion Buyer

relationship with suppliers need good working relationship negotiate prices and delivery dates predict customer response, production cost, profit margin, etc.

interactions with merchandiser: more strategic level issues such as assortment and

budget of rate, set targets on time, margins, etc., and follow progress

design: design ideas, consistency within and across ranges quality control: buyer more on aesthetic issues and QC on

technical issues fabric technologist: sourcing the developing fabrics marketing and sales: …