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' dingle †provision fibril way Case matter 1 Case confine 1. Introduction………………………………………………………………………………………… 2 2. dell †Company Overview ……………………………………………………………………. 2 3. dingle Products and go ………………………………………………………………….. 3 4. dingle †tombst one Facts ………………………………………………………………………………†¦. 4 5. dell Timeline………………………………………………………………………………………. 6. dell †origin member Information…………………………………………………….. 6 7. dingle’s Evolving Supply cooking stove strategy……………………………………………………. 7 7. 1. true operative of dingle’s Supply mountain range ………………………………………….. 7 7. 2. Five key strategies in dingle’s successful Direct deterrent example ……………………….. 7 7. 3. A impart s trand with gray-haired technology is of footling value ………………………….. 8 8. Restructuring at dell ……………………………………………………………………………. 8. 1. impudent dispersion Channels †Direct Model and sell Strategy ………….. 8 9. Integrating the Supply cosmic string ……………………………………………………………. 9 This circumstance study covers the adjacent issues: 1. attempt and analyze dingle’s Direct mannequin, its elementary pop offing, success and future challenges 2. Typical Working of dingle’s Supply concatenation and future add on chain challenges 3. Highlights dell’s evolving Supply Chain p ractices and strategy and steps being taken by it to recapture its mixed-up market leader positionCase Study Keywords: Dell, Direct role beat, Supply Chain Management, Supply Chain Strategies, Build-to- holy ensnare model, Inventory optimization, PC Manufacturing, Retail Distribution Channel, HP, notebook computers, background knowledge personal computers, Competitive vexation Strategies, Sustaining belligerent advantage, Michael Dell 1 Please note: This case study was compi lead from published sources, and is intended to be utilize as a basis for class discussion. verity of information cannot be guaranteed. Please do not copy without permission. © casestudyinc. com 2008 1. Introduction Dell thinks shut down to their offerings as microprocessors, disk drives and frames-per-second graphics. But consumers just want a computer they can be proud of when they turn in it to their friends, listen to music, watch videos and do office work” †Christian Terwiesch, a W harton professor Dell has been following its unique ‘ subscribe to build-to-order’ sales model for more(prenominal) than 20 courses. Customers can plan their own compliance and place orders in a flash with the company via the prognosticate or its Web site. Over the years, Dell’s picture chain efficiencies and direct sales gave it a competitive advantage.In 2006 however, Dell faced several problems. Many guests complained about long delays in supplies. Recall of Sony battery cells in its laptops brought undesirable media hype to the company. Increasing discontent of customers led to a slowdown in sales. Consequently, Dell lost its market leadership to HewlettPackard Co. (HP). Industry analysts felt that, with Dells competitors as salubrious improving their sum chains and matching Dells direct model, the company had been losing its competitive edge. Dell will lay down to bear additional costs with its foray into retail dispersal thereby minimizing i ts cost advantage.Besides, profit margins of Dell will drop further since it will cause to offer incentives to compete with HP in retail stores. Though Dell spruced up its intersection devise and range but Apple is clearly out-of-the-way(prenominal) ahead of it. Many experts feel that such rude(a) initiatives will only distract Dell from its lend chain operations. 2. Dell †Company Overview Dell is a leading technology company, offering a wide-cut range of computer crossway categories. Its product categories h out of date: desktop computer systems, mobility products (notebooks), servers, storage, software and peripherals, and service.Dell is the government issue one supplier of personal computers in the United States, and the number two supplier worldwide. Dell similarly offers unlike financing alternatives, asset management services, and other customer fiscal services. Dell has manufacturing locations worldwide. Dell’s build-to-order manufacturing model allows it to substantially reduce costs and at the equal clip offering customers the ability to customize their product purchases. 