Dell Level 5/Level 4 Manufacturing

978 Words Apr 13th, 2012 4 Pages
Dell Inc.: Case questions

In the Level 5 manufacturing, the motherboard is not installed into the chassis before the shipment to the US. This means that at L5 has a longer list of cost:
(1) motherboard packaging cost to protect the motherboard from damage
(2) air-freight cost, these are separate transportation cost
(3) US transportation cost are cost required to transport the motherboard from the U.S. to the SLC and to the 3rd-party integrator
(4) inventory holding cost at SLC
(5) Local integration cost to integrate two separate components.
After this it is needed that after the motherboard within the chassis after integration returns to the 3rd-party. Since the 3rd-party does not have effective equipment to perform tests, the
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This shows that the members were not totally objective. Above mentioned arguments show that the scoring process can be subjective or biased. Next to that there was no weight placed to differentiate more critical processes from other processes. This means all departments had an equal weight. Concluding it would be better to implement another decision making model that would give a more clear solution.
The relationship is characterized by a shallow relationship which is not very in depth in order to be manageable and sustainable. Investing too deeply in a relationship will result in high cost and energy. The limited production capacity allows to dedicate its production to chipsets, which provide a higher margin for Dell and Intell (chipset supplier).

Dell uses a push-pull strategy. It produces computers by using components after a customer order. Dell’s model is called a Direct model where suppliers deliver to Dell and Dell is directly in relationship with the customer without distributors and/or retailers. The customer is in the beginning (specific order) and at the end of the process. Suppliers are situated very close to the plant which results in a easy coordination. There are few suppliers and it saves money through shipping directly to customers. Next to specific components, Dell also uses some components through all orders. Each order consists of a motherboard for example.
This strategy has great benefits.

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