INVENTORY MANAGEMENTAn inventory management on Dell Corporation

OUTLINE What is inventory management? Reasons for keeping inventory in Industry or Company Background of DELL Products of dell & product lines of Suppliers Mission statement of DELL Dell business model & Business functions of DELL Inventory model of DELL &- instrument of DELL inventory

management Verify discussion of instrument of dell inventory management -Build to order -Revolver -Value chin program

Advantage of this model & Increasing opportunity of DELL product

Conclusion

What is inventory management? Inventory management is a

discipline and primarily about specifying the shape and placement of different types of goods in stocked. It is required at different locations within a facility or within many locations of a supply network to precede the regular and planned course of production and stock of materials.

Reasons for keeping inventory in industry or company

There are five basic reasons for keeping an inventory. These are – Time - The time present in the supply chain, from supplier to user at every stage,

requires that you maintain certain amounts of inventory to use in this lead time.

Seasonal demands: demands varies periodically, but producers capacity is fixed. This can lead to stock accumulation, consider for example how goods consumed only in holidays can lead to accumulation of large stocks on the anticipation of future consumption.

Uncertainty - Inventories are maintained as buffers to meet uncertainties in demand, supply and movements of goods.

Economies of scale - Ideal condition of "one unit at a time at a place where a user needs it, when he needs it" principle tends to incur lots of costs in terms of logistics. So bulk buying, movement and storing brings in economies of scale, thus inventory.

Appreciation in Value - In some situations, some stock gains the required value when it is kept for some time to allow it reach the desired standard for consumption, or for production.

Background of DELL

Dell is a multinational computer technology company based in Round Rock, Texas.

Michael Dell is the founder and CEO of Dell Technologies and started the company in 1985.

In 1992 Fortune magazine included Dell computer corporation in its list of the world’s 500 largest companies

In 2015, Dell was the third largest PC vendor in the world after Lenovo and HP Inc.

In 2016, Dell was the No. 1 shipper of PC monitors in the world.

Product of DELL Desktop computers Notebook computers Network servers Scanners Printers Workstations Storage products Dell offers a total of 1.6 million different

possible production figurations for all its.

Product lines SUPPLIERS MICROSOFT - for Windows INTEL - for micro processors NVIDIA - for Graphic chips SONY - for monitors Also There are 7 technology leaders now working together under DELL. they are

for Innovative PCs & devices

for IT solutions

for software development

Security solutions

&

Cloud solutions

Business mobility

DELL BUSINESS MODEL

Dell operated as a pioneer in the “configure to order” approach to manufacturing - delivering individual PC configured to customer specifications

To minimize the delay between purchase and delivery, Dell has a general policy of manufacturing its products close to its customers.

Low inventory is another signature of the Dell business model - a critical consideration in an industry where components depreciate very rapidly.

Mission statement of DELL

Customer satisfaction: Dell satisfies their customer by providing their superior customer service.

Team satisfaction: Management and employees of Dell inc. are committed to cooperating as a team for the purpose of profitability and gratification of a job well done.

Community Satisfaction: Dell provides jobs in a clean, safe, environmentally sound atmosphere and be an active participant in community affairs.

BUSINESS FUNCTIONS OF DELL

Direct Sales

Inventory Management Supplier Integration

INVENTORY MODEL OF DELL &- INSTRUMENT OF DELL INVENTORY MANAGEMENT

Dell has follow VENDOR-MANAGED-INVENTORY (VMI) arrangement with its suppliers

Suppliers decide how much inventory to order & when to order while Dell sets target inventory levels & records suppliers’ deviations from the targets.

Dell withdraws inventory from the revolvers as needed -- on average every two hours

It uses a quarterly supplier scorecard to evaluate how well each supplier does in maintaining this target inventory in the revolver.

Build to order Revolver Value chin program

BUILD TO ORDER

Dell first receives the order and the money and only then starts to build, using that money to purchase from supplier

Therefore there is customization of products for each and every customer.

While other companies had to guess, DELL knew exactly what its customers wanted before manufacturing the product

Others had to maintain inventory as there existed middlemen, so to supporter seller and retail channels.

REVOLVERS

o To compensate for long lead times & buffer against demand variability, Dell requires its suppliers to keep inventory on hand in the revolvers.

o Revolvers or supplier logistics centers (SLCs) are small warehouses located within a few miles of Dell’s assembly plants

o Each of the revolvers is shared by several suppliers who pay rents for using their revolver

o Dell does not own the inventory in its revolvers; this inventory is owned by suppliers .

VALU CHIN PROGRAM

Value Chain is intended to extend Dell’s successful direct-sales approach back in to the supply chain

The goal of it is increasing the speed and quality of the information flow between Dell and its supply base

The portal, valuechain.dell.com acts a secure extranet for Dell suppliers to collaborate in managing the supply chain

Dell envisions using this site to exchange with suppliers current data, forecasted data, new product ideas, and other dynamic information

ADVANTAGE OF THIS MODEL

 Returns grew Slightly as the carrying costs and obsolete

stock is avoided.

Saves LARGE amounts of money on purchasing components because the component prices drop by 3 percent per month

Reduces handling cost. Common factors that drive up holding costs include opportunity costs, increased rent required for the space of the inventory, higher premiums to insure the inventory, and cost of obsolete goods.

INCREASING OPPORTUNITY OF DELL PRODUCT Introducing many new products to its

product line. selling low cost, low price computers to

PC retailers .

Dell cuts out the retailer and suppliers directly to the customers. It uses information technology and Customer Relationship Management approaches to capture data and its loyal customers.

Conclusion Vendor Managed Inventory gives the vendor (DELL) in

a vendor/customer relationship the ability to monitor, plan and control inventory for their customers. Also consumers benefit from knowledgeable store staff who are in frequent and familiar contact with manufacturer (vendor) representatives when parts or service are required.

Store staff have good knowledge of most product lines offered by the entire range of vendors. They can help the consumer choose from competing products for items most suited to them and offer service support being offered by the store. With VMI, businesses maintain a proper inventory, and optimized inventory leads to organizational efficiency.