Assignment 2

Executive Summary

Dell Computer is, currently, the world's largest manufacturer of personal computers, over companies such as IBM, Toshiba, Compaq or HP with a market share of 14% which continues to grow as a fact in 2008, where despite the recession and the drop in sales of PCs, Dell has overtaken its main competitors on a sales increase of 8%.

The objective of this report will be to analyze and evaluate Dell and its procurement, manufacturing, transporting and distribution areas, as well as suggesting a new strategy offering a methodology for process improvement to improve the company results.

In order to carry out the objective of this report, the firm should realize continuing improvements in the planning and estimation of sales to reduce the problems from a sudden increase of demand, setting up “Lean Six Sigma Method” and fulfill the different steps of its implementation.

Current Strategy Definition

        Dell’s logistic strategy has 6 main points:

  • Minimize the inventory as much as possible and thus reduce the costs.
  • Produce to order, not producing anything that does not already have a buyer.
  • Customer service as support to the E-business.
  • Exclusive relationship with the suppliers such as FedEx, UPS, Microsoft and Intel.
  • Managing the supply chain, Dell integrates into the company its customers and suppliers, which allows a speedy and flexible management of their supply chain, thus Dell delivers its products in a reliable and very rapid manner, obtaining a competitive edge.

The major difference between Dell and its competitors is that Dell is not dependent on retail outlets to distribute its product. It sells online or by phone, and obtains the competitive edge through its  electronic commerce.

The chart below shows Dell’s production chain process.

After receiving the order from the customer, through an integrated platform that takes the request made by internet or by telephone directly to the factory that night it starts production. The assembly line for its plant is capable of producing a computer in less than 4 minutes.

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About the distribution chain process, the device is delivered from the factory through outsourcing companies, the same day of production to distribution points and then straight away to the final customers.

I have tried to show the process in the chart below.

Taking the order just before the assembly, Dell gets the components which are an average of 60 days newer than those of machines sold by IBM and Hewlett-Packard at the same time. That may translate into an advantage of a 6% gain in only the components.

The strategy of procurement, manufacturing, logistics and distribution has enabled ...

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