Dell production operation managemnet

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POM – II DELL Operations Strategy Group – Panoply Group members: Ashish Ladda (2010129) Eshita Batta (2010136) Harsh Agarwal (2010139) Komal Takavale (2010143) Pankaj Arora (2010153) Praveen Trivedi (2010156) Shashi Bhushan Dwivedi(2010167)

Transcript of Dell production operation managemnet

Page 1: Dell production operation managemnet

POM – IIDELL Operations Strategy

Group – Panoply

Group members:Ashish Ladda (2010129)

Eshita Batta (2010136)Harsh Agarwal (2010139)

Komal Takavale (2010143)Pankaj Arora (2010153)

Praveen Trivedi (2010156)Shashi Bhushan Dwivedi(2010167)

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Introduction• Dell -founded by Michael Dell who was a student at the

University of Texas in Austin in 1984. The direct sales model was adopted since the very 1st step.

• In 1996, Dell began its Internet approach.• In 1999, became the number one PC seller in US, number

two worldwide-phenomenal success. Managed to remain a successful company in spite of general crisis of the PC industry of the new millennium.

• Decided to enter new markets and expand its product portfolio.

• Changed its name in 2003 from “Dell Computer Corporation” into “Dell Inc.”, to “reflect the evolution of the company from a computer manufacturer to a company that provides a wide array of technology-related services”

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Supply Chain ManagementIt is the strategic management of activities involved in the acquisition and conversion of materials to finished products delivered to the customer.

Supply chain as defined by experienced practitioners extends from suppliers’ suppliers to customers’ customers.

Supply chain includes :Material flowsInformation flows Financial flows

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Dell’s Business Process Model

Key principle of Dell’s business model

Build-to-Order Manufacturing & Mass Customization - Dell builds its computers, workstations, servers to order, none produced for inventory; Custom built servers, workstations could be ordered based on their needs of their applications.

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Direct Selling

First hand intelligence about customer preferences, needs - for evolving requirements and expectations.

Immediate feedback on design problems and quality glitches On-line communications technology - easier to communicate inventory

levels and replenishment needs to vendors daily/hourly. Access to Dell's own on-line internal technical support tools to its large

customers Accurate sales forecasts

Indirect PC value chain

Direct PC value chain : Dell’s hardware delivery system

Other Advantages --

Sell-direct strategy - Dell has no in-house stock of finished goods inventories. (adv. - don’t have to wait for resellers to clear out their own inventories before it could push new models into market place.)

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Just-in-Time Inventory Practices

Producing goods and services exactly when they are needed

An inventory management strategy aimed at monitoring the inventory process in a manner as to minimize the costs associated with inventory control and maintenance.

At DELL: Cost advantage Shortens time to market for DELL new generation of

computer models No fear of obsolete inventory Safety net from price fluctuations

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Partnerships with Supplier Dell believed it made much better sense for Dell Computer topartner with reputable suppliers of PC parts and componentsrather than to integrate backward and get into parts andcomponent manufacturing on its own.

The advantages:

1. Using name-brand component enhanced the quality and performance of Dell PC’s.

2. Getting the volume of components it needed the overall market supply.

3. It feasible to have some of supplier engineers assigned toDell product design team and for them to be treated as part of Dell.

4. Dell’s long-run commitment to its suppliers laid the basis for just-in-time delivery suppliers product to Dell assembly in Texas, Ireland, Penang.

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DELL – Tryst with “ERP”

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Enterprise Resource Planning Recap:

Enterprise-wide system which integrates the business functions and processes of an organization

Integration of business functions into one seamless application

Usually runs on a RDBMS

At DELL:Uses i2 Technologies for its SCM system:

Every 20 sec software aggregates orders, analyzes material requirements, compares Dell’s on-hand inventory with its suppliers’ inventory & creates a supplier bill of material to meet its order needs.

Instead of forecasting the daily supply needed, Dell receives the exact material every two hours to fulfill actual customer orders.

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SAP 140 member team set up for SAP implementation. Cancelled when costs shot up and flexibility of system went

down. The following G-2 architecture (local control of functionality but

a global view of the business) enables company to run “best-of-breed applications” rather than only a single enterprise system.

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ISO Standards

Recap:

ISO is a network of the national standards institutes of 160 countries, one member per country, with a Central Secretariat in Geneva, Switzerland, that coordinates the system.

ISO enables a consensus to be reached on solutions that meet both the requirements of business and the broader needs of society

At DELL:

Dell follows the ISO 14001 standard for managing environmental programs throughout product life cycle.

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Research and Development

•The company talked to its customers frequently about "relevant technology," listening carefully to customers' needs and problems and endeavouring to identify the most cost-effective solutions.

•Had about 1,600 engineers working on product development, spent about $250 million annually to improve users' experience with its products

•The company's R&D unit studied and implemented ways to control quality and to streamline the assembly process.

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Business results – A success• Internet coupled with Direct Business Model

- sell directly to end customers instead of intermediate

distributors, resellers.

• Virtual Integration - using sophisticated CRM, SCM systems at respective ends as well their integration - already integrated with 38 procurement and ERP systems across all its clients.

• Selling Points - Internet, B2B (Premier Pages), Phone-calls, Mass catalog mailings

• Do not Just sell Products – sell Values - client asked to put tags on their computers - proactive in solving clients pain points – preloaded software

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• Net income grew faster than sales as Dell improve costs and capture economies of scale

• Return on invested capital (ROIC) of 85 percent for the year, the highest return of any major computer systems company

• The increases in consolidated net sales for both fiscal 1997 and fiscal 1996 were primarily attributable to increased units sold.

• Unit volumes increased 55% and 48% for fiscal 1997 and fiscal 1996, respectively.

Business results – A success

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Business results – A success

Splits:10-Apr-92 [3:2], 30-Oct-95 [2:1], 09-Dec-96 [2:1], 28-Jul-97 [2:1],

09-Mar-98 [2:1], 08-Sep-98 [2:1], 08-Mar-99 [2:1]

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THANK YOU!