1.INTRODUCTION

Dell, Inc is a multinational technology corporation that develops, manufactures, sells, and supports personal computers and other computer-related products. Based in Round Rock, Texas, Dell employs more than 82,700 people worldwide. Dell grew during the 1980s and 1990s to become (for a time) the largest seller of PCs and servers. As of 2008 it held the second spot in computer-sales within the industry behind HP. The company currently sells personal computers, servers, data storage devices, network switches, software, and computer peripherals.

Dell is a trusted and diversified information-technology supplier and partner, and sells a comprehensive portfolio of products and services directly to customers worldwide. Dell, recognized by Fortune magazine as America's most admired company and No. 3 globally, designs, builds and delivers innovative, tailored systems that provide customers with exceptional value. Dell's remarkable climb to market leadership is the result of a persistent focus on delivering the best possible customer experience.

Revenue for the past four quarters totaled $49.2 billion*. The company manufactures its computer systems at six locations: Central Texas and Middle Tennessee in the United States: Eldorado do Sul, Brazil; Limerick, Ireland; Penang, Malaysia; and Xiamen, China. Dell sells its products and services worldwide. Dell was founded in 1984 by Michael Dell, the computer industry's longest-tenured chief executive officer and currently, the company's chairman, on a simple concept: a direct model. Dell's Direct Model is built on the principle that by selling computer systems directly to customers, Dell could best understand their needs and efficiently provide the most effective computing solutions to meet those needs.

2.SUPPLY CHAIN SYSTEM

The Dell SCM system must handle an enormous number of transactions and pieces of information, and includes multiple core components necessary to keep operations running smoothly:

2.1 CONFIGURATION MANAGEMENT: The configuration management component manages over 1 million Dell part numbers per year across approximately 200 product families, and over 2 million bills of materials (BOMs) per year. BOMs listing component part numbers are created for manufacturing facilities to build assemblies and subassemblies for Dell products.

2.2 PROCUREMENT : The procurement component manages nearly 1.8 million purchase order lines per year from more than 5,000 suppliers worldwide. To streamline the procurement

process, Dell uses an automated application that includes workflow approvals and vendor communication and enables services such as defective part replacement.

2.3 COST: The cost component runs mostly in batch mode to calculate the costs to Dell for all BOMs. These batch jobs run weekly, monthly, and quarterly, with each job aggregating total material costs.

2.4 INVENTORY : The inventory component manages more than 3 million inventory movements daily from stock rooms to factory floors across all Dell sites, along with the

corresponding 3 million messages transmitted to different systems for reporting, analysis, and factory scheduling.

2.5 Accounts payable: The accounts payable component handles approximately 15,000 items per day, including payments to Dell suppliers, invoices, and receipts. Vendor information includes vendor ID number, location, negotiated terms, and contact

information.

3. SUPPLY CHAIN MANAGEMENT

Dell sells its computer systems directly to end customers, bypassing distributors and retailers (resellers). Dell's supply chain consists of only three stages— the suppliers, the manufacturer (Dell), and end users.

Dell’s direct contact with customers allows it to:

properly identify market segments, analyze the requirements and profitability of each segment, and

Develop more accurate demand forecasts.

Dell matches supply and demand because its customers order computer configurations over the phone or online (Internet). These computer configurations are built up from components that are available. Dell’s strategy is to provide customized, low cost, and quality computers that are delivered on time. Dell successfully implemented this strategy through its efficient manufacturing operations, better supply chain management and direct sales model. Dell takes orders directly from its customers; either on phone or online. Thus, Dell reduces the cost of intermediaries that would otherwise add up to the total cost of PC for the customer. Dell also saves time on processing orders that other companies normally incur in their sales and distribution system. Moreover, by directly dealing with the customer Dell gets a clearer indication of market trends. This helps Dell to plan for future besides better managing its supply chain.

Another advantage Dell gets by directly dealing with the customer is that it is able to get the customers requirements regarding software to be loaded. Dell loads the ordered software in its plant itself before dispatching it. By eliminating the need of a PC support engineer to load software, the customers gain both in time and cost. They can use the PC’s the moment they arrive.

