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D’après Régis Meissonier 1 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 2 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 3 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 4 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 5 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 6 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 7 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 8 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 9 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 10 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 11 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 12 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 13 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 14