Dell has six factories around the world, including Penang (established in June 1996) and Xiamen, China (established in August 1998). It will concentrate the orders originally given to more than 200 suppliers and give them to 50 of them, but only if they build a warehouse next to the Dell factory and supply them nearby, and those who are unwilling to cooperate will be removed from the supply chain. Dell's own spare parts inventory is less than 2 hours. After receiving the order, it will inform the supplier to send the spare parts, and it only takes 4 hours from feeding to assembly and shipment.
This concept is similar to Toyota's "just-in-time" production mode and is a pioneering work in the PC industry. It subverts the previous PC industry model of making market forecast first and then preparing materials according to the forecast, and has been adopted by the same industry one after another. In order to reduce inventory and improve the liquidity of parts, suppliers have also formulated corresponding methods, that is, modularize parts as much as possible, reduce the cost of storing many different parts and increase the compatibility between different parts.
Dell has an evaluation system for suppliers, including quality, logistics and service, and constantly checks the performance of each supplier as a basis for retention or elimination. Dell's assessment is the most careful, and it knows suppliers very well. This system also helps them to do internal management.
The second step is to strengthen the speed and transparency of information circulation in the supply chain.
Suppliers who do business with Dell help Dell manage its inventory. They must be very clear about Dell's future shipping plan, so as to avoid losing money if they have too much inventory, and being replaced by Dell if they have not enough inventory. For Dell, it is also necessary to know the inventory situation of the whole supply chain at any time to ensure the normal operation of the above companies. This involves two-way information flow and trust. It must ensure that the whole nerve is alive and well. If something goes wrong in a short time, the whole nerve will be paralyzed. In the operation of supply chain, the cost of changing suppliers is very high, because the learning curve is the loss of efficiency.
Dell highly uses information technology to build a backbone to connect customers, manage production lines and contact suppliers, and requires suppliers to cooperate.
Because Dell produces after receiving the order, it does not take the distribution channel, and there is no inventory on the store shelves, so once it is delivered from Dell's factory, it is equivalent to having been sold. Dell will publish daily sales figures of various types of PCs on the internal website for suppliers to check to know which parts are needed next. As for the orders that Dell will receive soon or just received, they will also be announced above to help suppliers make part estimates. Dell will make an estimate 13 weeks before delivery, and make corrections as the number of days decreases until the estimated figure is frozen two weeks ago, and the supplier will deliver the goods at the scheduled time according to this figure.
The third step is to reduce the ratio of R&D and design and enlarge the value of partners.
Dell's core competitiveness lies in managing the whole supply chain so that new products can be delivered to customers in the shortest time. Anything unrelated to this matter will be handed over to the partners in the supply chain. Dell's R&D expenditure accounts for less than 2% of total revenue, which is the lowest among the top ten computer companies, but the growth momentum is the strongest. The key point is that Dell handed over the research and design of notebook computers to Quanta, a foundry partner in Taiwan Province Province, while Dell concentrated on winning orders. No matter how many orders Dell places, Quanta won't say no, which is a happy problem for suppliers.
When Dell launched the price war, Quanta Computer was playing an efficient logistics support role. The market environment is changing rapidly, even if you do OEM, you must adapt to the changes in the market, otherwise you will be eliminated. Quanta was originally capable of designing, but from 1996 to 2000, Quanta began to emphasize DMS (design and manufacturing supply chain) and turned itself into a department store that designed and manufactured notebook computers. As long as customers want to sell laptops, Quanta can design and manufacture them from upstream and downstream components.
Starting from this year, Quanta will switch its business model to a new one. In the future, customers can place orders on the Internet, decide the microprocessor type, memory capacity and even chassis color of computers, tell their own needs to computer brand manufacturers, and then send the orders to Quanta. The factory can complete the assembly within 2 days and send it directly to the courier company for delivery within 3 days.
In this way, the time for the end consumer from placing an order to receiving goods is only 5 to 6 days at most. The advantage of this is that all key parts can be completely zero-stocked, and because the product price has been finalized when placing an order, there will be no doubt that the product price will drop. In fact, there are still many difficulties in this delivery mode. How to connect different systems of different customers with their own companies is a big problem. Secondly, how to control the upstream parts supply chain is also a science. In addition, the production only takes two days without any mistakes. The difficulty can be imagined.
The cooperative relationship of the whole supply chain is closer, and the existence of each other helps each other create more value, not just the buying and selling relationship of ordering and delivery. When encountering difficulties, they are more considerate of each other. If Dell is in a hurry to rush the shipment, which causes the accounts payable to rise, the supplier is required to extend the payment time by 15 to 30 days.