Case Study

INTRODUCTION

Dells operation strategy is based on a build-to-order production system.

Dell relies on unique supply chain strategy that gathers large volume of
customer information through its direct sales model.

To successfully forecast demand, Dell maintains a constant flow of data in

two information loops: one between customers and the Dell sales team,
and the other among sales, procurement, and suppliers.

The information Dell receives from suppliers tells its sales team what
products it can effectively promote.

To successfully forecast demand, Dell maintains a constant flow of data in

two information loops: one between customers and the dell sales team, and
the other among sales, procurement and suppliers.

Dell started out as a direct seller, first using a mail order system and then

taking advantage of the internet to develop an online sales platform

Key points of Dell incredible rise

Disintermediation.

Enhancing customer value.

Process and operations innovation.

Let data do the driving.

Approach

Identify Customer Values

Dell used historical customer knowledge from contracts, survey results,

business intelligence (BI) data and platform sales to begin its customer-centric
view of value.

Understand Strengths

Understanding customer value

Identifying core competencies

Understand the External Environment

Contd

Chart Clear Course and Benefit

Configured by Dell

Customer
Configuration

Product variety

Low

High

Customization

Limited

Based on customer
value

Forecast Accuracy

High

Low

Volume by
Configuration

High

Low

Cost of Lost sale

Low

High

Contd

Engage the Entire Organization

 Results
Dell's transformation yielded both financial and qualitative gains:
Stronger connection to customers
Complexity reduction
Improved internal collaboration
Cost reduction
Improved forecast accuracy

 Critical Success Factors

Dell identified three critical success factors:
Start with customer value
Executive sponsorship
Dedicated COE

Lessons Learned
According to Mr. Noakes, "Dell's industry-leading supply chain
history has given us the skills to be agile and flexible. It's this history
that provides the framework and skills to reach the next levels of
success and supply chain leadership."

Traditional build to stock value chain

Compone
nt
Manuf.

Compone
nt

PC
Manufact
urer

Product

Forecas
t

Components

Distribut
or
/Reseller

Product

Order

MicroAge,
CompuCom

Corporat
e
custome
r

DELL direct MODEL

Component
manufactur
er

Compone
nts

Distributo
r

DELL
Comp
Corp

Produc
t

Order

Final
customer

DELL DIRECT MODEL

Dell

Computers direct model departed from the industrys historical rules on several
fronts:

The company outsourced all components but performed assembly.

It

eliminated retailers and shipped directly from its factories to end

customers.

It

took customized orders for hardware and software over the phone or via the
Internet.

It

designed an integrated supply chain linking Dells suppliers very closely to its
assembly factories and order-intake system

Implementation of Supply Chain

segmentation.

Phase 1 Vision/design Skill required are outside-in perspective focused

on customers, knowledge of market and other industries, end-to-end supply
chain design and business acumen.

Phase 2 Change management Skill adapted where process design,

Six Sigma expertise, data analytics, systems optimization & communication.

Phase 3: Orchestrating the ecosystem - Denotes a continuously

evolving organization focused on translating customer needs to supply chain
capabilities

Cross Department Communication

The broader the span of communications, the more simplified the message
needs to be.
To ensure long-term, cross-functional collaboration, Dell integrated supply
chain design into existing product design processes and created a phase-gate
review process,
Phased releases drive step-function improvements, rather than constant
adjustments.

Ankit Kumar-06
Ravinder Kaur- 41
Subin Suresh- 53
Himanshu Zanwar- 1008