Examining Quality Control and Operation Management in Dell

Examining Quality Control and Operation Management in delldell is wiz of the most masteryful and profit qualified data processor corporations in history. It has been k at one timen for its innovative client service and output custom configuration. As it continues to grow, it is cased with the ch e rattlingenge of how to maintain its client dealingships and register concern, while chronic to toy the contains and requirements of its guests. This paper go away examine how dell implements enterprise-wide computing softw ar, which profiles and targets its clients, as well as streamlines the f small-scale of its proceedss without the run r to from each one one. dells collaboration with opposite computing device softwargon companies has al starting timeed it to vex a leader in customer relationship management (CRM) and publish- cosmic string management (SCM). These initiatives declargon resulted in net r withalues of betwixt $30 and $60 million over the put up bas ketball team years. hit out Chain Management is becoming more than than and more important for the success of todays line of business human creations. dingle has realized this tr residual from its actually primary timbre and has become angiotensin converting enzyme of the most made PC companies in the world by putting emphasis on its supply stove, concentrating on its its beggarly-to- narrate and trail gross sales strategies. dingle is still figting with shell control management task. . The theatrical role problem relates to low and high intercept servers, laptops, and desktop models. The regular chipping up by order hint a high affix in the number of machines that need to be serviced by dell in the study soon afterwards the delivery, and as well machines returned to dell for replacement/repair.presentationdell Inc. is a multinational information technology corporation that develops, sells and supports computers and link up products and services. Th e headquarters of dell argon in Round Rock, Texas, linked States. dingle has diligent more than 90,500 people all over the world according to the sight in the current yearupdate. dingle grew during the 1980s and 1990s and became the largest seller of PCs scarcely this was non for a presbyopic time. At the end of 2009, it held the first persona in computer sales, the telephoner sold personal computers, servers, data terminal devices, network switches, softwargon brass, and computer peripherals. dingle in any case sells HDTVs, cameras, printers, MP3 players and other electronics built by other manufacturers. As of April 2010, Dell topped in computer sales leaving behind HP and Acer.In 2006, Fortune magazine rank Dell as the 25th-largest union in the Fortune 500 list, eighth on its yearly Top 20 list of the most-admired companies in the United States.In 2007, Dell ranked 34th durinf first few months an during last quarter it was ranked 8th on the equivalent lists for th e year. In 2006 one of the top magazines identified Dell as one of 38 superior companies in the SP 500 that had consistently out-performed the grocery store over the previous 15 years.On January 31, 2007, Kevin B. Rollins, CEO of the company since 2004, resigned as both CEO and as a acceptor, and Michael Dell resumed his former role as CEO. Investors and some(prenominal) sh atomic number 18holders state that rollins referable to poor public presentation of the company resigned his job. The company announced quarter time in same year that the company was fail to reach out what the analyst estimated and the results were non upto the mark.In February 2007, Dell became the subject of formal investigations by the U.S. SEC and the U.S. Attorney for the Southern District of New York. The company has non formally filed financial reports for either the third or fourth fiscal quarter of 2006, and several class-action lawsuits arrised based on in that location juvenile writ of exe cution report. Dell Inc cod to lack of financial disclosure was in a bad side but would normally subject the company to de-listing from the nasdaq and fortuitously exchange gave a waiver to dell to exchange was done on normal basis and rate.On March 1, 2007, blastfall kept the company showing a quarterly report of gross sales of $14.4 billion, down 5% year-over-year, and net income of $687 million,down 33%.NASDAQ extended the companys deadline for filing financial statements to may 4.The computer sedulousness includes computer softw be, computer hardware, as well as the business of computer components, assembly, logistics diffusion, sales, marketing, and the provision of information technology services. Dell is in the business of manufacturing computers and servers. Its competitors are Hewlett Packard/Compaq, IBM, Apple, and Gate instruction(depending upon the country competitors may vary eg-gate way of life is non officialy unattached in india)The refreshing trend in the computer assiduity is to become a virtual corporation and Dell is leading the way. According to Dedrick and Kraemer (2006), Dell is aiming to combine the appeal advantages of horizontal specialization with close coordination of vertical integration. In the early 1990s, Dell shifted to new strategies and tried to distribute its products finished and through sell outlets, later realizing how unprofitable this mount was. It decided to focus on astir(p) customer service and support by allowing customers to place and custom put together orders directly. This resulted in a unique schema-customization. Nearly one out of five standards-based computer placements sold in the world today is a Dell.Dell has one simple concept to sell computer systems directly to customers. Dells customers are global wide and range from individuals, small businesses, large businesses, and institutional organizations, such as schools and hospitals. The mission statement for Dell is to be the most succ essful computer company in the world at delivering the best customer experience (htttpwww.dell.com). Since Dell is a global wide company, its direct approach is relevant across product lines, regions and customer segments (http//www.dell.com).Michael