Dell Inc.

Just in Time

Anoop P,
Denish Davis,
Jithin J Kumar,
Prassanakumar S Nair,
Sooraj Jose,
Suaihiam Gangmei

Sr
Topics
Pg
No
No.
1)
Introduction: Dell Inc. 1
2)

Introduction: JIT

4)

How Dell became

Market leader in
India
JIT @ Dell Inc.

3)
6)

7)
8)

Advantages &
7
Disadvantages of JIT
in Dell Inc.
Suggestions
8
References

Introduction: Dell
Dell Inc. is a privately owned multinational computer
technology company based in round rock Texas, United
States that develops, sells, repairs and supports
computers and related products and services. Bearing the
name of its founder Michael dell the company is one of
the largest technological corporations in the world,
employing more than 103,300 people worldwide.
The company is well known for its innovations
in supply chain management and electronic commerce,
particularly its direct-sales model and its "build-to-order"
or "configure to order" approach to manufacturing
delivering individual PCs configured to customer
specifications. Dell is listed at 51 numbers in the fortune
500 list. In 2012 it was third largest Pc vendor after Hp
and Lenovo. Dell is currently the number 1 shipper of PC
monitors in the world. Dell is the sixth largest company in
Texas by total revenue.

Introduction: Just in time

Just in time was a production model which was
implemented by Toyota Motor Corporation in the 1960s. It
emphasized the need to have just the required
accessories, just the required quantities and just the
required time need for production and distribution. In the
1980s, many American enterprises copied the JIT model.
JIT exposes all kinds of problems in management
though reducing different sorts of inventories, and it

analyzes the reasons before resolving the problem to

make improvements. And, the pulling production that
arranges the production according to customer demands
one of the most effective ways to reduce inventory.

How Dell Computer Became the

Market Leader in India?
Before Dell Computers success, Indias computer market
was ruled by Hewlett-Packard and Chinese computer
maker Lenovo. HP arrived in 1989 when its only
competition was IBM. Both HP and Lenovo had factories
in India, and their products were available off the shelf
through a vast retail network. Because the companies
supplied machines whether there was demand or not,
customers were offered hefty discounts, which made
sales rise.
Today, Dell has sold over 1.1 million desktops, laptops
and notebook computers in India in 2010, compared to
HPs 1 million and Lenovos 600,000. India is emerging
as the fastest-growing market for the company, reporting
a year-on-year growth of 55%-the highest for any Dell
market.
Why did dell believe it needed to change its inventory
process ?
Because computers depreciate at a very high rate. Sitting
in inventory, a computer looses a ton of value. Dell Today:
13 years ago dell carried 20 25 days of inventories in a
sprawling network of warehouses.

Today dell has no warehouses.

80000 computers.
No more than 2 hours of inventory.
Maximum 72 hours across its entire operations.

JIT at Dell Inc.

Dell has also leveraged JIT principles to make its
manufacturing process a success. Dells approach to JIT is
different in that they leverage their suppliers to achieve
the JIT goal. They are also unique in that Dell is able to
provide exceptionally short lead times to their customers,
by forcing their suppliers to carry inventory instead of
carrying it themselves and then demanding (and
receiving) short lead times on components so that
products can be simply assembled by Dell quickly and
then shipped to the customer.
Important Factors to Dells Success:
Dependable suppliers with the ability to meet Dells
demanding lead time requirements.
A seamless system that allows Dell to transmit its
component requirements so that they will arrive at
Dell in time to fulfill its lead times.

 A willingness of suppliers to keep inventory on hand

allowing Dell to be free of this responsibility.

Why dell changed to JIT?

Computers depreciate at a high rate. A computer stored
as inventory will lose its value in no time according to the
change in markets and technology.
According to Kevin Dollins, CEO of Dell, The longer you
keep it, the faster it deteriorates you can literally see
the stuff rotbecause of their short product lifestyles,
computer components depreciate anywhere from a half
to a full point a week. Cutting inventory is not just a nice
thing to do, its a financial imperative.
Dell reengineered its inventory management and supply
chain so that they can cater to the exact needs ordered
by customers, could ship them within 24 hours of
ordering and need not practically invest anything in
inventory. They literally have no or little products in the
inventory. Products are produced as and when demand
and according to customers preferences and needs. This
helped in building customer satisfaction and loyalty.
Effect on Dells competitors
In 1998, Compaq was the largest seller of PCs and
was selected as Forbes magazines Company of the
year. After Dell implemented JIT, in the next 2 years,
Compaq incurred a loss of $2 billion and its CEO was
fired.

 Compaq ultimately merged with Hewlett Packard.

However, after this merger HP lost its market share
in PC market to Dell because of its ineffective cost
structure.
Dells status today
Before 13 years, Dell maintained 20 25 days
inventory in a huge network of warehouses. Today,
Dell has literally no inventories.
Produces nearly 80000 computers every 24 hours. It
carries not more than 2 hours of inventory in its
factories, and a maximum of 72 hours of inventory
throughout its operation.
Dell has no plan to stop its Just in Time Inventory
Practices.

Advantages and Disadvantages of JIT in

Dell Inc.
The main BENEFITS of JIT in Dell Inc. are the following:
1 Funds that were tied up in hardware inventories can
be used elsewhere.
2 Areas previously used to store inventories can be
used for other more productive uses.
3 Throughput time is reduced, resulting in greater
potential output and quicker response to customers.

4 Defect rates are reduced, resulting in less waste and

greater customer satisfaction.
5
6
7
8

Less space required for stock

Closer relationship with suppliers
Less vulnerability to fashion and technology changes
Reduction in stockholding costs

Most companies find, however, that simply reducing

inventories is not enough. To remain competitive in an
ever
changing
and
ever
competitive
business
environment, must strive for continuous improvement.
Disadvantages of JIT in Dell Company:
So implementing thorough JIT procedures can also involve
a major overhaul of business systems -it may be difficult
and expensive to introduce.
In dell JIT manufacturing also opens businesses to a
number of risks, notably those associated with the supply
chain. With no stocks to fall back on, a minor disruption in
supplies to the business from just one supplier could force
production to cease at very short notice. Some of it major
disadvantages are:
1 Danger of disrupted production due to non-arrival of
supplies
2 Danger of lost sales
3 High dependence on suppliers
4 Less time for quality control on arrival of materials
5 Increased ordering and admin costs
6 May lose bulk-buying discounts.

Suggestions
Dell needs to maintain a set of suppliers who are
able to provide continuous supplies irrespective of
the market conditions.
Improve the production facilities to cater the demand
in a particular season accordingly.
Even HR requirements are filled according to the
need of Just in time which might be difficult in a real
scenario.
Increase on the training of employees as they need
to be well trained in order to work under pressure
and demand requirements
Dell needs to work on R&D as it is a technology
company which are more dependent on the
innovations and inventions.

REFERENCE
http://www.theindiaexpert.com/how-dell-wo-india
http://prezi.com/k25a2hddmezj/dell-jit-inventorymanagement/

 http://in.reuters.com/news/timeline?
type=businessNews&tl=201312230518445006#
www.wikinvest.com/stock/Dell_(DELL)/Data/Revenu
e_Growth
http://www.crn.com/news/datacenter/240164102/michael-dell-new-channelstructure-creates-more-growth-opportunities-forpartners.htm
www.theregister.co.uk/2012/08/21/dell_quarterly_res
ults/