and (b) fens manufacturing ag its publishes a Chartbonk port and identify the hourly States, Japan, Korea, Taiwan es by sales revenue pet he ‘most recent ranking, at computer companies, witha al 2004, a year in which most bal Dell saw its revenves jump by $5 ig profit, and gained over 2 percent in global mae ‘outside the United States. Dell credits mish jure that is the lowest in the industry. Thst ag and supply chain management stratez ‘Malaysia, and China, in addition to three sites ine ). The sites were chosen for low labor cos the He? ty {0 important regional markets. Dell pe" ® ie shipping costs ‘and increase the speed of deliver United States because its U.S workforce is ‘$0 it pays to be close to U.S. customers. ) ‘support operations are also performed: outsie India (U.S. customers calling Dell ne eee eeated ret speaking workforce oe oe all smooth sailing. Differences in ee 2M {in complaints from customers fori er Dell moved some of is supra" oper eeLOBAL PROOUCTION, cuTSoURCING AND: Locisnes: custom Be gitivenca Barats Utes States. Dells support operations for retail customers, center. ~ and Del's management states it s committed to maintaining its base is also global ited States, Thinty ae Some 200 suppliers, more than half of which are located Gof major suppliers are in Asin “OOM 75 Parent of Del's total purchases. Over neeption, Dell one ao ‘was based on direct selling to customers, eliminating wholesalers ‘consumers lower prives ja tt by cutting out the middle of the distribution chain, Dell Finds the mi isso Initially, direct selling was achieved through mailings and telephone 85 percent of all sales entity Of Del’ sales have been made over the Internet, and by ts the ability to coca ns tOUEh this medium, Inemet sling has enabled Del to customize their orders, mixing, and matchi features such ‘memory, monitors, int ca ee aa al hard drives, CD and DVD drives, keyboard and mouse d the like, to get the system that best suits their particular requirements. bility to customize products, when combined with low prices, has made Dell attractive to eal power of the business model is to be found in how Dell manages its global supply ize inventory while building PCs to individual customer orders within three days. Dell to feed real-time information about order flow to its suppliers. Del's suppliers, wherever /have up-to-the-minute information about demand trends for the components they produce, expectations for the next 4to 12 weeks that are constantly updated as new information ble. Dell’s suppliers use this information to adjust their own production schedules on a producing just enough components for Dell’s needs and shipping them by the most typically truck or air express, so that they arrive justin time for production. This tight a example, Quanta of Taiwan makes notebook computers for Dell that incorporate digital ssing chips from Texas Instruments. To better coordinate the supply chain, Dell passes Texas Instruments in addition to Quanta. This allows Texas Instruments to adjust its quanta’s needs, Which in tun can adjust its schedule according to data from Dell. ‘goal is to drive all inventories out of the supply chain apart from those in transit ‘and Dell, effectively replacing inventory with information. Although Dell has not yet al, the firm has reduced inventory to the lowest level in the industry. In 2004, Dell : days of inventory, compared to 30, 45, or even 90 days’ worth at competitor. This is in the computer industry, where component costs account for 75 percent of revenues by I percent per week due to rapid obsolescence. For example, when large, fasterhard d ‘which occurs every three to six months, the value of previous-generation hard y reduced, So if Dell holds one week of inventory, and a competitor holds four + immediately into 3 percent worth of component cost advantage to Dell. whieh tage on the bottom line. Driving inventory ae ae system lly : Seas the company’s pro! E ee a se procurement syste ave also allowed the 7 eon exter that few other companies can, Forexample, ifDell sees that pee ee rent, say, 17-inch monitors from Sony, itean manipulate demand by Tata lower price until Sony delivers more ing monors By ogi ag Bed dphinzedby Hondyscertor WT >‘pel can mest customers’ exPetations 4), ape imiseentest ans omsoets invertor. Del ne fn excess or obsolete inventory. j, ‘materials C08tS ich again gives Del asiificant cost ava ay 4, 200 38-49 te eee ee Doreen. Cove Hon Movember 5.2001, pp. 79-80 Det ik * Businessieek Jue) 2004, Section pp 14 sites located where they are? What are jt its PC from independent supplies, ‘han final assembly of components into ty of replacing inventories firms to adopt Dell's mode!” How secure is this advantage? sey? How can these _Trafton, “Global Supply Chain Manszens 95), pp- 69-93, and Diana Fare “Beyer! 2004, pp 1-8. 26 (Fall "Sloan Management Review Tool sue of the Academy of Managemen! Review fo s article provides a good overview of |W. Dean and D.E. Bowen, “Mansee"e sy 19 (1994), pp. 392-218. ABS “Advantage,” Strategi Managem