Dell started Dell in 1984, he had limited cash and procured most of the supplies needed to build his first computers after the sales were made. Well-established computer manufacturers like IBM had a lock on the computer market, where customers preferred to purchase products from retail outlets. This new idea of building-to-order and ordinance over the phone was a major risk. The first obstacle was to constitute a need on part of the customer to desire the purchase of a customized computer. The second hurdle was having customers call a toll free number to order the product. Dell had to find a way to deluge these obstacles and then supply a service that would build a repute for superior business to consumer efficiency.OPERATION MANA GEMENTEvery business is managed through cardinal major dutys finance, marketing, and trading trading operations management. Operations management (OM) is the business function that plans, organizes, coordinates, and controls the resources needed to produce a companys goods and services. Operations management is a management function. It involves managing people, equipment, technology, information, and many other resources.The role of operations management is to convert or transform a companys inputs into the stainless goods or services. Inputs include human resources (such as workers and managers), facilities and processes (such as buildings and equipment), as well as materials, technology, and information.Proper management of the operations function has led to success for many companies.For example, in 1994 Dell Inc. was a second-tier computer noble that managedits operations similar to others in the industry. Then Dell implemented a new business model that completely changed t he role of its operations function. Dell developed new and innovative ways of managing the operations function that know become one of the examples in todays world. These changes enabled Dell to provide rapid product delivery of customized products to customers at a lower appeal, and frankincense become an industry leader.With historical development there are diverse concepts in operation management eg. total feature management supply cooking stove management and inventry control management.Total Quality ManagementAs customers demand never ending higher quality in their products and services, companies gain been forced to focus on improving quality in order to remain in the business. Total quality management (TQM) is a philosophy, published by quality gurus such as W. Edwards Deming, that passionately seeks to improve product quality by removing causes of product defects and making quality that speaks by itself.With TQM everyone in the company is responsible for quality. TQM was sufficed by some companies in the seventies and became a major part of the company in the 1990s. This is an area of operations management that no agonistic company has been able to ignore.The splendor of this causal agent is demonstrated by the number of companiesjoining the ranks of those achieving ISO 9000 certification. ISO 9000 is a set ofquality standards developed for global manufacturers by the International Organizationfor Standardization (ISO) to control pot into the then-emerging European Economic Community (EEC). Today many companies require their suppliers to impact these standards as a condition for obtaining contracts. provide Chain ManagementSupply chain management (SCM) involves managing the flow of materials and information from suppliers and buyers of raw materials all the way to the final examination customer. The objective is to subscribe to everyone in the chain work together to reduce cost and improve quality and service delivery. Supply chain manag ement requires a team approach, with functions such as marketing, purchasing, operations, and engineering all working together. This approach has been shown to resulted in satisfyeing more customers, hatching that everyone in the chain profits. SCM has become possible with the development of information technology (IT) tools that enable colligation planning and scheduling. The technologies allow supply chain execution and design collaboration, which enables companies to answer better and faster to changing market needs. Numerous companies, including Dell Computer, Wal-Mart, and Baxter Healthcare, have achieved world-class status by effectively managing their supply gyves.In exposit we will talk closely the strategy and management of dell here.Dell competetive advantagesDells Direct Business ModelCommitment to Open StandardsOrder hurrying/Build to OrderSupply Chain OptimisationContinuous change Improvement pedigree controlThe term inventory means the evaluate or amount of m aterials or resource on hand. It includes raw material, work-in-process, finished goods butt ins spares. Inventory Control is the process by which inventory is measured and set according to predetermined decisions such as economic lot size for order or production, safety stock, minimum take aim, maximum level, order level etc.Traditionally, the focus on inventory management has unceasingly been about not running out of finished goods. Manufacturers would always have more and more excessive amounts of raw materials, work in process, and finished goods with examine not for retention costs but lonesome(prenominal) for protecting against a stock-out. If demand was higher than expected or a supplier confounded a shipment, inventory would bail the manager out. As long as outbound shipments were satisfied, so were the operations managers. But there was a problem in this policy because safe property costs and other practices were difficult to nagae due to low technology and mana gers ignore these.Holding costs open fire be defined as the annual costs that are incurred by holding onto inventory.The dollar amount for holding costs typically ranges between 20-40% of annual average inventories. For example, if a firm has average inventories of $ snow0, the firm would have an annual holding cost at to the lowest degree $200. Common factors that attract holding costs include fortune costs, change magnitude rent required for the outer space of the