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1. GROUP 4 PRESENTATION ON DELL
INC. BUSINESS CASE
SUPPLY CHAIN PRINCIPLES OMGT 1021
TUTORIAL- MONDAY 0830-1030
TUTOR NAME- Dr. Mei Hua (Bella) Gu
GROUP MEMBERS- SIDHANT NARANG, DIVYANG MOHITE,
NIMITH T., GANGATHARAN R, KHANH LUONG
Date- 15/may/2017

2. WHY DELL ?

3. WHY DELL ?

4. THIS PRESENTATION’S TWO SEGMENTS
 First segment depicts the dell Inc. Before oct. 2007 (dell direct model’s
close inspection)
 What was unique about dell’s supply chain before oct. 2007 and why
was this the case
 Second segment depicts dell Inc. After oct. 2007 (changing times in the
PC manufacturing industry, dell’s response & all logistics elements)

5. DELL- INTRODUCTION
 Started by Michal Dell in 1984. Its headquartered in Round Rock,
Texas, U.S.A.
 Dell Product Line: Desktop Computers, Notebook Computers, Network
Servers, Storage products.
 In 2001, became the No. 1 computer system company in the world.
 At Present, it is the third largest PC vendor in the world after HP and
Lenovo.
 Dell Supply Chain operated as a pioneer in the “Configure to order”
approach to manufacturing –delivering individual PC configured to
customer satisfaction.

6. Supply Chain of DELL

7. DELL’S SUCCESS PILLERS
 INVENTORY MANAGEMENT
 DIRECT SALES
 SUPPLIER NEXT LEVEL INVOLVEMENT IN BUSINESS

8. REVOLVERS
 Revolvers or supplier logistics centers (SLCs) are small warehouses
located within a few miles of Dell’s assembly plants.
 Each of the revolvers is shared by several suppliers who pay rents for
using the facility. Therefore, need for a warehouse for Dell does not
occur.
 Dell does not own the inventory in its revolvers; this inventory is
owned by suppliers & charged to Dell indirectly through component
pricing.

9. INVENTORY MANAGEMENT
 Dell withdraws inventory from the revolvers as needed -- on average every
two hours.
 In contrast to others who produce –to stock, dell first receives the order and
the money and only then starts to build, using that money to purchase from
supplier
 While other companies had to guess, DELL knew exactly what its customers
wanted before manufacturing the product. Hence, need not have to store the
finished product in their inventory
 Others had to maintain inventory as there existed middlemen, so to support
reseller and retail channels.
 Just-in-time inventory- only 3 days to deliver the product

10. REVOLVERS- SUPPLIER’S OWNED LOGISTIC
CENTER

11. DELL’S DIRECT MODEL
 Very early to introduce direct
selling through online channel
when others (Compaq etc.) were
using indirect selling
 Customer relationship strongly
built in direct model
 Customization was highly
welcomed by customers online
and sales sky rocketed in
duration, when any other
company cannot even launch
first product.
 The direct model allows a larger
share of the pie for the company
 A good cash flow as you get the
revenue before even paying for
it
 Manufacturing close to the
customer policy- time saving
and adds responsiveness to the
SC

12. DELL’S UNIQUENESS & REASON
 Supplier close linkage- the PC company continually in search for flexibility
and first priority from the supplier to remain fast and lean (cost saving point
of view)
 J-I-T (serve the latest as there is nothing to go outdated)
 Customer service & relations, direct sales
 Mass customisation (serve exactly what customer wants)

13. UNIQUENESS & REASON
 Pull mechanism- the pipeline always remained clear for dell. At any
point in time, there was no outdated inventory to be cleared before
launch of a new model
 Also, typically operated on minimal inventory
 Reason for success in that era- PC market was lacking maturity, this
kind of competition & low pricing (dell allowed the savings to flow
right up to the customer)

14. DEMAND FORECASTING- DELL V/S OTHER
PLAYERS
 Dell’s build-to-order and direct model allowed high agility and
responsiveness to market signals, thereby curbing on overheads and unlike
others, Dell was not required to highly rely on demand forecasting as there
were no retailers who ordered in advance purely on forecasting.
 However, customization was also being welcomed by customers due to
absence of ‘popular standard models’ which meant that industry was still
lacking maturity

15. SUPPLIERS INVOLVEMENT IN DELL
 The goal of it is increasing the speed and quality of the information
flow between Dell and its supply base.
 The portal, value chain.dell.com acts a secure extranet for Dell
suppliers to collaborate in managing the supply chain.
 Dell envisions using this site to exchange with suppliers current data,
forecasted data, new product ideas, and other dynamic information.

16. SUPPLIERS SELECTION AND VALUATION
SELECTION
i. Quality
ii. Price
iii. Delivery
iv. Response to feedback.
EVALUATION - to measure performance uses suppliers score
 Cost
 Delivery
 Availability of technology
 Velocity of inventory
 Ways in which they did business with dell over the internet.

17. DELL’ S MAJOR SUPPLIERS
 MICROSOFT - Windows Provider
 INTEL - Micro processors Provider
 NVIDIA - Graphic chips Provider
 SONY - Monitors Provider

18. Major Partners/Suppliers

19. ADVANTAGES OF DELL MODEL
 Mass Customization (serve exactly what customer wants).
 Dell’s customization was also being welcomed by customers due to
absence of “popular standard models” which meant that industry was
still lacking maturity.
 Saves enormous amount of money on purchasing components because
the components prices increased by 2% every quarterly.
 Reduces handling cost in carrying components and having minimum
inventory.
 More efficient use of resources.

20. CHANGING TIMES- SEGMENT 2, Post OCT 2007
 In OCT 2007, It was witness the change of many fast selling standard PC
models in the market.
 Customers were less concerned about customization and focus on instantly
available models at reseller stores.
 In 2007, DELL suffers a fall in stock due to changing PC market and
preferences from customers.
 From a double digit margin to an alarming 30% fall in the stock market.

21. DELL HYBRID MODEL
 Michael Dell in 2007-“The direct model has been a revolution ,but its not a
religion.”
 In Jun 2007, Dell offered two PC models through Wal-Mart stores sell Inspiron
notebook computers through Wal-Mart’s Sam’s Club outlets.
 In Oct 2007 Dell sold its PC through, China’s largest electronics retailer fifty
Gomez Electrical Appliances stores
 Later Dell also extended its international retail strategy by opening its first retail
store in Russia
DELL
DIRECT
Retail
Store
Hybrid
Business
Model

22. AT PRESENT
• It’s bad news for a PC manufacturer (Particularly if it does not also produce tablets
or mobile phones.) A new study predicts that the rise in sales of tablets and cell
phones will directly, and negatively, affect the sales of PCs, which have already been
steadily slowing down.
• Many people attribute the decline of PC sales to various factors, like the growing
popularity of smartphones and tablets.
• Last year, tablet sales totalled around 116 million units; this year it’s expected to
jump up to 197 million, a nearly 70 percent increase. The reason for the increase is
largely due to decreasing prices, love of the cloud, and addiction to apps. On the
other end of the spectrum, while PCs sold 341 million units last year, anticipated
sales will drop to 315 million this year.

23. DELL’S HIERARCHY 2016- A BIG
OPERATIONAL CLUSTER
•Wide range of activities
done.
•A comparatively dense
cluster full of
employees.
OPERATIONAL
•Analyze and predicts
the capacity of supply
chain.
•Specialists & Analysts.
Analytical •Particularly long term
decision making.
•Example-
manufacturing
overseas, 3pL usage,
DELL DIRECT.
Strategic

24. THANK YOU