operations of dell

8/14/2019 Operations of DELL

http://slidepdf.com/reader/full/operations-of-dell 1/8

Operation Management Assignment

Submited from :

Azad Srivastava 17002 Joan Trinidade 17025

Lalit Kothari 17028 Soniya Yadav 17048

DELL

It’s Operation and How ItMakes Work



COMPANY HISTORY

• 1984: At the age of 19 with $ 1,000 in start up capital Micheal Dell

founded Dell Computer with simple vision and business concept – that

Personal computer could built to order and sold directly to customer.

He believed that:

• Bypassing distributors and retail dealers eliminated the markups of

reseller.

• Building to order greatly reduced the costs and risks associated with

carrying large stock of parts, components and finished goods.

• 1985: Dell build and design the first computer system

• 1988: Dell had raised $ 30 Million in it’s IPO. At this time his capital is

$ 85 Million.

• 1998: Dell had a 12% share of PC market in US and became one of

market leader in computer business with Compaq and IBM until now.

Company Tour

• Overview: We Make Computing Easy. Like it should be

• Focus: Our Direct Connection

• Leadership: Why We’re the Industry Leader – Our Product & Service

• Result: We Know Enterprise Computing Firsthand

• Global: We’re Close to Customers Around the World



OPERATIONS AND STRATEGY

Build-to-Order Manufacturing and Mass Customization

Dell built its computers, workstations and servers to order, none were produced for inventory. Dell customers could order custom built server andworkstation based on their needs of their applications.This sell-direct strategy meant that Dell had no in-house stock of finishedgoods inventories and that unlike competitor using traditional value of chainmodel, it didn’t have to wait for resellers to clear out their own inventories

before it could push new models into market place.

Partnerships with Supplier

Dell believed it made much better sense for Dell Computer to partner with

reputable suppliers of PC parts and components rather than to integrate backward and get into parts and component manufacturing on its own.The advantages:

1. Using name-brand component enhanced the quality and performanceof Dell PC’s.

2. Getting the volume of components it needed the overall marketsupply.

3. It feasible to have some of supplier engineers assigned to Dell productdesign team and for them to be treated as part of Dell.

4. Dell’s long-run commitment to its suppliers laid the basis for just-in-time delivery suppliers product to Dell assembly in Texas, Ireland,Penang.



Committed to Just-in-Time Inventory Practices

Dell's just-in-time inventory emphasis yielded major cost advantages andshortened the time it took for Dell to get new generations of its computer models into the marketplace. New advances were coming so fast in certaincomputer parts and components (particularly microprocessors, disk drives,and modems) that any given item in inventory was obsolete in a matter of months, sometimes quicker.Having a couple of months of component inventories meant getting caughtin the transition from one generation of components to the next. Moreover,there were rapid-fire reductions in the prices of components—most recently,component prices had been falling as much as 50 percent annually (anaverage of 1 percent a week).

Direct Selling

Selling direct to customers gave Dell firsthand intelligence about customer preferences and needs, as well as immediate feedback on design problemsand quality glitches.Management believed Dell's ability to respond quickly gave it a significantadvantage over rivals, particularly over PC makers in Asia, that made large

production runs and sold standardized products through retail channels. Dellsaw its direct sales approach as a totally customer-driven system that

allowed quick transitions to new generations of components and PC models.



Virtual Integration and Information Sharing

Dell was using technology and information-sharing with both supply

partners and customers to blur the traditional arm's-length boundaries in thesupplier- manufacturer-customer value chain that characterized Dell's earlier

business model and other direct-sell competitors. Michael Dell referred tothis feature of Dell's strategy as "virtual integration."16 On-linecommunications technology made it easy for Dell to communicate inventorylevels and replenishment needs to vendors daily or even hourly.A number of Dell's corporate accounts were large enough to justifydedicated on-site teams of Dell employees. Customers usually welcomedsuch teams, preferring to focus their time and energy on the core businessrather than being distracted by PC purchasing and servicing issues.Dell gave its large customers access to Dell's own on-line internal technicalsupport tools, allowing them to go to www.dell.com, enter some informationabout their system, and gain immediate access to the same database and

problem-solving information that Dell's support personnel used to assist call-in customers. This tool was particularly useful to the internal help-desk groups at large companies.

Demand Forecasting

Management believed that accurate sales forecasts were key to keeping costsdown and minimizing inventories, given the complexity and diversity of thecompany's product line. Because Dell worked diligently to maintain a closerelationship with its large corporate and institutional customers, and becauseit sold direct to small customers via telephone and the Internet, it was

possible for the company to keep a finger on the pulse of demand—whatwas selling and what was not.

Moreover, the company's market segmentation strategy paved the way for in-depth understanding of its customers' evolving requirements andexpectations. Having credible real-time information about what customerswere actually buying and having first hand knowledge of large customers'

buying intentions gave Dell strong capability to forecast demand.



Research and Development

The company talked to its customers frequently about "relevant technology,"listening carefully to customers' needs and problems and endeavoring toidentify the most cost-effective solutions.Dell had about 1,600 engineers working on product development and spentabout $250 million annually to improve users' experience with its products

—including incorporating the latest and best technologies, making its products easy to use, and devising ways to keep costs down. The company'sR&D unit also studied and implemented ways to control quality and tostreamline the assembly process.

1. Listen

We gather requirements directly through tens of thousands of customer

interaction daily, organized events, and customer panels. Partnerships with awide variety of key industry software, hardware and component suppliersgive us a uniquely broad perspective on the computing landscape.

2. Solve

Many Innovations begin in-house, led by global team of top engineers, product designers and technical experts. Others begin as a team effort withDell’s strategic partners. The mission is to deliver innovative and cost-effective solutions that meet today’s real live customer challenges and work seamlessly in existing environments and with other product.

3. ImpactDell is uniquely positioned to impact industry trends. We maintain stronginternal development capabilities. We partner, rather than compete, with topindustry technology suppliers and original development manufacturers. Westeer enabling industry standards and technologies through industry groupsand strategic partners. In this way, Dell Spurs innovation and delivers valueto customers.

Listen Solve Impact



Traditional PC’s Industry Value Chain

(Utilized by Compaq, IBM, HP and Most Other)

Build-to-Order/Direct Sales Value Chain

(Employed by: Dell, Gateway, Micron Electronics)

Manufactured of PC’s Component

BySuppliers

PurchaseBy

PC Users

Service andsupport activitiesProvided to PC

Users by reseller (or some PC

Makers – IBM toPC users)

Assembly of PC byPC Makers (toFill order fromSuppliers and

Keep distributionChannel stock)

Sales andMarketing

Activities of Reseller to self Inventories of PC’s on hand

Manufactured of PC’s Component

BySuppliers

Service andSupport activitiesProvided to PCUsers eithers byPC Makers (viaTelephone, fax,

Email) ect.

PurchaseBy

PC users

CustomizedAssembly of PC’sBy PC Makers asOrders from PCBuyers come in



• Dell Assembly Plants – Austin - Texas, Ireland and Penang

Malaysia.

operations of dell

Documents