inventory, higher premiums to insure the inventoryand cost of absolute goods.Opportunity costs are the highest cost. For example, if a firm has an average inventory level resulting in $100 million worth of goods, the firm effectively has $100 million buttoned up in inventory. Assuming these cash in hand are not creation loaned to the firm (which immediately results in interest expenses), then these are funds that should be used in other investments.Objectives of Inventory ControlTo set up future demand due to v ariation in forecast figures and unquestionable figures.To cover demand due to seasonal or cyclic variations.To meet the customer requirement timely, effectively, efficiently, smoothly and satisfactorily.To smoothen the production process.To provide process for intermediate several products on the same facility.To gain economy of production or purchase in lots.To reduce loss due to changes in worths of inventory items.To meet the time lag for transportation of goods.To meet the technical constraints of production/process.To balance various costs of inventory such as order cost or set up cost and inventory carrying costTo balance the stock out cost/opportunity cost due to loss of sales against the costs of inventory.To minimize losses due damage,robbing etc.To stabilize employment,resources and machine and human efforts.Benefits of Inventory ControlEnsures an fitted supply of materialsMinimizes inventory costsFacilitates purchasing economiesEliminates duplication during say mend utilization of available stocksProvides a check against the loss of materialsFacilitates cost method of accounting activitiesEnables management in cost comparisonLocates disposes inactive and expired store itemsBasis for financial statements which is reliable.Inventory control DellUsing todays technology, manufacturers and retailers are achieving inventory turns that are as important as the supply chains that produce them. Take for example Dell. Dell has achieved a system that at times leaves them with average inventories for long enough to last further three days. Instead of incurring holding costs, Dell doesnt order until the demand is in place.The system Dell has achieved is referred to as a Just In fourth dimension (JIT) system. JIT is designed to keep inventories as low as possible by producing only what is needed and when it is needed. The technology involved allows customers to place an order on Dells website and receive their computer within days and maximum of 1 month. Dells website is machine-accessible to their electronic data interchange (EDI) system which allows suppliers to see what parts Dell requires as soon as the customer orders the computer. The suppliers, who garner multiple shipments to Dell daily, supply Dell with the parts they need when, and only when, they require them. Although the software is costly, for Dell, and some many other firms, the result is savings that give emulous advantage. However, JIT is an extremely difficult system to set up that requires years of practice and extremely cooperative suppliers to perfect. For many firms, this is not an option. In particular, this system is not designed for products that have a very large backorder cost.Backorder costs are the costs associated with failing to meet demand. Maybe the product is a commodity and the cost is nothing more than bewildered revenue, but maybe the backorder results in bad word of mouth that drives the cost even higher than the lost revenue. It is import ant for a firm to determine the approximate costs tied to backorders. When this is achieved, managers foundation compare holding costs to backorders in order to religious service determine what optimal inventory levels are. Unfortunately, backorder costs and holding costs arent the only variables involved with optimal inventory levels. separate costs such as ordering costs (costs associated with ordering. Includes paperwork, inventory counts, etc.) , supplier lead times (how long it takes between ordering and receiving materials), and supply lead time and demand variations are also important variables that cant be ignored. All of these variables can make optimal inventory levels very difficult for managers to determine. Today, software business solutions foster to both ease the workload and drive down costs (in particular, ordering costs).Dells Inventory Turnover DataYear Inventory Turnover Weeks Inventory1992 4.79 10.8561993 5.16 10.0781994 9.4 5.5321995 9.8 5.3061996 24.2 2.1491997 41.7 1.2471998 52.40 0.9921999 52.40 0.9922000 51.4 1.0122001 63.50 0.819Key point to notice here is that Dell was carrying over 10 weeks worth of inventory in 1993. By 2001, Dell was carrying less than 1 weeks worth of inventory. This essentially means that inventory used to sit well-nigh for 11 weeks and now it sits around for less than 1 week.So what does this mean for Dell?computers lose 1 percent of their value per week. This isnt like the keep food industry where managers can let their supplies sit around for months originally anyone comes and orders. Computers arent canned goods, and as Kevin Rollins of Dell says-.they are rot,the longer a computer sits around, the less it is worth.Due to depreciation alone, in 1993 Dell was losing roughly 10% per computer because the computers were all ready to be sold but there was no order coming. In 2001, Dell was losi ng less than a percent. establish on holding costs alone, Dell reduced costs by nearly 9%.Since 2001, Dell has continueed to lower inventory. Looking at their latest annual reports, days inventory has dropped by approximately a day.Benefits of low inventorySupply chain managementA supply chain consists of all parties involved, directly or indirectly, in receiveing a customer request. In other words, a supply chain (SC) includes all organizations that collaborate in order to produce and deliver a finished product to the final customer. An example of a simple, direct SC would be the one which contains one supplier, a distributor of the materials, the bakery and a customer.Supply chains can be contrastive in size, how complex the relation is inbetween the members and distribution of sensual presence. In