PC Industry and DELL Presentation

Supply Chain Management

Of

PC Industry

Prepared By:Sulabh Maheta (08084)Amin Pattani (08100)Bhavna Thakker (08112)

Introduction of Industry

1. Computer Software Industry :- Computer software means all those application programs, which we cannot touch but see and computer software industry means that providing the business opportunities and employment in the field of computer software development.

2. Computer Hardware Industry :-

Computer hardware means all those parts, which we can touch and see and computer hardware industry means that providing the business opportunities and employments in the field of computer hardware development.

2TOLANI INSTITUTE OF MANAGEMENT STUDIES

COMPUTER INDUSTRY - MAJOR PLAYER IN INDIA

• Hewlett Packard (HP)

• HCL

• Toshiba

• Compaq

• Dell Computers

• Sony

• Lenovo.

HP has the largest market share of 21% in the Indian market.


• Dell = 17.3%

• HP = 15.5%

• Lenovo = 7.4%

• Acer = 4.5%

• Fujitsu-Siemens = 3.7%

Worldwide Market Share


Growth of Laptop Market in India

• Indian Laptop market is now in sync with global market.

• In 2005 that sales of laptops surpassed the sales of desktop computers for 1st time.

• Laptop market has registered 79% Year-on-Year (YoY) growth during 2006.

• Market share of laptops would be 35-40% in the next two years.


Distribution Channel of PC Industry


Supplier PC maker Distri- butorsRetailersResellers

IntegratorsFinal Customer

• Dell’s headquarters was in Austin, Texas

• Michael Dell founded the company in 1984

• Dell opened its first manufacturing centre in the Asia-Pacific region in 1996 in Penang Malaysia.

DELL


• Dell is a global company operating in 43 countries in three world regions.

• Dell is the World's largest PC maker having Build To Order model.

• No 1 in profitability for the computer systems industry

• For the last couple of years it has held its position as market leader (it took it from rivals Hewlett-Packard).

Dell’s Global PresenceThe Americas EMEA Asia Pacific China

Sales Offices in 43 countries Sales presence in 170 countries 6 Manufacturing Sites

XiamenChina

PenangMalaysia

LimerickIreland

AustinTexas

NashvilleTennessee

Eldorado do Sul Brazil

LOCATION

Dell selects specific locations based on a combination of factors including :

• Labour costs,

• transportation and information infrastructure,

• proximity to markets

• government incentives.


Dell’s Direct Approach: A Fundamentally Different Model

Dell Direct Model

Suppliers Suppliers Customers Customers

Ownership of the value chain

Loss of control over product & information flow & customer relationships


Supplier PC maker Distri- butorsRetailersResellers

IntegratorsFinal Customer

Competitor Model

Benefits of Dell Direct Model

• Better understand customer needs

• Customers receive exactly what they want: not standard solution

• Minimized inventory

• New technology delivered immediately

• Dell’s use of the direct approach reportedly provides it with nearly a 14-16 % cost advantage compared to indirect sellers.


The Benefits of Low Inventory

90

95

100

105

110

115

120

TypicalDell

RelativeComponentCost

Weeks Relative to Delivery

With 3 DaysInventory,Dell Buys Here

With 90+ Day’s Manufacturerand Reseller Inventory, ChannelManufacturer Buys Here

10-12% Cost Advantage



Performance Indicator:DELL versus the Industry, 2008

Source: eScholarship_UC_item_4kq2q43h.pdf

Customer

Local Suppliers

Dell FactoryLogistics Hubs

Suppliers

Results: 3 days of inventory - Inventory turns of 106 per year

Delivery

Supplier Owned Dell Owned

Inventory Model


Supplier/Partner Location

• Dell is using direct model that’s why company 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%)


Customer

Check Configuration

YES

Manufacturing Floor

Push the inventoriesNO

Assembling of hardware Print out

Software Installation

Testing

Packing

Delivered


DELL order process

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.


Open Innovation And Effective R&D

• The traditional approach to innovation tends to produce proprietary technologies and products that are often hard to migrate from as a customer. Dell have a more open and effective approach to R&D.

• Dell spends little on product research and development - $440 million a year, vs. $4 billion a year at Hewlett-Packard.


• Effective Network repair Logistics

• Repair cycle time dropped from

43days 24 days 17 days

Reverse logistics


Direct Repair Service Handling

ContractService

ContractService CustomersCustomers

CSRCSR

3PL3PLWarehouse

Repair Serv

ice Request

Servicing

Parts DeliveryShipment Order

Service Order

Service Request

Message

PartsOEM

Ship returned Parts

Invoice

Receipt


Disadvantages

• High Cost Involved- $350 million

• Time Lag – 60 Days

• Decrease in Customer Focus

• Need for Maintaining Stock in Ware House


Repair Services Handled by OEM Suppliers

CustomersCustomers

CSRCSR

ContractService

Warehouse

Repair Serv

ice Request

Servicing

Parts Delivery

Service Order

Service Request

Message

PartsOEM

3PL3PL

Invoice

Receipt


Scenario After SCEM Deployment

CustomersCustomersCSRCSR

ContractService

Repair Service Request

Servicing

Parts Delivery

Ser

vice

Ord

er

PartsOEM

3PL3PL

Invoice

Receipt


Hewlett Packard

• Since Hewlett-Packard was founded in 1939.

• HP is a technology company that operates in more than 170 countries around the world.

• HP is the world's 2nd largest IT company, with revenue totalling $114.6 billion for fiscal 2009.

• HP’s online store was launched in early 1998.


HP Supply Chain Facts

• Over 600 contracted materials and manufacturing suppliers

• More than 340,000 workers at audited sites that produce HP products

• More than 1 million printers shipped per week

• 48 million PC units shipped annually


• In order to help hpshopping.com increase responsiveness to its customer base, FedEx placed both restored -and finished-goods inventories .

• Late cutoff times enable hpshopping.com customers to order as late as 10:00 p.m. and still have their orders shipped the same day.

• HP decreases returns cycle times by 80% and per unit return product costs by 70%.


Thank You

TWO golden rules at Dell : `Disdain inventory' `Listen to the customer'

PC Industry and DELL Presentation

Documents

Transcript of PC Industry and DELL Presentation