ESC Silicon Valley 2010 – Dell OEM Solutions - Designing with TCO in Mind

Designing with TCO in mind

Josh Neland, Franklin Flint

OEM Technology Evangelism

Global MarketingConfidential2

Hidden costs . . .

Missingopportunities

Being surprised by

success

Improving the wheel


Technology opportunities

VirtualizationCloud

computingActivity monitoring


Evaluating opportunities

Your Company

Needs

Investments

Maturity

Trends



Your Company

Needs

Investments

Maturity

Trends

Customer

Needs

Investments

Maturity

Trends



Your Company

Needs

Investments

Maturity

Trends

Customer

Needs

Investments

Maturity

Trends

Supplier

Needs

Investments

Maturity

Trends


Virtualization

Server

ClientHDD

ClientHDD

ClientHDD

http://cache.gawker.com/assets/images/lifehacker/2009/08/windows7_01.jpg









A fork in the road

Client v1 Client v2Client v3Client v4Client v5

Client







http://smb.slac.stanford.edu/research/developments/blu-ice/images/linux_logo.gif


Improving the wheel


Specific needs


Invest wisely . . .

What your supplier does

What you do?


Rebalancing the portfolioValue

Vendor expertise

?

Integrate or

Standardize


Plan for success

Sales

Time


Plan for success


Wrapping up

• Broaden your lens to find new opportunities

• Engage and leverage your suppliers

• Plan for success


Q & A


Let’s continue the discussion

[email protected][email protected]

http://dell.com/oem

Global Marketing19 Confidential

Backup


Every Dell customer receives . . .

• Quality in design and production

• Best costs possible

• Supply when you need it

• Sustainability throughout the entire supply chain


Quality in design and production

• System Integration Test (common development term): Ensure components will work together within spec during development

• X-Build (common development term): After development completes, ensure final version of parts work together to spec.

• Pilot (common term): All aspects of manufacturing are working on a few units, including packaging, peripherals.

• Ramp build (dell term): Slowly start ramping production while closely auditing quality to catch any issues only seen during mass production.

• Buying power to resolve component quality issues immediately, should they arise.


Best costs possible

• Utilize frequent B2B e-auctions for the majority of our components to get the best costs with the best terms

• Strategic purchases of commodities during cost dips


Supply when you need it

• Relationships with Samsung, Intel, Microsoft and ODMs allow us to get priority during industry-wide supply constraints

• Dell’s SC3 facility/control room allows Just-In-Time inventory management and routing between Dell facilities, including the ODMs.


Sustainability throughout entire supply chain

• A dedicated Dell team regularly goes on-site to audit the working conditions and manufacturing processes of our 1st, 2nd and 3rd tier suppliers

• The team ensures ethical and legal labor/environmental practices are being followed.

• Zero-tolerance: If a supplier violates the rules, we discontinue usage immediately.

• Our carbon intensity (CO2/revenue), is less than half that of our closest competitor and we have pledged to reduce it further


Quality examples

Global Marketing

PC Manufacturers Recall More Sony Batteries

• BusinessWeek, 2008/10

• “Remember the brouhaha a couple of years ago when Sony took the heat for failing to tell consumers immediately about a problem with its notebook pc batteries?”

• “To refresh your memory, Sony ended up taking a charge of about half a billion dollars in 2006 for a massive recall of more than 10 million lithium-ion batteries. As with the previous recall, Sony reported the problem stemmed from a manufacturing problem that caused defects.”

• Dell was the first in the industry to announce and resolve the issue with our customers, despite the bad press it created.


Supply examples


VRAM shortage impacts second-tier notebook shipments

• DIGITIMES, 2010/4/21

• Video RAM (VRAM) used in graphics cards is in short supply, forcing second-tier notebook makers to delay shipments, according to sources from notebook players, because the three main producers, Samsung Electronics, Hynix and Elpida, do not have enough capacity to meet increasing orders.

• The sources noted that most downstream notebook makers are unable to maintain a secure level of VRAM inventory even if they are willing to pay more; however, the sources expect first-tier notebook makers to see less impact from the shortage.


DRAM shortage impacting PC makers, says Nanya

• DIGITIMES, 2010/4/14

• The ongoing DRAM shortage is causing a panic among PC makers, which now have less than one month of inventory, according to Nanya Technology spokesperson Pei-Lin Pai speaking at the company's recent investors conference. The chip shortage has even affected shipments of some first-tier PC vendors, Pai pointed out.

• Pai said that PC customers are complaining of not getting sufficient supply of DRAM chips, and their stockpiles are falling below safe inventory levels.


Sustainability examples

Global Marketing

Apple: Foxconn violated code of conduct

• Macnn.com, August 2006

• Apple said its audit team--comprised of members from is human resources, legal, and operations groups--found that Foxconn was in compliance in the majority of the areas audited, but found violations to the company's Supplier Code of Conduct, including overcrowding in some housing provided to workers, a complex and overly incentivized pay structure, an outdated payroll system, over-worked employees, and some instances of harsh treatment.


Apple's Foxconn Problems: What Steve Jobs Doesn't Get At All

• Seekingalpha.com, 2010/04/14

• We all can learn a lot from Apple's Foxconn problems. Executives in charge of supply chain management can no longer concern themselves with low prices and high quality alone. They absolutely must make sure their partners take care of their employees and protect the environment.

• No company should be too beholden to any single partner. If one company controls your entire production, you won't have the influence you need to make them improve when necessary.

ESC Silicon Valley 2010 – Dell OEM Solutions - Designing with TCO in Mind

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