Dell Slides

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© Dell Inc. - 2003 Supply Chain Excellence

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Transcript of Dell Slides

Page 1: Dell Slides

© Dell Inc. - 2003

Supply Chain Excellence

Page 2: Dell Slides

2© Dell Inc. - 2003 Supply Chain Management

Dell’s Product Portfolio

Precision Workstations

PowerEdge Servers

PowerVault&

Dell|EMC Storage

OptiPlex Desktops

Latitude Notebooks

Software &Peripherals

PowerConnect Switches

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~80%Corporate & Institutional ~20%

Consumer

Customer Base (Revenues)

Revenue by Region

70%Americas

11%APAC

19%EMEA

Global Manufacturing Austin, Texas, USA

Nashville, Tennessee, USA

Eldorado do Sul, Brazil

Limerick, Ireland

Penang, Malaysia

Xiamen, China~41,800 employees worldwideRevenue $38.4B (last 4 qtrs.)

Dell Facts

Revenue by Product• Desktops = 51%• Enterprise = 21%• Notebooks = 28%

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Suppliers Customers

Direct Model

• 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

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The Power of Virtual Integration

• Dell acts as the single point of accountability while focusing on our core competency – custom-configured computing solutions.

• Seamless integration with best-in-class partners leverages their core competencies for the benefit of Dell’s customers.

Software E-Business

ServicesTechnologyBLUECURRENTEMC²

SOLUTIONSOLUTIONCustomer

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1991

0

50

100

Day

s S

ales

Inve

nto

ry

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Q103

10

20

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60

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5

15 X

                 

Inventory Management Experience

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Cost

Quality

Delivery

Worldwide Procurement Regional Materials

Shared responsibility

Separating contracting from commerce

Procurement Responsibilities….

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Execution

Planning

Strate

gy

Intense Focus through:• Separate internal organizations• Supported by unique processes and systems• Looking at a different parts of the inbound supply chain• Dealing with different people at the supplier

Continuity of Supply

Low inventory does not equal Supply IssuesBut it does equal operational efficiencies…

Time Horizon: Beyond lead-time 3 days to order lead-time 0 to 3 daysOrg (people): Worldwide Procurement (6X) Regional Materials (4X) Factory (X)Supplier Interface: Executive Operations SLC

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Quickly Make Product after Sale = Cost Advantage

ConsistentSupply

Globally

Immediate Response to Customer Needs

LowestCost Consistently

Customer Benefits

Time

Co

st

of

Co

mp

on

en

ts

Today

Customer Places Order

Dell Procures Components, Assembles, &

ShipsDell Cost

VAR Gets Product from

Distributor

Channel Inventory

3 Weeks Ago

Distributor Gets Product from

Mfr

4 Weeks Ago

Mfr Assembles Product

6 Weeks Ago

Mfr Buys Components

8 Weeks Ago

Cost to Competitors

Mfr Inventory

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Velocity = Direct Demand Feedback

1) Dell facilities act as Manufacturing Centers, not Warehouses – only inventory needed for next 2 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.

SLCDell

Manufacturing

Buy-to-Plan Build-to-OrderS

up

pli

ers

Material requested to build customer orders

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

“push” “pull”

Cu

sto

mer

s

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Quarterly Business Review (QBR)

Quality

Cost Leadership

Performance to Targets Structural Cost Analysis Advantaged Pricing Internet Negotiation

Service

Technology/Time To Volume

Continuity of Supply

Warranty Cost VLRR, 90-day FIR Process Capability 5 Sigma

Product Leadership Roadmap Alignment Joint Qualification RTS Predictability

Corrective Action Global Support Failure Analysis Quality Metrics

Supply Chain Optimization Capacity/Capability Globalization Flexibility

Senior leadership involvement

Data driven discussion/ decisions

Identify actions/ commitments

Mutual agreement of future performance targets

Measure and reward performance

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Continuous Improvement

1. DefineWhat’s the problem?

Who can fix it?What’s the process?

2. MeasureCan I explain a problem

with data?

3. AnalyzeWhat’s the real problem?

4. ImproveLet’s improvethe process!

6. ReportTell others.

5. ControlDid we improve?

Did we save money?

BPI

Model

• Initial Six Sigma efforts started in 1994.

• Formal “belting” process in manufacturing - 1998.

• Company-wide program started in 2000.

• Master Black Belt focused on supplier BPI beginning 2001.

• Foundation for Dell’s Winning Culture Initiative.

• Over $1B saved during life of program …

Business Process Improvement

Certification Levels• Yellow Belt• Green Belt• Black Belt• Master Black Belt

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Low Cost LeaderDell consistently provides superior value

Dell’s low operational costs mean lower prices for customers:

• State-of-the-art supply chain management

• Efficient technologies:• Dell.com• Support.dell.com• Globally available Premier Pages

Operating Expense Over Time (% sales)

8%

10%

12%

14%

16%

18%

20%

22%

24%

26%

28%

Q1 CY02 Q2 CY 02 Q3 CY 02 Q4 CY 02

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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

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• Organize around Customers – “Be Direct”

• Manage Business Fundamentals – cash\expenses

• Stick to Core Competencies – leverage partners

• Focus on Velocity – compress time

• Continuous Improvement – cultural mandate

• Simplify Complexity – “Easy as Dell”

• Critical Ingredients = People and Processes

Dell’s Strategies for Success

Structural advantages – part of Dell’s DNA …

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Thanks!

SCM@Dell - Velocity Matters!