3.1 THE DIRECT MODEL

Dell's direct selling model traces its origins to Michael's ( founder) idea of selling computers directly to the consumer eliminating the need for middlemen and distributors. Michael believed that by selling PCs directly to the consumers, the company would be able to better understand the needs of its customers. The first computer that the company introduced in 1985 - Turbo PC, was advertised in computer magazines and sold directly to customers. Dell also began employing computer literate sales personnel, who guided consumers in their choice of systems. Each system was assembled according to the preferences of the customers. This option helped customers to get computers at a price lower than other brands.

3.2 ROLE OF DELL SUPPLIERS

In order to manage its operations with low inventory levels, Dell collaborated closely with its suppliers. The company's procurement decisions were based on four criteria - quality, cost, delivery and technology. Suppliers were selected on the basis of cost (given a weightage of 30%) and quality, service and flexibility (with a weightage of 70%).

3.3 BALANCING DEMAND AND SUPPLY

Dell maintained a database to track the purchasing patterns of corporate customers and their budget cycles, in order to forecast demand. It also maintained a similar database for individual customers in order to cater to their future requirements for PCs. Through its forecasting techniques, Dell was able to forecast demand with 75% accuracy. Thrice a day, the changing demand patterns were communicated to the major suppliers. In all the countries in which Dell operated it had a direct sales force, which was directed by the marketing department located at the headquarters.

3.4 PRODUCTION PROCESS

Dell received orders via the telephone, Internet, e-mail, etc. Orders were received by business units, which downloaded the orders every 15 minutes. With advancement in technologies, the choices available for the consumers also widened. Customers could use Dell's website www.dell.com, to configure their customized computer and place an order for it. Customers could choose from a variety of products ranging from desktops, notebooks, servers, printers, etc. The website catered to different segments of customers like individuals, home office customers, small businesses, medium businesses, large businesses and public sector customers like Government departments, educational institutions and healthcare institutions.

3.5 THE BENEFITS

Dell maintained nearly zero inventories for some of its components. With the value of inventory declining rapidly at an average of 0.5% a week, holding a significant amount of inventory did not prove to be an advantage.

As Dell did not hold large inventory of finished products, it did not have to sell technologically obsolete products at a discount.

Dell was able to bring in new products according to the needs of the customers into the market faster than its competitors.

In 2004, the inventory turnover rate in Dell was at 107 times a year, compared to 8.5 times at HP and 17.5 times in IBM.

3.5 THE PROBLEMS

In the years 2005 and 2006, Dell faced several problems, and lost its coveted position as the largest selling PC manufacturer to HP. HP was able to surge ahead of Dell by procuring components at a cheaper price and improving its supply chain management practices. Dell's problems included growing complexities in its product line and pricing system. At the same time, demand from the corporate buyers, who accounted for a major share of Dell's sales fell. According to a survey by CIO Insight, technology spending among companies with revenues of US$ 500 million decreased by 1.3% in 2006.

4. DELL’S COMPETITIVE ADVANTAGE

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.

5. INFORMATION SYSTEM & TECHNOLOGY

5.1 I2 SCM SOFTWARE PACKAGE

Every 20 seconds, Dell aggregates its orders, analyzing the material requirements. i2 SCM compares Dell’s on-hand inventory with its suppliers’ inventory, then creates a supplier bill of material to meet its order needs. Dell’s suppliers have 90 minutes to pull the needed materials and drive them to Dell’s factory. Dell then takes 30 minutes to unload the truck and place the materials – in the precise order in which they will be manufactured – onto the assembly line.

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 the requirements and confirm their ability to commit their own inventory to Dell as the orders are placed.

6. INVENTORY MANAGEMENT

Dell has a special vendor-managed-inventory (VMI) arrangement with its suppliers:

Suppliers decide how much inventory to order and when to order while Dell sets target inventory levels and records suppliers' deviations from the targets.

Dell heuristically chose an inventory target of 10 days supply, and it uses a quarterly supplier scorecard to evaluate how well each supplier does in maintaining this target inventory in the revolver.

