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Supply Chain Management

Of
PC Industry

Prepared By :
Sulabh Maheta ( 08084 )
Amin Pattani ( 081
Bhavna Thakker ( 08112 )
Introduction of Industry
1 . Computer Software Industry :-
Computer software means all those application
programs, which we cannot touch but see and
computer software industry means that providing
the business opportunities and employment in the
field of computer software development.
 
2 . Computer Hardware Industry :-
Computer hardware means all those parts, which
we can touch and see and computer hardware
industry means that providing the business
opportunities and employments in the field of
computer hardware development.

TOLANI INSTITUTE OF MANAGEMENT STUDIES 2


COMPUTER INDUSTRY - MAJOR
PLAYER IN INDIA
•H e w le tt Pa cka rd ( H P )

•H C L

•To sh ib a

•C o m p a q

•D e llC o m p u te rs

•S o n y

•Le n o vo .

H P h a s th e la rg e st m a rke t sh a re o f 2 1 % in th e
In d ia n m a rke t.
• TOLANI INSTITUTE OF MANAGEMENT STUDIES 3
W o rld w id e M a rk e t S h a re

•D e ll = 1 7 . 3 %

•H P = 1 5 . 5 %

•Le n o vo = 7 . 4 %

•A ce r = 4 . 5 %

•Fu jitsu -S ie m e n s = 3 . 7 %

TOLANI INSTITUTE OF MANAGEMENT STUDIES 4


Growth of Laptop Market
in India
• Indian Laptop market is now in sync with global
market.

• In 2005 that sales of laptops surpassed the sales


of desktop computers for 1st time.

• Laptop market has registered 79% Year-on-Year


(YoY) growth during 2006.

• Market share of laptops would be 35-40% in the


next two years.
• TOLANI INSTITUTE OF MANAGEMENT STUDIES 5
Distribution Channel of PC
Industry

TOLANI INSTITUTE OF MANAGEMENT STUDIES 6


DELL
• Dell’s headquarters was in Austin, Texas

• Michael Dell founded the company in 1984


• Dell opened its first manufacturing centre in


the Asia-Pacific region in 1996 in Penang
Malaysia.
•D e ll is a g lo b a l co m p a n y o p e ra tin g in 4 3
co u n trie s in th re e w o rld re g io n s.

•D e ll is th e W o rld 's la rg e st P C m a ke r h a vin g


B u ild To O rd e r m o d e l.

•No 1 in profitability for the computer systems


industry

•For the last couple of years it has held its


position as market leader (it took it from
rivals Hewlett-Packard ). OF MANAGEMENT STUDIES
TOLANI INSTITUTE 7
Dell’s Global Presence
The Americas EMEA Asia Pacific China

Austin
Texas Limerick
Ireland

Nashville Xiamen
Tennessee China

Eldorado do Sul
Sales Offices in 43 countries Penang
Brazil Sales presence in 170 countries Malaysia
6 Manufacturing Sites
LOCATION

Dell selects specific locations based on a


combination of factors including :



• Labour costs,

• transportation and information infrastructure,


• proximity to markets

• government incentives.

TOLANI INSTITUTE OF MANAGEMENT STUDIES 9


Dell’s Direct Approach:
A Fundamentally Different
Model
Dell Direct Model

Suppliers
Suppliers Customers
Customers

Ownership of the value chain

Competitor Model

Loss of control over product & information flow & customer relationships

TOLANI INSTITUTE OF MANAGEMENT STUDIES 10


Benefits of Dell Direct
Model
• Better understand customer needs

• Customers receive exactly what they want: not


standard solution

• Minimized inventory

• New technology delivered immediately


• Dell’s use of the direct approach reportedly


provides it with nearly a 14-16 % cost
advantage compared to indirect sellers.

TOLANI INSTITUTE OF MANAGEMENT STUDIES 11


The Benefits of Low
Inventory
With 90+ Day’s Manufacturer
and Reseller Inventory, Channel
Manufacturer Buys Here
120

115
Relative
Component 110 10-12% Cost
Cost Advantage
105
With 3 Days
100 Inventory,
Dell Buys Here
95
Typical
90
Dell
4

0
-4

-2
-8

-6
-1

-1

-1

Weeks Relative to Delivery

TOLANI INSTITUTE OF MANAGEMENT STUDIES 12


TOLANI INSTITUTE OF MANAGEMENT STUDIES 13
Performance Indicator:
DELL versus the
Industry, 2008

Source: eScholarship_UC_item_4kq2q43h.pdf

TOLANI INSTITUTE OF MANAGEMENT STUDIES 14


Inventory Model
Results: 3 days of inventory - Inventory turns of 106 per year

Suppliers

Logistics Hubs Dell Factory Delivery

Local Suppliers

Customer
Supplier Owned Dell Owned

TOLANI INSTITUTE OF MANAGEMENT STUDIES 15


Supplier/Partner Location

• Dell is using direct model that’s why company


manage its operations with low inventory
levels.

