DELL-ONLINE ALL THE TIME

It was Started by Michael Dell (19 at that time) in his dorm room at the
University of Texas in 1984 with $1000.Company headquartered in Round
Rock, Texas, U.S.A. Its revenue is around US$ 63.07 billion in 2012.In 2001,
became the No. 1 computer systems company in the world.At present (2013),
it is the third largest PC vendor in the world after HP and Lenovo. Dell has
grown by both increasing its customer base and through acquisitions since its
inception; notable mergers and acquisitions including Alien ware (2006) and
Perot Systems (2009)
PRODUCT LINE

Desktop computers

Notebook computers

Network servers

Workstations

Storage products

Dell offers a total of 1.6 million different possible product configurations

for all its product lines

SUPPLIERS

MICROSOFT - for Windows

INTEL

NVIDIA

SONY

- for micro processors

- for Graphic chips
- for monitors

Supply chain chart

Suppli
Customer
place an order
(by phone or
thru
www.dell.com
Configuration
evaluation
(checking the
feasibility of
specific technical

Revolve
Dell
processes
the order

Financi
al
evaluat
ion
(credit

Sends the
Plants build, test
2-3 days
order to
&package the
assembly
product(about 8
plant(any
hours)
Dell
Typically
ship all
orders (no
later than 5
days after
receipt)

Custom
er

DELL-ONLINE ALL THE TIME

Traditional Build to stock value

chain
Comp
onent
manuf
acture
r
Order

Pc
Component
man
ufac
ture
r

Distributor
product
/retailer
Forecast

component

CorporaProduct
te
custom
er

Micro age ,

CompuCom

Dell Direct Model

Comp
onent
manu
factur
er

Dell
component
co
m
Cor

Final
Product
custome
r
Order

Distributor

Three Golden rule of Dell

Always listen to Customers

Never Sell Indirect

Disdain inventory

INVENTORY MODEL

BUILD-TO-ORDER MODEL

DIRECT TO SELL

INVENTORYMANAGEMENT is primarily about specifying the size and

placement of stocked goods.
1. Just-in time inventory management

- 3 days.

DELL-ONLINE ALL THE TIME

2. Focus on speed of inventory delivery process.

MICHAEL DELL
8 days of inventory competitors 40 days, if Intel comes out with a new chip,
I am going to get that to the market 32 days sooner

In contrast to others who produce to stock, dell first receives the order and
the money and only then starts to build, using that money to purchase from
supplier

Therefore there is customization of products for each and every customer.

While other companies had to guess, DELL knew exactly what its customers
wanted before manufacturing the product

Others had to maintain inventory as there existed middlemen, so to support

reseller and retail channels

Dell has a special vendor-managed-inventory (VMI) arrangement with its

suppliers

Suppliers decide how much inventory to order & when to order while Dell sets
target inventory levels & records suppliers deviations from the targets.

Dell withdraws inventory from the revolvers as needed -- on average every

two hours.

It uses a quarterly supplier scorecard to evaluate how well each supplier does
in maintaining this target inventory in the revolver.

To compensate for long lead times & buffer against demand variability, Dell
requires its suppliers to keep inventory on hand in the revolvers.

Revolvers or supplier logistics centers (SLCs) are small warehouses located

within a few miles of Dells assembly plants.

Each of the revolvers is shared by several suppliers who pay rents for using
their revolver.

Dell does not own the inventory in its revolvers; this inventory is owned by
suppliers & charged to Dell indirectly through component pricing.

Value chain program

Value Chain is intended to extend Dells successful direct-sales approach

back into the supply chain

The goal of it is increasing the speed and quality of the information flow
between Dell and its supply base

The portal, valuechain.dell.com acts a secure extranet for Dell suppliers to

collaborate in managing the supply chain

DELL-ONLINE ALL THE TIME

Dell envisions using this site to exchange with suppliers current data,
forecasted data, new product ideas, and other dynamic information
Advantage of this model

Returns grew disproportionately as the carrying costs and obsolete stock is

avoided.

Saves enormous amounts of money on purchasing components because the

component prices drop by 3 percent per month.

Reduces handling cost. Common factors that drive up holding costs include
opportunity costs, increased rent required for the space of the inventory,
higher premiums to insure the inventory, and cost of obsolete goods.
SWOT analysis
Strength:
1. Direct Model Approach, it provides Dell a way to interact to customers
directly
2. Customization of products
3. Reliability, Service and Support
4. Latest Technology
Weakness:
1. Market share growth is slow due to competition; Fake products/ imitations
affect sales
2. Overdependence on Suppliers.
3. Lack of Dell Stores, can be an issue for some customers
Opportunity:
1. With increase in e-commerce the online retail stores of Dell provide them
better framework to tap new business
2. The Direct approach Model of Dell would help them there existing to sell
the other IT products, so new product development opportunity is for Dell
3. Tablet and Smart phone Market
Threats:
1. With the increase in innovation in the market the computer systems are
becoming outdated, so Dell should constantly come out with new products
2. People need the quality products at low price which was Dell strength due
to its customize solution, but now its competitors are coming up with
products in same price range