Dell withdraws inventory from the revolvers as needed, on average every two hours. If the commodity is multisourced (that is, parts from different suppliers are completely interchangeable), Dell can withdraw (pull) those components from any subset of the suppliers. Dell often withdraws components from one supplier for a few days before switching to another. Suppliers decide when to send their goods to their revolvers.

In practice, most suppliers deliver to their revolvers on average three times a week.

Dell had been setting inventory targets based on empirical data and judgment with no clear reference to any desired service levels. Dell hypothesized that it could reduce revolver inventory markedly by using a more rigorous approach and gaining better visibility of the inventory throughout the supply chain. Once it determined an optimized inventory level, Dell could collaborate with its suppliers to eliminate excess inventory.

6.1 EASILY DEPLOYED The Dell Software Inventory & Usage Management service enables IT administrators to remotely inventory and monitor software usage on any managed corporate PC connected to the Internet. PC software usage can be automatically tracked anytime the user connects to the Internet, even if they are not connected to the corporate network.Unlike traditional on-premise solutions that require up-front investments, the Dell Software Inventory & Usage Management service works without infrastructure investments or upgrade servers, can be deployed in days, and is easy to maintain without end-user involvement.

6.2 AUTOMATES THE SOFTWARE INVENTORY PROCESS Dell Software Inventory & Usage Management automates the software inventory process by discovering application executables on PCs enterprise-wide – without requiring connection to the corporate network. Dell has a dedicated team of software experts who monitor industry changes and product releases in order to maintain a comprehensive titling database. This database allows millions of executables to be automatically resolved into their licensed parent applications, versions and bundles/suites for easy comparison with license agreements so that unused or under-used software licenses can be easily identified.

6.3 PROVIDES ROBUST REPORTING With the Dell Software Inventory & Usage Management service you can run on-demand software inventory reports. When combined with Dell Asset Management, you can also run reports on hardware assets to give you a comprehensive inventory of all IT assets. Reports can be run on multiple levels from an individual system or across an entire organization – capturing a multitude of attributes for every covered application, including publisher, title, date of installation and usage history.

7. DEMAND MANAGEMENT

Dell controls its inventory and costs by being a demand-pull company, whereas one of its top competitors, IBM, is strictly a supply-push company and operates in a more traditional manner. IBM has to be good at forecasting what the customers will need, while Dell makes the computers to order. Dell is more efficient and therefore more profitable because it can buy its component parts based on the customer’s demand and not have to worry about building up its supply of inventory that may or may not be used. “The result was that the company wound up with essentially no carrying costs for inventory while maintaining excellent turnaround on orders, because it sold what it had on hand, collected from customers in an average of a few days, and didn't have to pay suppliers for several weeks (Henricks, 2003).” Dell continues to use this successful formula to keep its competitive edge over its customers.

8. E-COMMERCE AND PROCUREMENT

B-2-B E-commerce solutions

Dell delivers business to business (B2B) transactions that allow an organization to lower their procurement costs. With a B2B solution, we can shop online from within our Enterprise Resource Planning (ERP) "procurement" application and return the contents of our shopping session back to our ERP system electronically. No longer are we required to enter duplicate information in order to purchase. The electronic requisition can now be routed through our standard ERP workflow where it can be approved electronically. Once this electronic requisition is approved, it can become an electronic purchase order and be transmitted instantly to Dell. These orders flow directly into Dell's manufacturing system where our orders are built immediately, saving us hours or days in processing time. This brings us the latest technology at the quickest pace.

Dell's has two objectives with its B2B integration initiative:

1. To quickly integrate with customers who are capable today2. To help customers build a B2B solution for rapid deployment and connectivity

Dell has built a solution that extends its existing Internet infrastructure and E-Commerce capability to easily integrate with any customer who supports open, industry document standards of XML and EDI. This allows Dell to provide the same customized catalog most customers use today with Premier Pages, and integrate this dynamic commerce functionality into their internal procurement systems.

If a customer is not currently capable of integrating their procurement systems and processes with their suppliers, Dell can provide the necessary hardware, software, and consultation to help build and deploy a solution that not only connects the customer to Dell, but one that can to connect to even other suppliers or customers.

