Download Dell mini case study

D’après Régis Meissonier
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Supply chain transformation
Traditional supply chain
Suppliers
Producti
on
Distributi
on
Custome
r
Partner network
Parallel processes
New supply chain :
Partner
Customer
Enterprise
Partner
Distributio
n
Partner
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Dell history
Created by Michael Dell in 1984 at Austin, Texas
Initial activity: retail of IBM component updates
1985: the firm started to sell PCs using the direct model
(by telephone)
1990-1993: Dell tried to developed its own distribution
channels but gave up the project and reverted to the
direct model
1999: Dell n° 1 in USA and n° 2 on the world market
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Dell mini case study
Read the mini case study document. Point out:
Strengths
Weaknesses
Opportunities
Threats
Source : Harvard Business School, Case Study 9-699-198
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Direct Model
Why a Direct Model?
Price competition: Dell products are medium level
(IBM, HP, Compaq vs supermarket PCs)
A lack of financial assets
Stock depreciation: 50% each year
Advantages
Just in time SCM: stock value = 3 or 4 days
Cash flow
Direct communication with customers
Drawbacks
Some customers are reluctant to use remote purchase systems
Value creation of intermediaries is lost
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Customer Relationship Management
CRM:
« Premier page »: a personal web site
(reserved for large firms)
Configuration of data computer equipment
Order history
On-line simulation
Etc.
Call centres (concern most of the orders)
“Platinium Council Forums”
Dell Professional Services (DPS)
in Europe, Middle-East, Africa
Consulting (implementation, integration and assistance)
Infrastructure architecture
Hosting and back ups
Precise segmentation:
Large and medium firms (70 % of annual turnover)
Small businesses
Education sector, Government and Healthcare
Customers
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What direct model implies:
IS Integration
Supply chain integrated with suppliers
They can look after their supplying outflow
and plan their production by anticipating orders
DOMS System
(Dell Order Management System)
Order administration
Production management
Automated editing process of Orders
Stock inventory
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DOMS System
Tracking
the order
Customer
Finance department
1: order
Suppliers
Control system
3: checking feasibility
Access to
component
4: orders outflow
DOMS
5: hardware and software tests
The PC is connected on Ethernet network,
a software is automated downloaded,
all tests are automatically done.
4: production schedule
Engineering
department
2: checking payment
While computers are
assembled, the order is
updated with bar codes
Manufacture
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IS integration history
1990: IT are too decentralised
(one datacenter with separated applications)
Projet IRB (Information to Run the Business)
Step 1: installation of standard OS and standard hardwares
(with Sun Servers, Tivoli Network Management)
Step 2 : a new network (DellNet) and a new datacenter at Austin,US, in
Ireland and Malaysia
Phase 3 : adoption of SAP/R3
1995: regionalization plan at Dell
(objective: being closer to customers)
SAP/R3 is called into question
1997: Jerry Gregoire is the new president
Restarting of SAP/R3 implementation
Fin 1997 : giving up of SAP/R3
Inconsistency of the system with the segmented offer of Dell
Development of a specific integrated IS: G-2
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Process reengineering
Processors
Cards
Processors
Hard disks
Cards
Screens
Assemblage unit
Delivering,
Unpacking
Checking
Stockage
Etc.
Hard disks
Screens
Assemblage unit
Packaging
and
expedition
Distribution warehouse
Distribution warehouse
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Process reengineering
1992 - 1997: 75% reduction of the number of suppliers
Level standards imposed (in the contract) to the 25%
remaining suppliers:
A worldwide quality level of product and services
Stock of components must be 15 minutes far from Dell plant
A continuing stock inventory not older than 2h
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Process reengineering
250 M$ / year = chain production innovation
Clips replaced screws on PC central units
Within computers: reduction of line length in order to ease
assembly processes
Reduction of software setting up duration (with fibre optic)
Development of a software testing the correct running of all
components: reduction from 45 to 3 minutes
Result: production delay of a PC = 7 h
200 patents deposited
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Change management
More than 80% of the business is B2B:
computer room management, protections systems, etc.
10 000 employees work directly in customer firm
Dell Professional Services (DPS) in Europe, Middle-East, Africa
Consulting (implementation, integration and assistance)
Infrastructure architecture
Hosting and back ups
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Conclusion
Avoiding to implement IS in the existing organization:
Rethinking about the strategy
Looking for « partners » and not « suppliers »
Reengineering internal and external processes
Direct Model requires
JIT and TQM
An efficient partner network
So YOUR FIRM needs to represent for the partners:
A decisive financial asset
A development leverage
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