Dell Level 5/Level 4 Manufacturing

Intel operates in an industry, which is comprised of products involving high research and development costs, continuous product improvement and new innovations. The companies in the industry are having high economies of scale and are knowledge based. It helps both the service and manufacturing sectors in the growth process. Intel is positioned as a leading company with its ability to adapt to technological changes and its strong relations with other businesses who are major buyers of integrated circuits. The industry in which it operates is very competitive and comes with high risks as

Dell's business strategy combines its direct customer model with a highly efficient manufacturing and supply chain management organization and an emphasis on standards-based technologies. This strategy enables Dell to provide customers with superior value; high-quality, relevant technology; customized systems; superior service and support; and products and services that are easy to buy and use.

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

Dell. Dell’s products—computers, servers and printers—are commodities. Dell tends not to develop the technologies underlying these products. Instead, it purchases the components from firms that develop the technologies (semiconductors and computer software). Dell’s direct-to-customer marketing strategy is not unique, but the extent to which Dell performs this strategy better than anyone else in the industry gives it a competitive advantage. Its size, purchasing power, quality control, and efficiency permit it to operate as a low-cost provider.

The advantages of Dells model are: The internet allows Dell an extensive scope and reach for its products at a relatively low price (Dedrick and Kraemer 2001). Using the internet Dell has been able to automate many of its business functions, such as product configuration, order entry and technical support (Dedrick & Kraemer 2001), therefore the company can achieve higher revenues without customer service costs increasing greatly. Online configuration ensures that the customer gets exactly what they want. Dells build to order strategy means that inventory levels are low, they only hold approximately 4-8 days of stock, therefore inventory costs are low (Breen 2004).

In L5, the chassis (without motherboard installed) are shipped to the US first and followed by the motherboards being airfreight to the US as shown in Figure 6-4.

Dell is a computer corporation recognized for manufacturing computer systems through parts assemble. In 1983, Michael Dell saw an opportunity in using IBM compatible computers for a new assembly line that can be sold to local businesses. The idea as explained by Michael Dell, in one of his interview, is that in the early days of computers' manufacturing, companies had to be able to produce every part of the system. As the industry matured, companies started to focus on single parts and to become specialized in creating items that can be assembled with other parts to prepare a computer. As a result, Dell understood that to have a competitive edge in the market, they needed to

When Dell started its campaign to allow customers to configure and customize their computers according to their needs and budget Dell had serious issue regarding Inventory Management. Dell needed and Inventory which comprised of right computer parts at right time and right place. To manage this entire Dell

The direct supply chain model that Dell has been using for many years to sell customized PC’s to customers via the internet has been very successful. Dell designed and structured the supply chain to provide customized computers in a quick manner and with a reasonable price. Customers can visit the Dell website and configure the PC they desired and see the cost options they selected. Once the order was finalized, Dell would then start the building of that customized computer to meet the customer’s selection and ship the finished product directly from the manufacturing

Dell is able to sustain a competitive advantage over competitors in the computer industry because of an extremely efficient supply chain/distribution system and its JIT inventory system. Since inventory and labor are the highest liabilities of a firm and Dell operates with a few days of inventory, they are able to cut costs on warehousing, hiring people to track and maintain inventory, and avoid holding on to obsolete technology.

His direct model, in contrast, is partnering with companies who are treated as though they are internal staff. This model improves the level of information sharing and motivation to succeed as a team. Technology means that the information sharing can be easily and effectively done in a win-win type of arrangement. The challenge is to maintain these relationships and focus on the task at hand. Providing suppliers with real-time information and up to date demand enables the supplier to act accordingly to meet Dell’s requirements.

For Dell, they created an extranet for suppliers. Suppliers could see all order information and Dell’s production schedule. They could feed this information into their own production system. And produce the computer for different orders.

This situation was different to Dell’s supply chain, were by using new technologies Dell shared information in a real time fashion with its suppliers, helping them know Dell’s daily production requirements making the supplier more responsive to Dell’s needs.

AMD and Intel both face tremendous economies of scale. The cost of building the first chip of a new design may in the billions of dollars, if one includes the cost of building the manufacturing facility, and the research and development costs. However, the more chips that are produced of a given design, the lower the average cost.

Begum (1980) notes that “Because there are so many sources of value conflict among evaluation experts, as well as wide variety of unpredictable influences on evaluation efforts, it is not likely that any one system of