Supply Chain Excellence

a short primer on Dells practices

May 2006 || Mike Gray - Supply Chain Evangelist

Dell Inc. - 2006

Dells Product Portfolio

Axim PDAs

Monitors TVs & Projectors

Precision Workstations

PowerEdge Servers PowerVault & Dell|EMC Storage

Software & Peripherals

Printers

Services
Dimension Desktops

PowerConnect Switches

OptiPlex Desktops

Latitude Notebooks

Inspiron Notebooks

Dell Inc. - 2006

Supply Chain Management

Dell Facts
Customer Base (Revenues) ~85% Corporate & Institutional Revenue by Product
Desktop PCs ========= 38% Mobility ============= 25% Servers ============= 10% Storage ============= 3% Enhanced Services ===== 9% Software and peripherals 15%

~15% Consumer

Revenue by Region Global Manufacturing

Austin, Texas, USA Limerick, Ireland Penang, Malaysia Nashville, Tennessee, USA Xiamen, China Eldorado do Sul, Brazil Winston-Salem, North Carolina, USA
Dell Inc. - 2006 3

65% Americas

23% EMEA

12% APAC

~65,200 employees worldwide Revenue $56B (last 4 qtrs.)

Supply Chain Management

The Dell Business Model

Customer

Most Efficient Path to the Customer

Single Point of Accountability

Industry Standard Technology

Build-to-Order

Low Cost Leader

Significant cost advantage (lower OPEX and Material COGS) provides industrys best price/performance Unique sales, marketing, and supply chain model enabled by direct customer relationship Organization managed by data analysis and performance metrics
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Dell Inc. - 2006

Supply Chain Management

Dells Direct Model = the foundation for success

Suppliers Customers

Continuity of Supply E-business

Collaboration Technology Leaders Low-cost Manufacturers

Best Customer Experience Low Cost Efficiency &

Highest Quality

Product Quality Price for

Performance Customization Reliability, Service and Support

Partnering/Virtual
Integration

Latest Technology
Dell Inc. - 2006 5

Supply Chain Management

Global Supplier View of Dell Fulfillment

EMEA DAO APJ

Global Supplier

Dell Global Supply Base

3PL Providers = 9 Ocean Networks = 4 Air Networks = 4
Vendor Warehousing: 22 Locations, 3 M Square ft IB Air Networks: Equivalent of 650 747s per year
Air Ocean

BCC

IB Ocean Networks: 60,000 containers per year

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Dell Inc. - 2006

Supply Chain Management

Heart of Dell operations - a mixed model

push
Buy-to-Plan
Every Week

pull
Build-to-Order
Every 2 hours in each mfg center
Material requested to build customer orders

Suppliers

SLC

Dell Manufacturing
All material is tied to a customer order nothing gets built without an order.

1) 2) 3) 4)

Dell facilities act as Manufacturing Centers, not Warehouses only inventory needed for few hours of orders is on site Provides direct signal of Dell customer demand for suppliers Dells performance to customer orders is directly linked to our suppliers level of support Absolute synchronization between manufacturing and sales keeps the process balanced.
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Dell Inc. - 2006

Supply Chain Management

Customers

Cash Conversion Cycle and SCM

3 Elements (expressed in days):

Inventory (DSI) Accounts Receivable (DSO) Accounts Payable (DPO)

Cash Conversion Cycle (CCC)

DSI + DSO DPO = CCC

Dell Inc. - 2006

Supply Chain Management

Dells SCM Journey

~ 70
Days of Inventory

Vendor Managed Inventory Collections Payment Terms www.dell.com www.ValueChain.dell.com Finance for non-financial managers Six Sigma \ Lean Manufacturing \ BPI

>80

4
1992
Dell Inc. - 2006 9

Velocity Matters 2006

-44

Supply Chain Management

Cash Conversion Cycle

Supplier Logistics Center

Dells Direct Model = Perpetual Success

Industry's most efficient procurement, manufacturing and distribution process

Pass cost savings on to customer

Competitive Pricing

Efficient Model with Lowest Cost Structure

Help Drive Supplier Business Drives Market Share

Competitive pricing ignites demand

Lower cost drives Increased demand

Dell Inc. - 2006

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Supply Chain Management

Supply Chain Excellence

Dell Inc. - 2006

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Supply Chain Management