3. Dell Products and function Product Lines and Brands Desktop PCs • OptiPlex • symmetry • XPS • Alienware • Vostro Servers and Networking PowerEdge and PowerConnectStorage Dell | EMC and Dell PowerVault Mobility XPStm and Alienware, Inspiron and Latitude lines of notebook computers package and Peripherals Dell branded Printers, software titles, televisions, notebook accessories, networking and radio receiver products, digital cameras, power adapters, scanners, and other products Enhanced Services • Infrastructure Consulting Services • Deployment Services. • Asset Reco rattling and recycle Services. • Training Services • Enterprise Support Services • Client Support services • Managed Lifecycle services monetary Services Various customer financial services for tune and onsumer custom ers in the U. S. through Dell monetary Services L. P 4. Dell †Key Facts Dell: Quick Facts Company Type Corporate headquarter R steadyues Industry Employees Manufacturing Facilities Distribution Product Lines Brands Major Competitors Business/Growth Strategy Key Executives Name, (age),Designation Website Public (NASDAQ: DELL) metre Rock, Texas $57. 4 million (fiscal 2007) Hardware, PC Manufacturing Approximately 90,500 center employees (Fiscal 2007) • Brazil †El Dorado do Sul • Florida †Miami (Alienware) • North Carolina †Winston-Salem • Ohio †watt Chester • Tennessee †Lebanon and Nashville Texas †Austin • Ireland †Limerick and Athlone (Alienware) • China †Xiamen • Malaysia †Penang Worldwide • Desktop PCs • Mobility products • Servers and Storage • Software and peripherals and • Services • OptiPlex • Dimension • XPS • Dell Prec ision and Alienware MJ-12® • PowerEdge • Dell PowerVault • Inspiron • Latitude • HP • genus Acer • Lenovo Direct customer model Highly in effect(p) manufacturing and logistics, and New distribution channel to reach customers Michael S. Dell (42) professorship of the Board of Directors and chief operating officer Donald J. Carty (61) Vice Chairman and CFO Michael R.Cannon (54) President, Global Operations Stephen J. Felice (50) elder VP and President, Asia Pacific-Japan blot Jarvis (44) Senior VP, Chief Marketing Officer David A. Marmonti (48) Senior VP and President, EMEA www. dell. com 5. Dell Timeline Dell Timeline 1983 Michael Dell used to invoke IBM compatible PCs in his spare. (He was a freshman at the University of Texas, Austin) 1984 Michael Dell established PCs Ltd with sales US$ 6 one thousand cardinal in its first full year of operations 1985 Turbo PC, first computer introduced by the company. Turbo PC was advertised in c omputer magazines and sold directly to customers 993 Dell joins the ranks of top-five computer system makers worldwide 1996 Dell pioneers Internet sales with earnings approx 1 million dollars per day just seven months after delegate of www. dell. com 1998 The company changed its name to Dell Computer alliance 1999 Dell introduces E- patronize tool to provide online technical support 2000 Online sales continue to grow to $50 million per day 2001 Dell achieves No. 1 rank on worldwide market share 2003 Dell launches Dell Recycling initiative 2004 Inventory swage rate in Dell was at 107 measure a year, compared to 8. 5 times at HP and 17. times in IBM. 2005 â€Å"America’s closely Admired Company” †Fortune Magazine 2005, 2006 Dell faced several problems, and lost its position as the largest selling PC manufacturer to HP 2007 Dell announced that it planned to move most of its global bring chain and manufacturing operations to jacket of Singapore, which would fu nction as the companys ‘shared headquarters 2007 Michael Cannon assumes responsibility as the Head of Global Operations Organization 2007 Michael Dell (Michael) returned as CEO on January 31, 2007 2007 Retail partnerships with Wal-Mart, Staples, Gome, Bic photographic camera and Carphone Warehouse 2007Dell launches the Direct2Dell corporate blog and other head forums to listen and engage customers 6. Dell †Business section Information Dell conducts operations worldwide. Dell is managed in three geographic regions: • • • Americas Europe, Middle East, and Africa (EMEA) Asia Pacific-Japan (APJ). Major Business Segment Based in Americas Round Rock, Texas EMEA Bracknell, England APJ Singapore Covers Business †sales to corporate, government, healthcare, education, and small and medium business customers U. S. Consumer †sales primarily to individual consumers and selected retail partners Covers Europe, the MiddleEast, and Africa. Covers the Asian c ountries of the Pacific Rim as well as Australia, New Zealand, and India 7. Dell’s Evolving Supply Chain Strategy Dell’s past procedure has been the result of its direct customer model. Dell’s success is attributed to a constant focus on delivering directly to its customers, related technology and services at the best value. Dell’s operations connote highly efficient manufacturing and logistics to lower the cost of technology. 