Benefits:

Better align Dell with customer procurement processes Ease the purchasing process and reduce errors by eliminating duplicate data entry

Reduce costs for clients by eliminating paper purchase order/fax processes

Reduce customer cycle times for ordering approval and payment

9. PRODUCT DESIGN CONSIDERATIONS

In today’s world, the development of manufactured products is often a complex affair that traverses the globe. Not only are manufactured products themselves becoming increasingly sophisticated, but the companies that make such products increasingly rely on geographically distributed development organizations to help design them. To be successful in a global environment, however, a company must efficiently and effectively

manage product development both within and across its design facilities. Failure to do so can lead to delayed product releases, missed market opportunities, and ultimately lost revenue.

Dell is no stranger to global product development. In fact, Dell has five globally distributed design centers, eight original design manufacturers (ODMs) in nearly a dozen locations, and numerous remote team members all contributing to the design and development of its industry-leading hardware platforms. Despite the complexity of this worldwide product development effort, Dell has a consistent track record of meeting its product release dates, and Dell products have been regularly hailed as technology leaders.

For more than a decade, Dell has relied on PTC Pro/ENGINEER Wildfire computer-aided design (CAD) software running on Dell Precision workstations to design complex products and manage product information and development processes effectively.

Dell has used PTC Pro/ENGINEER software successfully in regional product design centers for more than a decade. Currently, Dell deploys hundreds of Dell Precision M90, Dell Precision 490, and Dell Precision 690 workstations running the Microsoft Windows XP OS

and Pro/ENGINEER Wildfire CAD software to design and develop the entire Dell product line—including servers, workstations, desktops, notebooks, printers, and even televisions (see Figure 1). Pro/ENGINEER Wildfire offers several key features, including sophisticated 3-D modeling and simulation capabilities, an integrated architecture that supports the design process all the way from concept to manufacturing, and automated generation of associative tooling design, assembly instructions, and machine code. By deploying Pro/ENGINEER Wildfire on standards-based Dell Precision workstations running Microsoft Windows, Dell can scale product design and development efforts quickly and cost effectively in response to changing business requirements around the globe.

10. GREEN ISSUES

Dell’s focus on efficiencies and customer satisfaction are seen in the products and services it supplies to the businesses it works with. That same focus helps drive Dell's environmental stewardship program to conserve product energy consumption, reduce or eliminate materials for disposal, prolong product life span and provide effective and convenient equipment recovery solutions. By streamlining business steps and processes to be as efficient as possible, Dell helps minimize stress on the environment while achieving speed, responsiveness and cost savings that are passed along to customers.

This commitment to the environment hasn’t gone unnoticed. Dell was recently awarded the National Recycling Coalition’s ninth annual Recycling Works Award. Dell’s longstanding efforts to promote individual producer responsibility were recognized for its leadership in recycling computer equipment and its global policies making it easier for customers to become effective environmental stewards.

10.1COMMITMENT TO THE ENVIRONMENT

When it comes to being an environmentally friendly company, Dell hardware and services talk the talk and walk the walk. From the first moment Dell engineers begin to design everything from flat panel displays to servers, they're thinking about energy efficiency and other ways they can ensure Dell products are "earth friendly." Dell is technology partners your campus can count on to vigorously pursue environmentally sound programs that conserve product energy consumption, reduce or eliminate materials for disposal, prolong product life span and provide effective and convenient equipment recovery solutions.

10.2 ENERGY SAVING HARDWARE DESIGN

Dell’s focus on product energy efficiency is designed to help customers decrease electricity usage and system operating cost. Across the range of Dell products, energy savings are built-in.

Targeting server power efficiency is one of Dell's primary design objectives. The latest Dell PowerEdgeTM servers consume up to 25% less energy than previous generations. When combined with impressive performance gains, this results in up to three times the performance per watt over previous generations.

Current Dell Latitude  notebooks consume up to 70% less energy on average than the previous generation OptiPlex GX620. The energy saved results in a reduction of pollution to the environment.