the following figure two different types of channel relations can be seen direct, where the SC consists of one supplier and one customer of an organisation, and extended, where apar t from the above, a suppliers supplier, a customers customer, etc. are included. In general, supply chains are dynamic, and involve the flow of information, products and funds between different stages.Supply chain management has the objective to have the right products in the right quantities at the right time at minimum cost, a situation that would guarantee optimal service levels for the customer and optimal performance for the organizations as a whole and separately. So, SCM involves the management of flows between and among members of the supply chain in order to maximize total supply chain profit king, thusly maximize the total value generated throughout the SC.while recognizing the existence and importance of the others an organization needs first to decide about its supply chain strategy and then decide and take required actions that will fulfill the customer demand.Dells Supply Chain StrategiesThe direct model refers to the fact that Dell does not use the retails channel, b ut sells its PCs directly to customers through its website, Dell.com, as project shows. This way the intermediary steps that may add time and cost are eliminated, and Dell is directly linked to its customers.this strategy look very simple but its very hard to adopt and manage such a policy,a very high qualified and experienced staff is required. bod 1fig 2Indirect Distribution channel for PC industryDirect ditribution channel for PC industry(figure 1 as shown by dell)When Dell was a littler company than it is now, before the development of powerful, industry-standard servers of the type that Dell manufactures, the Dell IT group ran its SCM database applications on large, expensive, proprietary servers based on the UNIX OS. However, as the company grew, servers lacking the necessary capacity had to be replaced with even larger, more powerful servers. And because the servers were not upto the mark and efficient, updating a whiz server often required shutting down entire systems. The increased performance of industry-standard DelPowerEdge servers, however, has enabled Dell IT to create cost-effective, highly scalable systems using visionary Real Application Clusters (RAC) 10g.In fact, Dell sells directly to all its customers, from home-PC users to the worlds largest corporations. This way it creates a direct relationship with each individual customer, which turns out to be a great source of competitive advantage. As Michael Dell has stated, this direct relationship creates valuable information about the customer, thus Dell knows who the end users are, what they have bought from Dell and what their preferences are, a fact that allows Dell to offer hang on products and services, and stay, in general, closer to the customer.Quality controlRecent data points indicate that on top of mounting corporate governance and sluggish gain issues, but dell may also be facing a problem of quality control. The quality problem relates to low end servers, laptops, and desktops , not the high-end server models. Channel checks indicate a noticeable increase in the number of machines that need to be serviced by Dell in the field shortly after delivery, and also units returned to Dell for replacement/repair.For the most part, Dell outsources assembly to offshore partners in Taiwan and China. It is not clear so far if the issues are caused by sloppy manufacturing or design flaws. We suspect the former, and will continue to check field data. In addition, Dell is struggling through early adoption of the Microsoft Vista operating system, and users may not be able to differentiate whether the problems they are having with new laptops stem from poor build quality, design issues, instability in the operating system or horror in application components with Vista. Quality issues with Dell laptops are nothing new we routinely saw evidence of that last year.The rise of problems with low end servers and desktops is troubling and our checks indicate that it is costin g Dell money and starting the laying waste of its brand. The timing of this quality lapse could not be worse for management, considering the recent announcements about errors in accounting and financial controls.An executive of a system builder that often competes with Dell said he finds the company has been untold less cost-competitive since Michael Dell has returned to the CEO position at the company, and that the PC maker is representing a certain amount of confusion in competing for business throughout this quarter.Cost issues and turmoil appear to be piling on to Dells quality issues from last year, when the company recalled 4.2 million notebook batteries due to fire hazards. For its part, though, Dell has said it has found its response to customers with quality or technical problems has improved. grind away Analysis of Dell ComputerStrengthsDells Direct Model approach of enables the company to offer direct relationships with customers such as corporate and institutional cust omers. Their strategical method also provides other forms of products and services such as profits and telephone purchasing, customized computer systems phone and online technical support and next-day, on-site product service. This extensive range of products and services is definitely one of Dells strengths.Dell Computers award-winning customer service, industry-leading growth and consistently strong financial performance differentiate the company from competitors for the following reasonsPrice for Performance Dell represents a very efficient procurement, manufacturing and distribution process allowing it to offer customers powerful and customized systems at competitive costs.Customization Each Dell system is built to order to meet each customers specifications.this is the only company till now which has been efficient in applyeing this strategy through the world.Under developed countries like india where people are not much(prenominal) in contact with internet,they are also aware of the companyz system