Dell was founded in 1984 by Michael Dell in his dorm room at the University of Texas-Austin. Dell pioneered a direct sales model, eliminating retailers and selling directly to customers at lower prices. By 2001, Dell became the number one PC manufacturer. Dell operates manufacturing facilities in the US but also utilizes contract manufacturers, particularly in China, who produce components and partially or fully assembled products that Dell then customizes and ships to customers. Contract manufacturing grew significantly from the 1980s onward, with almost all desktop PCs sold in the US coming from Chinese contract manufacturers by 2005. Dell retains some manufacturing in its US facilities by having contract manufacturers ship partially assembled products for further customization and quality control before delivery.

1. Dell Supply Chain
Management
S.Mamatha Himabindu

2.  DELL was founded by Michael Dell in his University of
Texas-Austin dorm room in 1984.
 Simple Business Model: “Eliminating the Retailers from
the Sales Channel and Selling Directly to Customers” at
lower than market average prices.
 Reached one of the top 5 in 1993, and Became Number
1 in 2001.

3.  3 Manufacturing facilities in the United State:
 Austin, Texas; Nashville, Tennessee; Winston-Salem,
North Carolina
 Dell’s revenue for the last 4 quarters totaled $56 billion
and with 65,200 employs world wide.
 Other than Personal computers Dell also include
workstations, servers, storage ,monitors, printers,
handhelds, LCD TVs, projectors.

4. Contract Manufacturing:
 The phenomenon of contract manufacturing began in the
1980s
 Contract Manufactures were responsible for producing
materials/unassembled components in less expensive
regions and shipped to OEM factories

5.  By late 1990s, more & more contract manufactures
began some level of manufacturing/assembly for their
customers
 According to Alameda,California-based technology CM
was worth $90 billion and by 2001 it was doubled $178
billion

6.  Original Equipment manufacturers(OEMs) chose to let
CM own & manage part of manufacturing for
 Capability
 Manufacturing Compititiveness
 Technology
 By 2005, almost all the desktop PCs sold in the US were
initially produced by CM in China

7.  Depending on the level of manufacturing competency
and cost some manufactures do everything from
manufacturing all the way to shipping fully assembled
products
 Dell was one of the few American companies that still
retained manufacturing facilities in the US
 As Dell Customize according to their customers. So, CM
in china produce and ship half assembled products to
Dell’s factories

8.  Dell factory associates perform further product
fulfillment building in the customized components
including the processor, memory, hard drive , speaker,
etc..
 Installing the necessary s/w application, performing final
unit testing and then delivering the fully assembled &
functional product

9. Level % versus Level 6 Manufacturing:
 Degree of assembly can be broken into 10 levels. The
higher the level, the more fully integrated it is.
 Level 5 includes PC chassis , floppy disk drive and fan
depending on the chassis configuration
 Level 6 manufacturing, the supplier installs the
motherboard in the chassis

10.  When a contract manufacture in china produces an L6
desktop PC chassis, yet which is not a functional unit
and still requires customized parts such as the
processor, memory, hard drive, speakers
 The contract manufacturer ships the L6 chassis from
china to Dell’s factories in the United States and Ireland
and then Dell finishes Level 10, a fully assembled and
functional product

11.  Some of the dell products such as handhelds and
printers are manufactured to Level 10 by contract
manufactures.

12.  L5 manufacturing has higher overall manufacturing and
logistics than L6
 Causes
 Chipset supplier decommit or supply issues
 Quality/engineering issues
 Dell forecast accuracy
 New product introduction

13. Thank You