10.3 KEEPING TECHNOLOGY OUT OF THE TRASH

All hardware will eventually reach obsolescence. But where it goes once it's replaced makes the difference. Dell has Asset Recovery and Recycling Services that helps ensure your obsolete or excess computer systems are resold or recycled in an environmentally friendly way. Options include:

10.3.1 Disposal

Frees up physical storage space by recycling used or obsolete computer equipments.

10.3.2Donation Donate your computers to the National Cristina Foundation to help disabled and economically disadvantaged children and adults in your community.

10.3.3Value Recovery Gain value from used equipment, which can be resold.

10.4DELL ASSET RECOVERY AND RECYCLING SERVICES

Utilize Asset Recovery Services for the logistical and disposal capabilities to recover and dispose owned and/or leased computer equipment in a secure and environmentally safe way. Along with removing identifying tags and labels, the hard drive of each system we recycle is overwritten to help protect the security of your data

10.5 GLOBAL RESPONSIBILITYDell recognizes the role that product design, asset recovery and other environmentally friendly actions play in our responsibility toward global stewardship. We are focused on implementing features that reduce the energy required to operate our products, as well as educating customers about the importance of using these features. Dell’s pioneering direct business model optimizes manufacturing and distribution efficiencies, resulting in lower cost-of-ownership through good environmental practices.

11. PERFORMANCE MEASURES

Dell has fewer stages in the S.C. Greater part of the S.C. operates in “pull mode”. Comments on the characteristics follow:

Type of products More

Product introduction Faster

Response time Longer (products not immediately available)

Stages Fewer: increased profit margin through cost reduction

Payments e-funds transfer: faster pay-inslower pay-outnegative workingcapital

(matter of negotiation with partners)

Inventory Lower: Through aggregation and delayed differentiation

Facilities costs Lower: Fewer facilities (mainly retail outlets)

Transport costs Increased: Distribution on a personal basis (whose cost is it?)

However Transport cost small fraction of price and cost

24-hour service More customers, revenue enhancement

Price More flexible: Price revisions depending on stocks

12.SWOT ANALYSIS

12.1STRENGTHS

Dell is the World's largest PC maker. Profits for the 3 months to July 2005 were in excess of $1 billion US, representing a growth of around 28%. For the last couple of years it has held its position as market leader (it took it from rivals Hewlett-Packard). The Dell brand is one of the best known and renowned computer brands in the World.

Dell cuts out the retailer and supplies directly to the customers. It uses information technology, and Customer Relationship Management (CRM) approaches to capture data on its loyal consumers. So a customer selects a generic PC model, and then adds items and upgrades until the PC is kitted out to the customer's own specification. Components are made by suppliers, never by Dell. PC's are assembled using relatively cheap labor. You can even keep track of your delivery by contacting customer services, based in India. The finished goods are then dropped off with the customer by courier. Dell has total command of the supply chain.

12.2 WEAKNESSES

The company has such a huge range of products and components from many suppliers from a plethora of countries, that there is the occasional product recall

that can cause Dell some embarrassment. In 2004 Dell had to recall 4.4 million laptop adapters because of a fear that they could overheat, causing electric shocks or fires.

Dell is a computer maker, not a computer manufacturer. It buys from a group of concentrated hi-tech component manufacturers. Whilst this is a tremendous advantage in terms of business operations, allowing Dell to focus on marketing and logistics, the company is reliant on a few large suppliers, and to an extent is locked in for periods of time (i.e. unable to switch supply dues to the lack of large suppliers in the World).

12.3OPPORTUNITIES

Kevin Rollins replaced Michael Dell in 2004 as Dell's Chief Executive Officer. Dell remained the company's Chairman. Despite founder Dell's massive success, new blood and a change in management thinking could lead the company into a new, even more profitable period. Dell was born in 1965, and founded Dell in 1984 with $1000 whilst studying at the University of Texas. He became the youngest Fortune 500 CEO in 1992, and will be a tough act to follow.

Dell is pursuing a diversification strategy by introducing many new products to its range. This initially has meant good such as peripherals including printers and toners, but now also included LCD televisions and other non-computing goods. So Dell competes against iPod and other consumer electronics brands.

