a short primer on Dell’s practices May 2006 || Mike Gray ... · PDF fileMay 2006 || Mike...

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Page 1: a short primer on Dell’s practices May 2006 || Mike Gray ... · PDF fileMay 2006 || Mike Gray - Supply Chain Evangelist © Dell Inc. - 2006 2 Supply Chain Management Dell’s Product

© Dell Inc. - 2006

Supply Chain Excellencea short primer on Dell’s practices

May 2006 || Mike Gray - Supply Chain Evangelist

Page 2: a short primer on Dell’s practices May 2006 || Mike Gray ... · PDF fileMay 2006 || Mike Gray - Supply Chain Evangelist © Dell Inc. - 2006 2 Supply Chain Management Dell’s Product

2© Dell Inc. - 2006 Supply Chain Management

Dell’s Product Portfolio

Precision Workstations PowerEdge

ServersPowerVault

&Dell|EMC Storage

OptiPlex Desktops

Latitude Notebooks

Software &Peripherals

PowerConnect Switches

Axim PDAs

Dimension Desktops

InspironNotebooks

Printers

Monitors TVs & Projectors

Services

Page 3: a short primer on Dell’s practices May 2006 || Mike Gray ... · PDF fileMay 2006 || Mike Gray - Supply Chain Evangelist © Dell Inc. - 2006 2 Supply Chain Management Dell’s Product

3© Dell Inc. - 2006 Supply Chain Management

~85%Corporate & Institutional ~15%

Consumer

Customer Base (Revenues)

Revenue by Region

65%Americas

12%APAC

23%EMEA

Global ManufacturingAustin, Texas, USALimerick, IrelandPenang, MalaysiaNashville, Tennessee, USAXiamen, ChinaEldorado do Sul, BrazilWinston-Salem, North Carolina, USA

~65,200 employees worldwideRevenue $56B (last 4 qtrs.)

Revenue by Product

Dell Facts

• Desktop PCs ========= 38%• Mobility ============= 25%• Servers ============= 10%• Storage ============= 3%• Enhanced Services ===== 9%• Software and peripherals 15%

Page 4: a short primer on Dell’s practices May 2006 || Mike Gray ... · PDF fileMay 2006 || Mike Gray - Supply Chain Evangelist © Dell Inc. - 2006 2 Supply Chain Management Dell’s Product

4© Dell Inc. - 2006 Supply Chain Management

The Dell Business Model

Customer

MostEfficient Path

to the Customer

Industry StandardTechnology

Low CostLeaderBuild-to-OrderSingle Point of

Accountability

• Significant cost advantage (lower OPEX and Material COGS) provides industry’s best price/performance

• Unique sales, marketing, and supply chain model enabled by direct customer relationship

• Organization managed by data analysis and performance metrics

Page 5: a short primer on Dell’s practices May 2006 || Mike Gray ... · PDF fileMay 2006 || Mike Gray - Supply Chain Evangelist © Dell Inc. - 2006 2 Supply Chain Management Dell’s Product

5© Dell Inc. - 2006 Supply Chain Management

Suppliers Customers

Dell’s Direct Model = the foundation for success

• Continuity of Supply• E-business

Collaboration• Technology Leaders• Low-cost

Manufacturers

• Best Customer Experience• Low Cost Efficiency &

Highest Quality• Partnering/Virtual

Integration

• Product Quality• Price for

Performance• Customization• Reliability, Service

and Support• Latest Technology

Page 6: a short primer on Dell’s practices May 2006 || Mike Gray ... · PDF fileMay 2006 || Mike Gray - Supply Chain Evangelist © Dell Inc. - 2006 2 Supply Chain Management Dell’s Product

6© Dell Inc. - 2006 Supply Chain Management

Global Supplier

AirOcean

3PL Providers = 9Ocean Networks = 4Air Networks = 4

EMEA

APJ

DAO

BCC

Dell Global Supply Base

Global Supplier View of Dell Fulfillment

Vendor Warehousing: 22 Locations, 3 M Square ft

IB Air Networks: Equivalent of 650 747’s per year

IB Ocean Networks: 60,000 containers per year

Page 7: a short primer on Dell’s practices May 2006 || Mike Gray ... · PDF fileMay 2006 || Mike Gray - Supply Chain Evangelist © Dell Inc. - 2006 2 Supply Chain Management Dell’s Product

7© Dell Inc. - 2006 Supply Chain Management

Heart of Dell operations - a mixed model

1) Dell facilities act as Manufacturing Centers, not Warehouses – only inventory needed for few hours of orders is on site

2) Provides direct signal of Dell customer demand for suppliers

3) Dell’s performance to customer orders is directly linked to our suppliers’ level of support

4) Absolute synchronization between manufacturing and sales keeps the process balanced.

SLC Dell Manufacturing

Buy-to-Plan Build-to-OrderSu

pplie

rs

Material requested to build customer orders

All material is tied to a customer order – nothing gets built without an order.

“push” “pull”

Cus

tom

ers

Every Week Every 2 hours in each mfg center

Page 8: a short primer on Dell’s practices May 2006 || Mike Gray ... · PDF fileMay 2006 || Mike Gray - Supply Chain Evangelist © Dell Inc. - 2006 2 Supply Chain Management Dell’s Product

8© Dell Inc. - 2006 Supply Chain Management

Cash Conversion Cycle and SCM

3 Elements (expressed in days):

• Inventory (DSI)

• Accounts Receivable (DSO)

• Accounts Payable (DPO)

Cash Conversion Cycle (CCC)DSI + DSO – DPO = CCC

Page 9: a short primer on Dell’s practices May 2006 || Mike Gray ... · PDF fileMay 2006 || Mike Gray - Supply Chain Evangelist © Dell Inc. - 2006 2 Supply Chain Management Dell’s Product

9© Dell Inc. - 2006 Supply Chain Management

Dell’s SCM Journey …

1992 2006

Day

s of

Inve

ntor

y

Cas

h C

onve

rsio

n C

ycle

Supplier Logistics Center

Vendor Managed Inventory

Finance for non-financial managers

Six Sigma \ Lean Manufacturing \ BPI

“Velocity Matters”

Collections

Payment Terms

www.dell.com

www.ValueChain.dell.com

>80

-44

~ 70

4

Page 10: a short primer on Dell’s practices May 2006 || Mike Gray ... · PDF fileMay 2006 || Mike Gray - Supply Chain Evangelist © Dell Inc. - 2006 2 Supply Chain Management Dell’s Product

10© Dell Inc. - 2006 Supply Chain Management

CompetitivePricing

CompetitivePricing

DrivesMarket Share

DrivesMarket Share

EfficientModel with Lowest

Cost Structure

EfficientModel with Lowest

Cost Structure

HelpDrive

SupplierBusiness

HelpDrive

SupplierBusiness

Pass cost savings on to customer

Pass cost savings on to customer

Competitive pricing ignites demand

Competitive pricing ignites demand

Lower cost drives Increased demandLower cost drives Increased demand

Industry's most efficient

procurement, manufacturing and distribution

process

Industry's most efficient

procurement, manufacturing and distribution

process

Dell’s Direct Model = Perpetual Success

Page 11: a short primer on Dell’s practices May 2006 || Mike Gray ... · PDF fileMay 2006 || Mike Gray - Supply Chain Evangelist © Dell Inc. - 2006 2 Supply Chain Management Dell’s Product

11© Dell Inc. - 2006 Supply Chain Management

Supply Chain Excellence