1 D’après Régis Meissonier

2 Supply chain transformation SuppliersProducti on Distributi on Custome r Traditional supply chain CustomerDistributio n New supply chain : Partner network Parallel processes Enterprise Partner

3 Dell history Created by Michael Dell in 1984 at Austin, Texas Initial activity: retail of IBM component updates 1985: the firm started to sell PCs using the direct model (by telephone) : Dell tried to developed its own distribution channels but gave up the project and reverted to the direct model 1999: Dell n° 1 in USA and n° 2 on the world market

4 Dell mini case study Read the mini case study document. Point out: StrengthsWeaknessesOpportunitiesThreats Source : Harvard Business School, Case Study

5 Direct Model Why a Direct Model? Price competition: Dell products are medium level (IBM, HP, Compaq vs supermarket PCs) A lack of financial assets Stock depreciation: 50% each year Advantages Just in time SCM: stock value = 3 or 4 days Cash flow Direct communication with customers Drawbacks Some customers are reluctant to use remote purchase systems Value creation of intermediaries is lost

6 Customer Relationship Management CRM: « Premier page »: a personal web site (reserved for large firms) Configuration of data computer equipment Order history On-line simulation On-line simulationEtc. Call centres (concern most of the orders) “Platinium Council Forums” Dell Professional Services (DPS) in Europe, Middle-East, Africa Consulting (implementation, integration and assistance) Infrastructure architecture Hosting and back ups Precise segmentation: Large and medium firms (70 % of annual turnover) Small businesses Education sector, Government and Healthcare Customers

7 What direct model implies: IS Integration Supply chain integrated with suppliers They can look after their supplying outflow and plan their production by anticipating orders DOMS System (Dell Order Management System) Order administration Production management Automated editing process of Orders Stock inventory

8 DOMS System Customer DOMS 1: order Finance department 2: checking payment Engineering department 3: checking feasibility Manufacture 4: production schedule Suppliers 4: orders Control system While computers are assembled, the order is updated with bar codes 5: hardware and software tests The PC is connected on Ethernet network, a software is automated downloaded, all tests are automatically done. Access to component outflow Tracking the order

9 IS integration history 1990: IT are too decentralised (one datacenter with separated applications) Projet IRB (Information to Run the Business) Step 1: installation of standard OS and standard hardwares (with Sun Servers, Tivoli Network Management) Step 2 : a new network (DellNet) and a new datacenter at Austin,US, in Ireland and Malaysia Phase 3 : adoption of SAP/R3 1995: regionalization plan at Dell (objective: being closer to customers) SAP/R3 is called into question 1997: Jerry Gregoire is the new president Restarting of SAP/R3 implementation Fin 1997 : giving up of SAP/R3 Inconsistency of the system with the segmented offer of Dell Development of a specific integrated IS: G-2

10 Process reengineering Processors Cards Hard disks Screens Assemblage unit Distribution warehouse Delivering, Unpacking Checking Stockage Etc. Packaging and expedition Processors Cards Hard disks Screens Assemblage unit Distribution warehouse

11 Process reengineering : 75% reduction of the number of suppliers Level standards imposed (in the contract) to the 25% remaining suppliers: A worldwide quality level of product and services Stock of components must be 15 minutes far from Dell plant A continuing stock inventory not older than 2h

12 Process reengineering 250 M$ / year = chain production innovation Clips replaced screws on PC central units Within computers: reduction of line length in order to ease assembly processes Reduction of software setting up duration (with fibre optic) Development of a software testing the correct running of all components: reduction from 45 to 3 minutes Result: production delay of a PC = 7 h 200 patents deposited

13 Change management More than 80% of the business is B2B: computer room management, protections systems, etc employees work directly in customer firm Dell Professional Services (DPS) in Europe, Middle-East, Africa Consulting (implementation, integration and assistance) Infrastructure architecture Hosting and back ups

14 Conclusion Avoiding to implement IS in the existing organization: Rethinking about the strategy Looking for « partners » and not « suppliers » Reengineering internal and external processes Direct Model requires JIT and TQM An efficient partner network So YOUR FIRM needs to represent for the partners: A decisive financial asset A development leverage