Dell is making and selling low-cost, low-price computers to PC retailers in the United States. The PC's are unbranded and should not be recognized as being Dell when the consumer makes a purchase. Rebranding and rebadging for retailers, although a departure for Dell, gives the company new market segments to attack with the associated marketing costs.

12.4THREATS

The single biggest problem for Dell is the competitive rivalry that exists in the PC market globally. As with all profitable brands, retaliation from competitors and new entrants to the market poses potential threats. Dell sources from Far Eastern nations where labor costs remain low, but there is nothing stopping competitors doing the same - even sourcing the same or similar components from the same or similar suppliers. Remember, Dell is a PC maker, not a PC manufacturer.

Dell, being global in its marketing and operations, is exposed to fluctuations in the World currency markets. Although it is a very lean organization, orders do have to be placed some time ahead due to their size or value. Changes in exchange rates could leave the company exposed to potential loses in parts of its supply chain. Exchange rates could leave the company exposed to potential loses in parts of its supply chain.

REFERENCES:

www.wikipedia.com

Boone, James (2000, May 12). Dell's Competitive Advantage.     Retrieved April 3, 2004 from University of Central Florida,

http://www.bus.ucf.edu/jcourtney/EcommPPT/DellAdvantage.ppt

SWOT Analysis DELL, Marketing Teacher Est.2000

Implementation study: DELL IT Scales supply chain Management with Oracle RAC 10g

By Dave Jaffe, Ph.D., Todd Muirhead, Tiong Tey, Raveendra Avutu

Dell Power Solutions, May 2007.

www.dell.com/techcenter

www.dell.com/oracle10g

www.dell.com/oracle

Go Green with DELL

Commitment to the Environment, Energy Saving Hardware Design, Global Responsibility Keeping Technology Out of the Trash, April 2007.

Dell Manages Profitability, Not Inventory dated 6/2/2003

Harvard Business School, review by by Jonathan Byrnes

Performance measurement & Risk management at Dell by Thomas Meredith, September 01, 1998

CONTENTS

1.INTRODUCTION...........................................................................................................................1

2.SUPPLY CHAIN SYSTEM................................................................................................................1

2.1 Configuration management:.................................................................................................1

2.2 Procurement........................................................................................................................2

2.3 Cost.......................................................................................................................................2

2.4 Inventory..............................................................................................................................2

3. SUPPLY CHAIN MANAGEMENT...................................................................................................2

3.1 The Direct Model..................................................................................................................3

3.2 Role of Dell Suppliers............................................................................................................4

3.3 Balancing Demand and Supply..............................................................................................4

3.4 Production Process...............................................................................................................4

3.5 The Benefits..........................................................................................................................5

3.5 The Problems........................................................................................................................5

4. DELL’S COMPETITIVE ADVANTAGE.............................................................................................6

5. INFORMATION SYSTEM & TECHNOLOGY....................................................................................6

5.1 I2 SCM Software Package......................................................................................................6

6. INVENTORY MANAGEMENT........................................................................................................6

6.1 Easily deployed.....................................................................................................................7

6.2 Automates the software inventory process..........................................................................7

6.3 Provides robust reporting.....................................................................................................7

7. DEMAND MANAGEMENT..........................................................................................................7

8. E-COMMERCE AND PROCUREMENT...........................................................................................8

9. PRODUCT DESIGN CONSIDERATIONS.........................................................................................9

10. GREEN ISSUES.........................................................................................................................10

10.1Commitment to the Environment......................................................................................10

10.2 Energy Saving Hardware Design.......................................................................................10

10.3 Keeping Technology Out of the Trash..........................................................................11

10.5 Global Responsibility....................................................................................................11

11. PERFORMANCE MEASURES...................................................................................................12

12.SWOT ANALYSIS.......................................................................................................................13

12.1Strengths...........................................................................................................................13

12.2 Weaknesses......................................................................................................................13

12.3Opportunities.....................................................................................................................14

12.4Threats...............................................................................................................................14

References:...................................................................................................................................15

16