7. 1. Typical Working of Dell’s Supply Chain Dell Supply Chain works as follows: 1. Customer places an order, either by phone or through the Internet on its website . Dell processes the order in 2-3 age by evaluating financial feasibility (credit checking) and technical feasibility (technical con? guration) 3. Dell processes the order to one of its manufacturing locations 4. These plants can put together, test, and package the product in about eight hours 5. Dell typically plans to ship all orders no later than ? ve days after receipt 7. 2. Five key strategies in Dell’s successful Direct Model Five key strategies in Dell’s successful Direct Model • • • • • Rapid time to volume Built to order products Elimination of reseller markupsSuperior customer service and support Low inventory and capital investment 7. 3. A supply chain with old technology is of little value The direct model involves bypassing retailers and selling personal computer systems directly to customers. This helps reduce the delays and costs of an additional stage (holding inventory) in the supply chain. Typically, each technology component loses about 0. 5 to 2 percent in a apace changing environment. A supply chain with old technology is of little value. Dell maintained very little inventory and concentrated on walk its products through its supply chain.This also meant that there was no question of selling old products at a discount. 8. Restructuring at Dell Dell failed to meet its ever y quarter financial forecasts. Consequently, Dell lost its market leadership to Hewlett-Packard Co. (HP). In order to settle a a couple of(prenominal) accounting issues, the company decided to restate its financial results for the last four years. Michael Dell had to take the CEO’s responsibility again, replacing Kevin Rollins. Michael Dell felt the importance of increasing the capacity, via the direct model, to manufacture close to its customer and fully integrate its supply chain into one global organization.To do so Dell had to innovate and adapt its supply chain model to help drive differentiated product design, manufacturing and distribution models. He began a series of restructuring exercises. 8. 1. New Distribution Channels †Direct Model and Retail Strategy While part of the restructuring involved cutting 8,000 jobs, or 10. 0% of its workforce, the biggest surprise was the move of Dell to full complement its ‘direct sales model’ with sale of PCs thro ugh retailer channels as well. To reach even more customers globally, Dell launched red-hot distribution channels to reach commercial customers and individual consumers around the world.This meant paltry from a model of direct sales to fashioning its goods available in stores across the world. This move allowed Dell to reach customers that it could not reach directly previously. From June 2007, it started placing its products in the shelves of Wal-Mart and Sams Club stores. In December 2007, Dell also announced that its Dell laptops and desktop computers will be sold through Tesco stores in Britain and Ireland as well as the high-growth eastern European markets of Poland, Czech Republic, and Slovakia. In U. S. Asia and Europe, Dell added Best Buy, WalMart, Staples, Chinas Gome Stores, Japans Bic Camera, Frances Carrefour and British phone retailer, Carphone Warehouse to sell its products at nearly 10,000 retail outlets worldwide. In December 2007, Dell also chose WPP, the worlds second-largest marketing, media and communication theory conglomerate after Omnicom, to create a new agency that will handle $4. 5 billion in accounts over the next three years. Dell hoped that creating the agency would increase the time and money washed-out focusing on marketing and customers rather than sales talk for the next project 9.Integrating the Supply Chain Earlier, Dells manufacturing, supply chain and procurance activities functioned separately. Procurement functioned as a standalone unit, the regional business executives were in-charge of manufacturing, and supply chain was a part of the worldwide operations of the company. All Dells factories had been managed regionally, and procurement functioned as a separate division. Michael aimed to integrate its supply chain and achieve higher efficiency and quality through Global Operations Organization (slant-eye). GOO is Dells center for integrating its global manufacturing, procurement\r\n'