B740 Dell Inc Case Study
docx
keyboard_arrow_up
School
Texas Tech University *
*We aren’t endorsed by this school
Course
MISC
Subject
Industrial Engineering
Date
Feb 20, 2024
Type
docx
Pages
6
Uploaded by cross2195
Dell Inc. Assignment
The following paper will discuss the case study regarding Dell Inc, a personal computer company utilizing a build to order computer and electronics business model with shipment directly to consumers. The manufacturing process utilizes a 10-level multi-stage supply chain with higher levels representing higher degrees of computer integration. The business model eliminates unnecessary overhead costs and raw materials inventory but possesses its own manufacturing and production processes issues. The following paper will examine the manufacturing and supply chain operations of Dell Inc., determine the reasoning behind the increased costs within certain levels of manufacturing, and recommend a solution for implementation to address the current issues facing the organization. From here, the paper will examine the sustainability of the recommendation, the methodology utilized by the BPI to determine optimal manufacturing solutions for the organization and propose methodology for the
effective addressing of the primary issues facing Dell’s operations. Why does L5 incur higher manufacturing and logistics costs than L6? What are some of the costs that are incurred in L5 but not in L6? Are there any costs that apply to only L6 but not L5?
With the manufacturing and logistics costs incurred by Dell Inc., the L5 costs are higher than the L6 costs due to the supply chain issues, quality issues, and forecast accuracy issues present with the L5 manufacturing. With L5 manufacturing, chassis are shipped by boat with estimated 5 week timeframe, motherboards are shipped by air freighter with a one-week estimated timeframe, and a third-party is utilized for integration (Simchi-Levi et al., 2021). Furthermore, L6 utilizes China integration to install the motherboards into the chassis before they are shipped by boat with an estimated 5 week lead time. This integration of the motherboard
and chassis that occurs with L6 manufacturing cheapens labor costs and eliminates the airfreighting costs resulting from the L5 manufacturing processes. Additionally, Dell’s inability to delivery motherboards in a timely manner resulting from the supply chain issues, quality issues, forecasting uncertainty, and new product introductions provides the root cause behind the increases levels of L5 manufacturing (Simchi-Levi et al., 2021). These forms of disruptions within the supply chain resulting from inability to meet product demand can present threats to business operations including increased costs, decreased profitability, negative company reputation (Bier et al., 2020). Furthermore, as discussed above regarding the manufacturing costs of L5, some of the costs incurred within L5 that are not present within L6 include the air freighter costs for shipping
the motherboards in an untimely manner and the increased labor costs resulting from the lack of China integration to install the motherboards into the chassis before shipment (Simchi-Levi et al., 2021). Along with this, another cost that can be incurred within L5 manufacturing is the repair and replacement costs associated with the quality and engineering issues facing Dell Inc. The need for repairs and replacement resulting from these quality issues can produce further supply costs to meet growing demands, as well as increased labor costs to make the necessary repairs and replacements. One the other hand, when examining the L6 costs compared to the L5 costs, there are no correlated costs that exists within L6 manufacturing that are not present within
the L5 manufacturing. The utilization of L6 manufacturing provides labor savings and elimination of air-freighting costs with no added expenses to the production processes. Which of the six proposed manufacturing solutions should Dell implement, based on the survey results (Table 6-1)? Why? What are the pros and cons of this recommendation?
With the proposed manufacturing solutions and the resulting survey provided with Table 6-1, the best options for solving the problems facing Dell Inc. would be the implementation of option 3A: Integration at SLC/hub. Based on the provided findings regarding the different manufacturing solutions, option 3A carries the lowest complexity score due to the ability for Dell
to make the necessary changes to manufacturing process with low capital expenditure and minimal impact to existing manufacturing processes (Simchi-Levi et al., 2021). Furthermore, while the costs per box for option 3A are not the lowest of the six solutions, the lower cost options have significantly higher complexity scores. Hereby, giving option 3A the best combination for minimizing costs and complexity for operations. However, the disadvantages with option 3A are increased levels of complexity regarding the current cost accounting, production control, and inventory control practices (Simchi-Levi et al., 2021). With inventory, increased levels can be beneficial to cope with potential disruptions to the production of the organization (Dong et al., 2018). However, overabundance of inventory can become wasteful regarding financial resources of the organizations and potentially increase costs (Choi et al., 2018). As a results, while option 3A can produce beneficial levels of increased inventory and reduce operational costs, these shifts in complexity will require more diligence on the part of Dell’s management and operations team to ensure financial resources aren’t wasted and unnecessary cost do not occur. How easily sustainable is your recommendation for the previous question if the chipset supply shortage further deteriorates?
While the recommended solution of option 3A will help Dell Inc. eliminate unnecessary manufacturing cost found with the current supply chain strategies, it will be difficult to sustain Dell’s current business model without the implementation of further solutions for addressing the
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
chipset shortage. This is primarily due to the chipset integration in Dell’s manufacturing process taking place prior to the L5 and L6 manufacturing stages addressed with option 3A. With multi-
stage supply chains, disruptions at any stage will create limited to no product transformation at the current level resulting in a continuous disruption down the supply chain impacting inventory and the meeting of organizational demands (Lucker et al., 2021). In turn, without chipset manufacturing in a timely manner and at the necessary quantity, there is no ability to finish production effectively at the current level necessary. However, option 3A provides significantly increases in simplicity regarding worldwide and regional procurement (Simchi-Levi et al., 2021).
As a result, Dell should be able to better manage initial suppliers of chipsets and control the degree of shortages plaguing Dell’s operations. How good is the methodology employed by the BPI team to determine the optimal manufacturing option for Dell? Are there more effective approaches?
The methodology utilized by the business process improvement team for determining the
optimal solution for Dell’s operations provided a thorough and accurate depiction of the impact each option would have on the operations of Dell. Furthermore, by considering both complexity and costs as important drivers for each option, the improvement team considers the primary factors of value for the departments within Dell as well as addresses the primary issues currently impacting Dell’s business operations. Complexity within the supply chain has a direct correlation
to the performance of organizations (Dubey et al., 2020). As a result, complexity must be examined to ensure desired results for operations are achieved. In turn, by examining complexity
regarding factors including worldwide and regional procurement, master scheduler, production control, operations, DAO quality, processing engineering, global and regional supplier quality
engineering, cost accounting, inventory control, and logistics, the business process improvement team analyzes measures essential to the success of Dell’s operations. How can Dell effectively address the root causes contributing to the increase of L5 manufacturing? For Dell to effectively address the primary causes behind the increases of L5 manufacturing, the organization must implement stringent and effective measures to ensure production demands are met. These measures Dell must implement include chipset manufacturers possess the necessary materials to meet demand needs and respond effectively to potential disruptions, emphasize contract agreements with all suppliers and third parties to ensure
production needs are fulfilled, and improve forecasting accuracy measures through investments in market research to better project actual demand. Furthermore, Dell’s operations could benefit by implementing methodology to better manage inventory risks including utilizing a balanced form of push-pull supply chain strategies. The overall performance of the supply chain operations is directly correlated to the allocation of inventory risks (Yang et al., 2018). In turn, due to the current desire to eliminate risks by reducing increases to L5 manufacturing, such methodologies could provide benefits to the overall supply chain strategies of the organization by providing better control to the demand swings facing operations.
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help