Dell Case Study

Flexibility of the Desktop PC
April 9, 2012
Professor Gary Kowalkowski

Flexibility of the Desktop PC
Dell Computer Company founded in 1984 uses the business model of eliminating retailers from the sales channel and selling directly to customers. Dell used this model to deliver customized systems to customers with lower than market average prices. To assist Dell in accomplishing this achievement, Dell used contract manufacturers to build and supply various components of its computer equipment. However, Dell has identified issues arising from its L5 and L6 manufacturing processes regarding motherboard availability and the resulting increased cost of manufacturing and logistics. This paper will review and evaluate the L5 and L6 manufacturing and logistics cost, the manufacturing solution to best minimize the issues, and address the chipset supply concerns In addition, the business process improvement methodology will be reviewed, supply changes recommended, and the application to other industries and work environments.
The L5 manufacturing and logistics process includes the assembly of the desktop PC chassis, floppy disc drive, fan, and depending on chassis configuration, the power supply. On the other hand, the L6 process includes all the processes in L5 plus the installation of the motherboard in the chassis. Currently, Dell suffers from the inability to provide contract manufacturers sufficient motherboards in a timely fashion. Several factors contribute to Dell’s inability to provide sufficient motherboards: chipset supplier decommits or supplier issues, quality and engineering issues, Dell forecast accuracy, and new product introduction (NPI). Bakker, Zheng, Knight, and Harland (2008) comment, “When operating in a volatile market ‘agility’ is required and information technology is focused on exchange of demand information, whereas in a stable market ‘lean’ is required, which allows working on forecasts and inventory-focused information exchange”...