Improving the Flexibility of the Desktop PC Supply Chain

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Improving the Flexibility of the Desktop PC
Supply Chain

• Supply chain management class
• Professor Shuo-Yan Chou

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Information of Group

• From left to right
• Bui Tien Dung M9701808
• Le Thi Thu Tam M9618802
• Doan Thi Truc Linh M9701801
• Hoang Nhat Duc M9705805

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Outline
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(No Transcript)
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History of the PC industry
In 1977 Apple computer Single chip
microprocessor Lower computer prices Learn how
to program, run simple office or productivity
applications or play game
In 1990s laptop computers size of a notebook
More powerful and capable of handing more
tasks Users movie studios, business universities
and governments
In 2005 high-end PCs More greater reliability
More powerful multitasking capability
In 1960s PC such as LINC and the PDP-8
Expensive 50,000 and bulky Individual
laboratories and research project
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Dells company background
Founded Michael Dell in his university Texas
Austin room in 1984 Simple business model
eliminating the retailers from the sales channel
and selling directly to customers In 1993
top-five computer system makers worldwide In
2001 number 1 computer system makers worldwide
Three major manufacturing facilities Autins,Texas
Nashville,Tennessee Winston-Salem, North Carolina
Dells revenue for the last 4 quarters totaled
56 billion. Dell employs 65,200 people worldwide
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Dells products(1/2)
Dell has a diversified its Laptop products to
meet variety of customers demands.
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Dells products(2/2)

• Besides Laptop, Dell also produces variety of
  electronics commodities
• Manufactured
• Dell factory associates
• Other companies but sold under the Dell brand

workstations
storages
servers
LCD
Printers
Projectors
Handhelds
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Dells business model
Selling directly to customers

• Benefits
• Manufacturing costs lower
• Save money by shipping directly to the customers
• Low raw material inventory
• Reduce the time from customer order to receipt
  of the system

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Contract Manufacturing

• Contract manufacturing is utilized to take
  advantage of labor cost differences.
• Many original equipment manufacturers (OEM)
  choose to let contract manufacturers own and
  manage part of manufacturing process for the
  following reasons
• Capacity The OEM cannot make the item or easily
  acquire this capability and must look for a
  supplier.
• Manufacturing competitiveness The supplier has a
  lower cost, faster availability, and so forth.
• Technology The suppliers version of the items
  is better.

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Dells Contract Manufacturing
Dells Contract Manufacturer in Asia
Shipping half-assembled product to US
Dell factory in US performs further product
fulfillments
Installing software and delivering to customers
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Critical Components of a Desktop PC Major
Component Manufacturers
Motherboard ASUS Foxconn Intel MiTAC
Chipset AMD Intel
Printed Circuit Board BTI Electronics Compeq GCE P
lato Electronic
Desktop PC Acer Apple Dell Fujitsu
Siemens Gateway HP Lenovo/IBM
LAN Chip Broadcom Intel
Desktop Chassis ASUS Flextronics Foxconn MiTAC Lit
e-On
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• Desktop PC Assembly Level 5

• Desktop PC Assembly Level 6

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Desktop PC Assembly
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L6 vs. L5
L5 additional cost
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L6 vs. L5 Value Comparison
L6 is more cost-effective than L5.
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Manufacturing Costs L5 gt L6.
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Percent L5 shipped has been increasing since
March 2005.
Percentage of L5 versus L6 production from July
2004 to June 2005
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Root Causes Analysis
Majority of expedites are caused by chipset
supply shortage.
AMF Expedite by Root Cause (January to June 05)
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BUSINESS PROCESS IMPROVEMENT(BPI)

• Manufacturing/ operations
• Worldwide procurement
• Regional procurement
• Production master schedulers
• Production control
• Quality
• Process engineering
• Supplier quality engineering
• Cost accounting
• Inventory control
• Logistics

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Project Methodology

• BPI project team established to evaluate the
  following 6 scenarios
• Keep as current 3rd-Party Integrator (3PI)
  managed by Equipment Manufacturers
• DAO Cellular Integration Enable the Dell
  factory work cells to perform L5?L10 mfg work
• Offline Integration Keep the current L6?L10 mfg
  process unchanged add a separate facility to
  handle MB-chassis integration work
• At SLC (Supplier Logistics Center)
• At a Dell-leased building
• 3PI managed directly by Dell
• L6 from Equipment Manufacturers Mexico plants

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Factors to Considered

• For each of the 6 scenarios, BPI project team
  assessed the following attributes
• Process smoothness sustainability
• Cost per box
• Product quality
• Capital investment
• Material handling/cost-accounting
• Logistics

Project Goal Identify the optimal scenario
based on these input attributes.
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Complexity Analysis
Legend The Cost per Box data has been
modified to respect Dells data
confidentiality. Option 1 CM-managed
3PI Option 2 Integration at DAO work
cells Option 3A Integration at SLC/hub Option
3B Integration at Dell-leased bldg Option 4
Dell-managed 3PI Option 5 Integrated chassis
from Mexico
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Characteristics of the Option 1
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Characteristics of the Option 2
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Characteristics of the Option 3A
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Characteristics of the Option 3B
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Characteristics of the Option 4
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Characteristics of the Option 5
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Complexity and Cost Analysis
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Conclusion

• Dells business model contract manufacturing
• Selling directly to customers
• Contract manufacturing take advantage of labor
  cost differences
• L5 vs. L6
• Manufacturing cost L5 gt L6
• Dell BPI team
• Identify the optimal scenario through complexity
  and cost analysis of the six potential
  manufacturing options
• Option 3A received the lowest complexity score

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Thank you for your attention