A

PRESENTATION ON
“IMPROVING THE FLEXIBILITY OF THE
DESKTOP PC SUPPLY CHAIN”

PRESENTED BY-
Mohd.Aarish
 EXECUTIVE SUMMARY

 All about improving flexibility in desktop PC supply chain of Dell Inc.

 PC was manufactured by assembling its components into 10 levels.
 Though L5 incurred high cost, it was manufactured more.
 Cost and quality compromise was done in L6, which resulted in
increasing inventory at L5.
 Other factors also contributed to L5 manufacturing.
 A BPI team from various organizations was formed to focus on
complexity of the situation and came up with several solutions
thereby.
 HISTORY OF PC
INDUSTRY
 Introduction of first PC- non-mainframe computers (LINC, PDP-8)
in 1960s.
- Expensive and Bulky.

 First microcomputers hit the market in 1970s.

- Emergence of single-chip microprocessor lowered the PC prices.
- Apple II- first successfully sold desktop in 1977.

 Introduction of first commercially available portable computer –

Osborne in 1981.
- tiny CRT monitor, brought a revolutionary impact

Introduction of multi-user PCs in 1990s.

- Increased usage by studios, universities, governments, etc.
 DELL’S BACKGROUND

 Founded by Michael Dell in 1984.

Based on ‘direct model’; soon enjoyed success; no. 1 in 2001.
 Its manufacturing cost was kept lower than that of its competitors.
- saves money by selling directly to customers,
- raw material inventory is low,
- time was reduced from ‘customer’s order to receipt of system.
 New concept of ‘Contract Manufacturing’ came up.
To take advantage of labor cost differences, many original equipment
manufacturers (OEMs) initiated business engagements with Contract
Manufacturers (CMs), as they lacked in
- Capability,
- Manufacturing Competitiveness,
- Technology.
COMPONENTS OF PC
 LEVEL 5 V/S LEVEL 6
MANUFACTURING
 In desktop manufacturing, components are assembled at 10 levels.

 L5 - Assembly of PC chassis, Floppy disk drive and fan.

 L6 – Assembly of L5 components + motherboard.

 Handhelds and Printers are manufactured to L10 by CMs.

- It implies that Dell lacks in having a manufacturing base for these.
- CMs assemble these products with user manuals and ship to Dell
merge centres.

 Dell follows ‘shipping strategy’ to maintain customer satisfaction.

 Similarities and differences between L5 and L6 value chains are
as follows:-
 CAUSES OF
INCREASING L 5
MANUFACTURING

 Dell’s inability to provide motherboards in time to CMs.

 Chipset supplier unable to deliver the agreed desired quantity.

 Defective motherboards created an additional unexpected demand.

- Breakdown of air-freight charges.

 Actual demand for the chipset exceeded the forecast.

 Unstable demand for the introduced new product, i.e. Desktop PC.
 Contribution of various factors in increasing L5 manufacturing
is shown below:-
 COMPLEXITY
MANAGEMENT
A task force, Business Process Improvement (BPI) team was formed.
-Consisted of employees from different organizations.
- Employee themselves were affected by chipset supply shortage.
 The team identified six manufacturing options viz.-
- Keeping of safety stock,
- Dell America Operations (DAO) cellular integration to perform
L5 to L10 manufacturing works.
- Offline integration at Supplier Logistics Centre (SLC).
- Offline integration at Dell-leased building.
- 3rd Party Integrator (3PI) managed directly by Dell.
- L6 from equipment manufacturers’ Mexico plants.
BPI team focuses on ‘quantifying the complexity’ and ‘cost of
managing the above six options’.
 CONCLUSION

 Adopted the best marketing strategy to reduce the price.

 Very effective approach of addressing the problem.

 Managing the safety stock for motherboard was the best means of
smooth running of inventory.
 OU
Y
N K
H A
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