1. https://dell.com Dell Confidential Lonnie Childs Director America’s Supply Chain Management Dell Computer Corporation Demand/Supply Management

2. https://dell.com Dell Confidential Presentation Outline Who is Dell? Operating Principles Demand/Supply Management What’s next?

3. https://dell.com Dell Confidential 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. https://dell.com Dell Confidential Harvard Business Review March – April 1998

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

7. https://dell.com Dell Confidential Communities Intellectual Assets Collaboration Value Shift in Supplier Relations Corporations Physical Assets Closed Virtual Integration Vertical Integration

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

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

12. https://dell.com Dell Confidential We win with…  Alignment  Communication  Commitment  Teamwork At the Center of Supply Chain Execution…. Sales/Mktg. Demand/ Supply Procurement Demand Supply “Relentless Demand/Supply Resolution”

13. https://dell.com Dell Confidential 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. https://dell.com Dell Confidential Demand:Supply Management 75%Forecast 15% Supply Chain Flexibility 10% Demand Management

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

16. https://dell.com Dell Confidential 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? What’s Next?