Posting 6



JIT SYSTEM IN DELL

For nearly three decades, Dell has been on an incredible journey, experiencing positive growth on a global scale. Through it all, it's our people(customers), business partners and team members (who keep us moving through the rapidly evolving world of technology).

Dell has also leveraged  JIT principles to make its manufacturing process a success. Dell’s approach to JIT is different in that they leverage their suppliers to achieve the JIT goal. They are also unique in that Dell is able to provide exceptionally short lead times to their customers, by forcing their suppliers to carry inventory instead of carrying it themselves and then demanding (and receiving) short lead times on components so that products can be simply assembled by Dell quickly and then shipped to the customer.

Dell pioneered a new way of making and selling computers. Dell re-engineered its supply chain so that it could produce computers with the exact features that customers ordered, ship them within 24 hours of taking the order, and ultimately invest almost no money in inventory. What does JIT Inventory mean? Small amounts of product are held in inventory. This means, at any given time, Dell would have little to no products wasting time in inventory. Essentially, products would be produced as they're demanded and to the customer's specifications. Dell thereby enabled customers to build almost completely custom-made computers. This increased customer satisfaction and loyalty.

Build to Order .

At Dell, the process is called "pull to order,”. It’s a critical element of our build-to-order manufacturing process,". The model contributes to increasing the accuracy of doing business, both from a customer and supplier standpoint. Once the parts are delivered, the assembly-line process can begin prepping components. Dell then begins manufacturing the actual computer.  Afterward, it tests and does custom integration work for the finished product.

After getting an order, Dell notifies its suppliers about what components are needed, and they're delivered within an hour and a half. With our pull-to-order system, we've been able to eliminate warehouses in our factories and have improved factory output by double by adding production lines where warehouses used to be. Dell generally fulfills customer demands within five days, and the firm plans to reduce that time by relying on more extensive Web-based collaborative technologies.

In addition to the manufacturing efficiency, there are other reasons why build-to-order is appealing. For instance, it helps prevent manufacturers from being stuck with inventory that may become obsolete as it sits gathering dust in a warehouse, says Burkett. Or if there's a design change to a manufactured product, a company can be stuck with useless inventory that it has to dispose of at a loss.

Process

Upon implementation of the world wide technology (WWT) solution, WWT became the single partner providing resources on the factory floor, reducing the overall number of resources required to maintain continuity of supply. WWT also built a dedicated team of material planners, vendor managers and process consultants to ensure end-to end management and efficiency of the solution. WWT brought several process and technical innovations to the Dell team. First, WWT developed a suite of forecast, inventory and demand planning applications calibrated to fluctuations in Dell's manufacturing process. Second, WWT opened distribution centers collocated with each Dell factory reducing lead times to 45 minutes or less. Finally, implementation of a RF based bar code scanning system used for product acceptance, replenishment requests and invoice reconciliation at the factory floor. These innovations while removing cost also provided much greater visibility and reliability relative to continuity of supply. 

Key to the WWT solution was working with each of the legacy suppliers.Management of 40 suppliers with 40 different processes and systems was a key challenge that the team faced. Leveraging technology, the WWT team was able to provide an integrated process for each supplier to receive orders, monitor forecast and reduce personnel cost. Also, by reducing entry barriers for suppliers wanting to work with Dell, WWT has been able to introduce a new level of free market competition further reducing stock keeping unit (SKU) prices for individual 

components managed by WWT. WWT successfully developed the needed systems, opened three initial facilities and put together a support team in just under three months. In addition, the project went live just prior to the holiday season, which is typically the most critical time of year for Dell's business. 

A member of Dell's supply chain management team noted, “Our new program with WWT has created new efficiency and simplicity in our supply chain. Consolidating supply chain management with a single entity has eliminated a lot of waste.” Dell has been able to acknowledge savings across multiple business areas recognize overall SKU price reductions and experience a scrabble process necessary to support Dell's overall growth. Since the program began in 2003, WWT has added three additional distribution centers, added more than 50 suppliers, built a team of more than 100 people to support Dell and is expanding into Dell's international manufacturing facilities.

(WWT) : World wide technology.

(SKU)   :Stock keeping unit.