Case Study of Logistics: Uncovering the Secret of Dell Supply Chain

Jack Welch once said: "If you don't have a competitive advantage in supply chain operation, then don't compete at all." MartinChristopher, a British management scholar, further emphasized the importance of supply chain. He said: "There are only supply chains and no enterprises in the market. The competition in 2 1 century is not the competition between enterprises, but the competition between supply chains. "

At the end of June 2005 1 1, the authoritative market research company AMR released "25 supply chains", which AMR called "the blade of predators", and Dell ranked first.

Let's take a look at Dell's performance in the market: 1996, Dell's sales were only $2.5 billion, and by 2005, Dell's annual revenue reached $54.2 billion, ranking first among the global computer manufacturers for several years. In China, Dell has also achieved success: since/kloc-0 entered China in August, 1998, Dell has maintained rapid growth. In just seven years, its market share in China is close to 10%, ranking third. Dell's profit margin in China is two to three times that of its competitors.

Both competitors and Dell itself owe much of their success to the enviable supply chain.

Although many enterprises, even competitors, are learning from Dell's supply chain, Dell people feel as if no one has really learned it. What's the secret of Dell's supply chain? What inspiration can it give other enterprises? This is the question in our mind before we went deep into Dell.

Virtual integration makes supply chain "agile"

To understand Dell's supply chain, we must first understand its "virtual integration" thought. Li Yuanjun, general manager of Dell China Customer Center, didn't mention the "direct sales model" as "the soul of Dell" at first, but mentioned another important business idea: focus on what you are good at, give the links you are not good at to people in the industry, and then buy back the cost-effective products through purchasing and make the final integration by yourself.

Li Yuanjun said that Dell can also set up its own CPU workshop, motherboard workshop and software workshop-with Dell's strength today, it can do it by itself. But Dell's approach is contrary to this traditional thinking.

From the perspective of providing parts, the supplier is equivalent to a workshop in Dell. Li Yuanjun said that every part provided by the supplier has a competitive price/performance ratio, so the whole product assembled by Dell is ultimately competitive.

But how does Dell achieve this goal? Dell's vision has crossed the four walls of the enterprise and regarded the supplier as its own workshop. But the parts workshop of the factory is next to the assembly workshop, and Dell's suppliers are distributed all over the world. How to manage them? Here, another very important concept in Dell's supply chain comes out-"transaction engine".

The ERP system through four walls is Dell's "transaction engine". On this information platform called "transaction engine", information of both Dell and suppliers can be enjoyed to a great extent.

Now it's time to talk about Dell's most distinctive "direct sales model"-Dell produces according to the order completely, and Dell produces according to the requirements only after the customer calls or places an order online. This way of production and sales enables Dell to constantly adjust its material requirements according to the changes of customers' actual needs, and enjoy this information through information systems and suppliers. Li Yuanjun thinks this is the most exquisite place in Dell's supply chain.

There are thousands of servers running around the clock in the computer room of the data center of Dell China Customer Center. Customers can place orders through the website or through the 800 telephone, and this information directly enters the data center. The data center counts the orders for this period every half hour, and lists the required configurations respectively. This list will be sent directly to the supplier's warehouse-there is a Dell supplier's public warehouse 5 kilometers away from the Dell China Customer Center, which is managed by Dell's global partner Burlington Company. The supplier sends the goods to this warehouse, which is managed by Burlington Company. Burlington also needs to deliver the goods to Dell every half hour according to the list sent by Dell.

Burlington can quickly assemble the goods within one hour after receiving Dell's order, and deliver the goods in less than 20 minutes-this is the advantage of setting up a transit warehouse: Dell's suppliers can't all be in Xiamen, and only by setting up this transit warehouse can we guarantee delivery every half hour.

In theory, there is no material in the workshop of Dell China Customer Center before the customer places an order. When each part is pulled in, there is actually a buyer. Once the whole machine is assembled, it can be shipped away immediately, so Dell's products can keep zero inventory.

In particular, Dell will send the list to the transit warehouse every one and a half hours, and it will also be sent to the supplier's headquarters. The supplier will decide whether to deliver the goods according to the inventory fluctuation of the transit warehouse, and arrange the production according to this information.

At the beginning, Dell should at least give a production forecast for the next year, such as how many tens of thousands of units will be sold, and the supplier will prepare the production capacity according to this forecast, and then Dell will give the supplier a rolling plan for the next three months: what goods and how many, and this information should be detailed every week. As soon as Dell sees the gap between the forecast and the actual situation, it will make adjustments immediately.

Dell's suppliers receive updated production forecasts for the next three months every week, even once a day for some parts with large demand changes. This not only enables Dell to get timely supply and achieve "agility" even when the market situation changes greatly, but also enables suppliers to arrange production according to the actual situation and reduce their inventory.

Dell constantly adjusts its production plan according to the market demand, and makes its suppliers constantly adjust their production plans, so that the production gradually approaches the real market demand in the process of continuous adjustment. In this process, Dell and suppliers enjoy such a high degree of information and cooperate closely as a whole, thus realizing Dell's management idea of "virtual integration" almost perfectly.

Virtuous circle, "win-win" with suppliers.

Dell connects itself with suppliers through a "trading engine" to achieve the purpose of agility, but this is not the whole content of dealing with suppliers. In this "virtual enterprise", how does Dell manage the "workshop"-the supplier?

In addition to the China Customer Center, Dell has another important department dealing with suppliers, the Dell Global Purchasing Center.

Although Dell Global Sourcing Asia team is located in Shanghai and Shenzhen, its task is to purchase for Dell's global factories. Dell's global procurement department has about 850 employees, about half of whom work outside the United States. There are 65,438+090 purchasing staff in China, because Dell has many suppliers in Asia. In order to cooperate with them, Dell Global Sourcing Center set up this team in China.

Dell's global procurement resources are divided into two categories: one is the procurement of production materials, and the purchased materials are directly used for production; The other is called general procurement, and the purchased materials are not directly used for production.

In managing suppliers of means of production, the global procurement center has three strategic tasks. One is to ensure the continuity of supplier supply. That is, when Dell needs raw materials, suppliers can deliver them in time according to Dell's needs. The second is to ensure that suppliers have certain characteristics in production costs. Dell needs to continuously reduce the cost of raw materials in order to bring more value to its customers. The third is to ensure the product quality of suppliers.

Strictly select suppliers. In order to ensure the completion of these three tasks, Dell has been very careful in selecting suppliers from the beginning. Zhong Weisi, managing director of global procurement of Dell Asia, said that Dell will choose suppliers from the following aspects.

Environmental protection and employee welfare-Dell attaches great importance to its own environmental protection and employee welfare, so Dell also hopes that the suppliers it cooperates with can attach importance to environmental protection and treat their employees well. This is a basic premise.