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 Dell to produce computers that are manufactured according to specifications that gives every customer, either through internet or telephone, a price lower than Dell’s competitors. However, the company has still some faults, for instance it has over 10% of delayed deliveries, especially in South America and also some problems with the suppliers.
New Strategy for Supply Chain Improvement.
Due to the high level of Dell’s efficiency and lack of any method to improvement the process, I propose a new strategy which will try to improve the supply chain based on perfecting the current strategy, plus providing the keys to resolve its main troubles such as supply problems and delivery delay, improving the quality of process outputs by identifying and removing the causes of defects, in order to reduce as much as possible the orders that are not processed in an early manner due to not being detected on time.
- Sales should be planned and estimated fairly accurately, which is vital in the integration of component suppliers in the manufacturing strategy.
- The catalogue must be managed in a dynamic mode, and adapted to the actual availability of components and manufacturing possibilities.
- There must be an efficient capture of order: for that Dell has developed a set of facilities on their sites that includes the monitoring of the order to the customer loyalty.
- The manufacturing system must be highly resilient to adapt to changes in demand and changes in consumer preferences.
The purpose of this strategy is to improve the distribution and transportation process and eliminate the overall process fault. Dell should implement an improvement method, there are many such as Lean Manufacturing or lean Production (LM), Total Productive Maintenance (TPM) or Quick Response Manufacturing (QRM). However, from my point of view the Six Sigma Method is the most appropriate for Dell’s needs because Six Sigma seeks to minimize errors and satisfy the customer. Six Sigma is a highly disciplined approach to decision making that helps company focus on improving processes to make them as near perfect as possible. According to http://www.bmgi.com/methodologies/methodologies_six_sigma.aspx
I suggest the Six Sigma DMAIC method to improve an existing business process, the steps to implement the Six Sigma DMAIC methodology are shown in the chart below.
In order to reinforce its accomplishments it is most appropriate to combine management with Lean Six Sigma, a methodology that includes tools such as work cell environments, polyvalence, the Kanban or scheduling systems with finite scheduling, flexibility in production and self - quality. See the chart below.
According to
Objectives.
The main objective is to introduce Lean Six Sigma DMAIC method in a successful manner and apply it to the procurement, manufacturing, transportation and distribution areas in order to achieve the objectives below.
- To reduce exponentially the number of defects and process variability that generates (and which the company traditionally considered as natural).
- To improve on-time delivery.
- To eliminate non-value-added activities and make processes highly efficient.
- To reduce defects, resulting in higher quality products and services.
- To lower operating costs by increasing process capability and yield.
- To decrease cycle time and lead time for both products and services.
- To have leverages data to help the business make sound decisions.
- To improve customer satisfaction by providing high-quality offerings at the right time.
- To involve employees at all levels to institutionalize a culture of excellence.
The Supporting Project Plan.
The project plan is divided in 5 main points (15.html):
- Define the project goals and deliverables for both internal and external customers
- Measure the process to determine current performance
- Analyze and determine the root cause(s) of the defects
- Improve the process by eliminating defects.
- Control future process performance
- Define
Six Sigma is about "solving a problem with an unknown solution." To unearth the solution, the problem needs to first be defined in concrete measurable terms.
2. Measure
Critical measures that are necessary to evaluate the success of the project are identified and determined. The initial capability and stability of the project is determined in order to establish a measurement baseline. Once the project has a clear definition with a clear measurable set of indicators, the process is studied to determine the Key Process Steps and an operational plan defined to measure the indicators. Once the reasons for input failure are determined, preventative action plans are put into place.
3. Analyze
The team should determine the causes of the problem that needs improvement and how to eliminate the gap between existing performance and the desired level of performance. This involves discovering why defects are generated by identifying the key variables that are most likely to create process variation.
4. Improve
This phase is where the process transitions into solutions. Critical inputs have been verified and optimized toward nailing down the problem causes. Once problem causes are determined in the Analyze phase, the team finds, evaluates through testing, and selects creative new improvement solutions. The team identifies and quantifies what will happen if needed improvements are not made and what will happen if the improvements take too long.
5. Control
Success in the Control phase depends upon how well the team did in the previous four phases. The keys are a solid monitoring plan with proper change management methods that identify key stakeholders. The team develops a project hand off process, reaction plans, and training materials to guarantee performance and long-term project savings. Documenting the project is very important so that the new procedures and lessons learned are maintained and provide concrete examples for the organization. At the close of the Control phase, ownership and knowledge is transferred to the process owner and process team tasked with the responsibilities. Finally, the team identifies what the next steps are for future Six Sigma process improvement opportunities by identifying replication and standardizations opportunities and plans.
The schedule plan advised to Dell new strategy implementation will last 11 months starting on January 2010 and finishing on November of the same year. A provisional Gant Chart is provided to aid in the schedule planning of the project:
Reference List
Walters, D. (2003), Global Logistics and Distribution Planning, strategies for management. UK: Kogan Page Limited.
Janice Burn, Peter Marshall and Martin Barnett (2002) E-Business strategies for virtual organizations, UK: Butterworth Heinemann,.
John J. Coyle, Edward J. Bardi and C. John Langley Jr. (2003) The management of Business logistics: A Supply Chain Perspective, South-western Thomson Learning.
P. Fawcett, R. McLeish and L. Ogden, (1992) Logistics Management. UK: Financial Time, Prentice Hall, UK.
Philippe-Pierre Dornier, Ricardo Ernst, Michel Feder and Panos Kouvelis (1998) Global Operations and Logistics. Text and Cases. UK: John Wiley & Sons, Ltd, UK.
Chen. S (2005) Strategy Management of e-Business. UK: John Wiley & Sons, Ltd,
Internet Sources
Breakthrough Management Group International. Problem solved. [Online] Available at . [Accessed 14 May]
Lean Sigma Instituted, services lean sigma DMAIC. [Online] Available at . [Accessed 4 May]
Peter Peterka, The DMAIC Method in Six Sigma. (24th October 2005) [Online] Available at . [Accessed 22 April]
