Dell Built-to-Order has Revolutionized Manufacturing

796 Words Feb 26th, 2018 3 Pages
In regards to the supply chain, rather than the traditional push model of manufacturing that continually manufactures inventory no matter the demand, the Dell Built-to-Order model uses the pull approach. Dell’s success led to other industries’ interest in Built-to-Order manufacturing. With the pull model, nothing is manufactured until a customer order is initiated, which triggers the production process to manufacture that specific order. While this may sound simple, in traditional manufacturing organizations like Ford, that mass produces and requires economies of scale to be productive, this is extremely difficult to achieve. However, there are many benefits that can be gained with the pull-based system including reducing inventory and work-in-progress that tie up a lot of capital, an increase in profit margin and revenue by charging more for products that are designed based on the specifications of what customers want thereby decreasing the need for discounting, and reducing operating costs along the supply chain through achieving operation efficiencies and forecast accuracy.
In the automotive industry, expensive equipment and machinery require high capacity utilization to be profitable. As such, traditionally, automotive companies optimized their production…
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