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Lonnie Childs Director America’s Supply Chain Management Dell Computer Corporation

Demand/Supply Management. Lonnie Childs Director America’s Supply Chain Management Dell Computer Corporation. Presentation Outline. Who is Dell? Operating Principles Demand/Supply Management What’s next?. Who are we?. #1 computer systems company in the world

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Lonnie Childs Director America’s Supply Chain Management Dell Computer Corporation

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  1. Demand/Supply Management Lonnie Childs Director America’s Supply Chain Management Dell Computer Corporation

  2. Presentation Outline • Who is Dell? • Operating Principles • Demand/Supply Management • What’s next?

  3. Who are we? • #1 computer systems company in the world • #1 in Server & Portables sales in US • #48 on Fortune 500 list • #10 on Fortune “Most Admired Company” list • 36,000 employees world-wide • Customers in 170 countries • 6 Manufacturing locations world-wide

  4. Harvard Business Review March – April 1998

  5. Virtual Integration Principles • Be direct • Focus on core competencies • Collaborate to spur velocity • Leverage the Internet to cross boundaries Benefits • Enhanced velocity throughout the value chain • Advantaged relationships • Joint, cooperative business processes replace Silos • Cost reduction for all parties

  6. Lovejoy’s Law Information, Inventory, and Capacity/Capability are substitutes for each other in any system. Information Capacity Capability Inventory Source: Lovejoy, William S., Integrated Operations. Univ. of Mich.; Sept., 1995

  7. Value Shift in Supplier Relations Corporations Communities Physical Assets Intellectual Assets Closed Collaboration Vertical Integration Virtual Integration

  8. The Model & Supply Chain Management • Be Direct • Enables immediate Market feedback • Allows us to quickly influence demand trends • Fastest TTM w/ standard technology • Build to Order • Postpone material commitment as long as you can • Focus on material productivity • No Finished Goods • Low Inventory, Low Backlog • Exposes problems quickly • Drives quick response. • The Model drives the right behavior and accountability. • The Model is religion - Follow it.

  9. The Dell Fulfillment Proposition • Buy to plan … build to order • Long material lead time – 4 months • Build and ship within 3 days avg. • Eliminate inventory - < 4 DSI Production Inv. • Continuously pursue flexibility • Develop strategic partnerships • Own the Customer Experience

  10. Bottoms-Up Forecast By Segment Constrained Ship Plan Plan for Flexibility Tops Down Sales and Operations Planning Revenue Plan Master Sales Plan Risk Mgmnt. Hedges & Adjustments World-wide Roll-up Book/Ship Plan Master Production Plan Supplier Capacity Plan Factory Capacity Plan Material Reqmt Plan Supplier Matl Reqmt Plan Keys to Success: >Regimented Planning Cycles>Regular SOP Reviews > Risk Management > Consistent Execution

  11. The Law of Demand/Supply “Demand/Supply will always tend to diverge.” DEMAND SUPPLY The question is…. How far in advance can we recognize it. How fast can we resolve it.

  12. Supply Demand Demand/ Supply Procurement Sales/Mktg. At the Center of Supply Chain Execution…. “Relentless Demand/Supply Resolution” • We win with… • Alignment • Communication • Commitment • Teamwork

  13. Demand Management • Lead-time elasticity • Specific lead times established for all configurations daily • Supply constraints are continuously communicated to sales • Managed at point of sale • Demand shaping

  14. 75% Forecast 15% 10% Demand Management Demand:Supply Management Supply Chain Flexibility

  15. The Improvement Curve What raises the bar? • Innovation • Information Velocity Supply Chain Velocity What got us here? • Best Model • Flexible Factories & Suppliers • Relentless Demand/Supply resolution • Great People & Execution! Time

  16. What’s Next? • Completion of Global roll-out of i2 Technologies applications & “institutionalization” of the changes • Electronic integration with Supplier planning systems • Supplier to Hub information & execution • Setting standards for E-Business (I.e Rosetta.net, etc.) • Trading Exchanges?

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