• Dell collaborated closely with its suppliers.


• The company's procurement decisions were


based on four criteria - quality, cost, delivery
and technology.

• Suppliers were selected on the basis of cost


(given a weightage of 30%) and quality,
service and flexibility (with a weightage of
70%) TOLANI INSTITUTE OF MANAGEMENT STUDIES 16
DELL orde r process
Customer
NO
Check Configuration Push the inventories
YES
Manufacturing Floor

Assembling of hardware Print out

Software Installation

Testing

Packing

Delivered
TOLANI INSTITUTE OF MANAGEMENT STUDIES 17
Balancing Demand and
Supply
• Dell maintained a database to track the
purchasing patterns of corporate customers
and their budget cycles, in order to forecast
demand. It also maintained a similar
database for individual customers in order
to cater to their future requirements for PCs

• Through its forecasting techniques, Dell was
able to forecast demand with 75% accuracy.

TOLANI INSTITUTE OF MANAGEMENT STUDIES 18


Open Innovation And
Effective R&D
•D e ll sp e n d s little o n p ro d u ct re se a rch a n d
d e ve lo p m e n t - $ 4 4 0 m illio n a ye a r, vs. $ 4 b illio n
a ye a r a t H e w le tt-Pa cka rd .

•T h e tra d itio n a l a p p ro a ch to in n o va tio n te n d s to


p ro d u ce p ro p rie ta ry te ch n o lo g ie s a n d p ro d u cts
th a t a re o fte n h a rd to m ig ra te fro m a s a
cu sto m e r. D e ll h a ve a m o re o p e n a n d e ffe ctive
a p p ro a ch to R &D .
TOLANI INSTITUTE OF MANAGEMENT STUDIES 19
R e v e rs e
• lo g is tic s

• Effective Network repair
Logistics

• Repair cycle time dropped from


• 43days 24 days 17
days

TOLANI INSTITUTE OF MANAGEMENT STUDIES 20


Direct Repair Service
Handling
Invoice Par t
Receipt
s
OEM

ts
e d Par
r n
i p r etu
Sh

Contract Ser vicing


Ser vice Or der Service Customers
Sh
ipm
en
t O li ver y s t
rde ts De ue
Warehouse r Par q
3PL Re
Se c e
rv
ice r vi
Me Re r Se
ss q
ag uest p ai
e CSR Re

TOLANI INSTITUTE OF MANAGEMENT STUDIES 21


Disadvantages

• High Cost Involved- $350 million


• Time Lag – 60 Days


• Decrease in Customer Focus


• Need for Maintaining Stock in Ware House


TOLANI INSTITUTE OF MANAGEMENT STUDIES 22


Repair Services Handled by
OEM Suppliers
Par t
Invoice
s
Receipt OEM

e r
O rd
e 3PL
v ic
S er Parts
Delivery

Customers

ci ng s t
Contract r vi ue
Warehouse Se q
Re
Se Service c e
rv
ice r vi
Me Re r Se
ss q
ag uest p ai
e CSR Re

TOLANI INSTITUTE OF MANAGEMENT STUDIES 23


Scenario After SCEM
Deployment
Invoice Par t
Receipt
s
OEM

er
rd
3PL
O
e
ic

Pa
rv

r ts
Se

De
liv
Contract

er
Service Ser

y
vic
ing

CSR Repair Ser vice Request Customers

TOLANI INSTITUTE OF MANAGEMENT STUDIES 24


Hewlett Packard
• Since Hewlett-Packard was founded in 1939.

• HP is a technology company that operates in


more than 170 countries around the world.

• HP is the world's 2nd largest IT company, with


revenue totalling $114.6 billion for fiscal
2009.

• HP’s online store was launched in early 1998.


TOLANI INSTITUTE OF MANAGEMENT STUDIES 25


H P S u p p ly C h a in F a c ts

•O ve r 6 0 0 co n tra cte d m a te ria ls a n d m a n u fa ctu rin g


su p p lie rs

•More than 340,000 workers at audited sites that


produce HP products

•More than 1 million printers shipped per week


•48 million PC units shipped annually


TOLANI INSTITUTE OF MANAGEMENT STUDIES 26


TOLANI INSTITUTE OF MANAGEMENT STUDIES 27
TOLANI INSTITUTE OF MANAGEMENT STUDIES 28
• In order to help hpshopping.com increase
responsiveness to its customer base, FedEx
placed both restored -and finished-goods
inventories .

• Late cutoff times enable hpshopping.com
customers to order as late as 10:00 p.m. and
still have their orders shipped the same day.

• HP decreases returns cycle times by 80% and
per unit return product costs by 70%.

TOLANI INSTITUTE OF MANAGEMENT STUDIES 29


TWO golden rules at
Dell :
`Disdain inventory'
`Listen to the
customer'

Thank You