Dell Computer Co. holds its supply-chain partners to high standards of flexibility and delivery performance, but those who meet the computer firm's challenging requirements find that the rewards go beyond simply sharing in Dell's rapid growth. For one ...
Dell Computer Co. holds its supply-chain partners to high standards of flexibility and delivery performance, but those who meet the computer firm's challenging requirements find that the rewards go beyond simply sharing in Dell's rapid growth. For one thing, Dell's practice of selling directly to end customers, rather than through distributors and retail channels, gives suppliers much better visibility to changing marketplace requirements, explains Eric Benhamou, CEO at 3Com Corp., one of Dell's key suppliers. "With traditional [marketing] channels, we tend to be shielded from market variation through several levels of buffering," says Benhamou in a new video produced by the Assn. for Manufacturing Excellence (AME). "As a result, it is more expensive for us to have to deal with traditional channels, because we have to compensate for this uncertainty with typically higher levels of inventory." While some Dell suppliers stock components close to the computer firm's plants in order to provide rapid response, only about 30% of all incoming inventory is handled that way, points out Stuart Smith, vice president for materials and logistics. "The rest is real velocity and real flexibility on the part of the supply chain." In the half-hour video -- "Dellocity: Velocity in the Dell Supply Chain" -- Smith and CEO Michael Dell indicate that the company envisions even tighter information links to its suppliers, who will sell some $13 billion worth of components to the Austin-based firm this year. "My vision for the future," Smith says, "is that our suppliers [will] send parts into our factories based on the live customer orders that we are going to build that day."
