Assessment of Dell's Approach to Operations Management

Recognized as one of the leading computer manufacturers, Dell uses an astonishing supply chain through pull-to-order procurement and just-in-time inventory management. Their strategy is highly efficient and drives costs to a minimum while allowing for minimal lead times and production times of under 4 hours for each order as their suppliers maintain levels of inventory based on forecasts within Dell warehouses near Dell assembly

Production practices have had an important role in satisfying the dynamic market. Many approaches have being developed in order to respond effectively to specific business requirements. In fact, some areas of management have focused its study on the overseeing, designing, and controlling the process of production in an effort to find the best methodology that ensures the business success and performance. However, complexities arise in this field because many variables such as costs, inventory, scheduling, suppliers, etc have to be considered in any business. Lean approach and the traditional approach are two points of view that aim to address this complexities, and those will be examined in this essay.

Dell uses a just in time order fulfillment policy and accurate forecasting of sales to minimize inventories. This allowed Dell to hold inventory of finished products far below levels of their competitors (10-20% compared to 50-70% industry level) and furthermore allowed them to quickly implement changes to their product lines as new technologies became available. This quick inventory turnover also allowed Dell to retain more capital. Finally, this policy enabled Dell to respond immediately to technological progress in components and deliver state of the art new finished products (e.g. Pc’s holding the newest Pentium microprocessors) while competitors

New Balance decided to improve their operations by implementing a “lean production system” in all of their domestic facilities. The lean production system was taken from Toyota’s manufacturing processes to, “deliver goods on demand, minimize inventory, maximize the use of multi-skilled employees, flatten management structure, and focus resources when and where they are needed” (Veleva, 2010). These improvements helped significantly improve vast processes across New Balance manufacturing, and in one example reduced the time to make a pair of shoes in the Lawrence facility from eight days down to three hours (Veleva, 2010).

Employing new merchandising tools aid the company in realizing lean production measures with its supply chain. Forecasting capabilities substantiated through “The combined efforts of our supply chain, merchandising, operations and finance teams, we reduced inventory by almost half a billion dollars in 2009, while at the same time improving our in-stock position” (Datamonitor 360, 2010).

By grafting its system of custom direct sales onto the Internet infrastructure, Dell has transformed these activities, creating an innovative and efficient procurement, production, and distribution network. The innovative advance made by Dell in deploying Internet communication as the foundation of its production network, is a process innovation. Although to some extent, the Internet has enabled Dell to create a new product -- a PC custom-configured through Internet communication -- it is the process of organizing flows of materials and information within its network, from customer order to procurement, production and delivery, by means of Internet communication, that defines the innovation at the Firm. The case supports this notion by stating “While most other PCs were sold preconfigured and pre-assembled in retail stores, Dell offered superior customer choice in system configuration at a deeply discounted price, due to the cost-savings associated with cutting out the retail middleman. Additionally, an important side-benefit of the Internet-based direct sales model was that it generated a wealth of market data the company used to efficiently forecast demand trends and carry out effective segmentation strategies. This data drove the company’s product development efforts and allowed Dell to profit from information on the value drivers in each of its key customer

Consider a firm with a daily demand of 100 units, a production rate per day of 500 units, a setup cost of $200, and an annual holding cost per unit of $10. Suppose that the firm operates 300 days per year. How many units of inventory must their storage area be able to hold?

There is a multitude of aerospace manufactures in the business of building airplanes worldwide such as Boeing and Lockheed Martin. In order to become a global leader in an ultra-competitive market, such as the aerospace industry, Boeing implements cost reducing initiatives such as lean manufacturing practices. In order to build a complex item such as an airplane on time and on budget, a manufacture will require a competent supply chain management system to ensure all the needed parts are available to the builders. Implementing technology such as automated equipment to assist in the reduction of human errors and fatigue will reduce costs associated with rework caused by human error mistakes.

In 2007, Dell decided to change the supply chain strategy to support the use of retailers for selling a standard configuration computer for customers. Customers could visit their local Wal-Mart or if in China, the local GOME retail store to pick from the standard computer models available (Chopra, 2012, Pg. 6). The changes Dell made to support the retailer to end customer model helps increase the revenues and provides a low cost solution at retail points of sale. Dell utilizes the retailer’s distribution and retail store facilities which keeps the costs low for Dell and also sees lower outbound transportation costs compared to the online supply chain model (Chopra, 2012, Pg. 21).

Being one of the biggest technological companies in the world, HP 's products are by nature innovative products, which usually have short life cycles and require the introduction of a steady stream of newer innovations to keep imitators at bay. Their market is uncertain and suppliers in this context must be chosen for their speed and flexibility, not for

Dell Computer Corporation was founded in 1984 by Michael Dell. From the early 1990s until the mid-2000s, Dell was ranked as a PC market leader relying on their distinctive marketing pattern “Direct Model” which undertook direct communication with customers and provided customized products. Recently, the PC industry is facing inconceivable worldwide competition, and Dell is gradually losing their competitive advantages by using its direct model in critical business segments. The company is facing shrinkage of growth, increasing competition, declining quality of customer service, and limitation of expansion. These issues have an enormous impact on Dell’s position as a technological giant in the PC industry.

As director of Supply Chain Systems, Teri Takai recommends implementing virtual integration strategies from companies like Dell to portions of Ford’s supply chain strategy. Although there are several key differences between the companies, the restructuring plans of Ford 2000 have set a viable foundation to implement Dell’s virtual integration strategy in inventory management, customer service and support and suppliers’ management. The redesign of the process must include design not only of the supply chain but also of fulfillment, forecasting, purchasing, and a variety of other functions that historically been considered independently within the Ford hierarchy. Teri

First, product complexity and supply channel constraints are key limiting factors of lean manufacturing that must be addressed. Due to the generic nature of computer parts, Dell possesses the ability to negotiate and procure necessary items for plant assembly from several independent purveyors. Therefore, Business-To-Business (B2B) transactions are accomplished with relative ease and minimal cost. Although generic items, such as spark plugs and windshield wipers, are provided to Ford by lower tier suppliers, wholly-dependent, “tier one” partners

Dell Inc. (Dell) is an American privately owned multinational computer technology company based in Round Rock, Texas, United States, that develops, sells, repairs, and supports computers and related products and services (Wikipedia, 2016). Dell founded in 1984 by Michael dell, is the world famous computer systems, computer products and service provider in the first place (Jones, 2013, P.388).

Dell revolutionized the PC industry in the 1990’s because of its strategic innovation of the Build-To-Order model. It was a bold new business model that changed the rules of the industry. Through our research we have come to know that in today’s competitive world, a brilliant business model alone does not create a sustainable advantage, unless it is supplemented by operational excellence, the continuous identification and adoption of best practices.