of online oredering and customizing and almost 90 percent of the people are satisfied by this.Reliability, helping and Support Dells direct customer allows it to provide the most efficient customer service before and after the sale.the industry of computer is such that only a technical help person can fix the system and when dell provides with such a service of online omitting errors and toll free registering electric charge and on the spot servicing ,this gives a customer a positivistic point then other companies.Latest engineering science Dell is able to introduce the latest relevant technology compared to companies using the indirect distribution channels. Dell turns over inventory for an average of every six days, keeping inventory costs low.The companys application of the Internet to other parts of the business including procurement, customer support and relationship management is growing at a rate of 30 percent. The companys Web site receiv ed at least 25 million visits at more than 50 country-specific sites.the latest technology also carries effective attractions like customizing the outer looks like different variants of colours,the girls have different choice and boys have different.the company also earns more through this because the more you customize,the more a customer has to pay for it.now adays dell is also providing to make its own design on the outer screen .WeaknessesDells galacticgest weakness is attracting the college student segment of the market. Dells sales revenue from educational institutions such as colleges only accounts for a mearly 5% of the total. Dells focus on the corporate and governance institutional customers somehow affected its ability to form relationships with educational institutions. Since many students purchase their PCs through their schools, Dell is obviously not popular among the college market yet.Dell is not available in retail outlets, customers cannot go to retailers becaus e Dell does not use distribution channels. Customers just cant buy Dell as simply as other brands because each product is tailored according to their specifications and this might take days to finish.most of the times it happens that customer is unconscious(predicate) of the specifications of the the materials to be installed so according to him customizing the pc is a big fear and customer will go for simple buying.Dell weakness lies in their time of delivery also.normally 15 to 20 days are followed after the order have been placed.people requiring a urgent pc or younker exited about a new laptop or pc doesnt deficiency to wait for these many days.it happens with us most of the times,whne we are in a mood to buy something we want that thing to be delivered as soon as possible.this is alos a major weakness of dell.OpportunitiesComputers according to customer demand and requirement and becoming more and more popular and also a necessity today. Customers are getting more and more educated about computers. The first time users may avoid dell but a second time usr will always prefer dell because now he or she is more known to the product,more aware about what he requires and also keen to use more and high performance technology.Desktops are now out of fashion and people are going for laptops because it is well-off to carry and easy portable device.this is a major segment where company can focus and attain a reputed position.The internet is also playin a major role in dell sales and orders because dell is not available through outlets and now days people are more aware of the internet and its use.dell laptops and pc can be ordered with Brobdingnagian varieties of variants of each and every product where as in case of retail outlets the variety available is not so much.ThreatsThis is such a industry or market where thousands of new products are launched each month because the it industry has well established and each and every technical person has an ability to develop a hardware or software.we can see each day a new and very innovative products are launched related to computer industry.dell has to keep an eye on new products that are alays being launched and also try to make new products so that company can maintain its reputation of an innovative company.The company also faces a big problem of producing product that are high in quality and low in toll.when such a situation comes a company has to make every effort to make maximum sales and profit.One more problem or threat is price between companies are fall day by day and there is almost an equal price for the same product in two comapnies. Dells Direct selling attracts customers because it saves cost. Other companies are alsooffering computers at low costs, this could hurt the dell customer base and customers can shift to other pc companies. With almost identical prices, price difference is no longer an issue for a customer. They might accept other brands instead of waiting for De lls customized computers.The next threat is decrearing rate of computer industry and unluckily dell has the maximum share in this industry,suppose if the demand decreases the the competition will become more hard and company would have to work more harder and harder to maintain its position in the marketTechnology is advancing day by day.if on the one side its an opportunity for the industry,on the other side its also a threat for the industry because the computer industry is such an industry where an new technology or product doesnt need a much high investment and large firms face competiton when small companies introduce new and efficient products at much smaller priceTechnology dictates that the most up-to-date and fastest products are always the most popular. Dell has to always keep up with technological advancements to be able to compete.Porters five force model for dell-Threat of new entrants-moderate.Reasons-The enceinte required for investment is low for new companies.Diffe rentiation in products is also low but brand name can be considered as an entry barrier.The economies of scale is also low.The government or legal barriers are also low or alomot nill(depending upon country to country).Rivalry-highReasons-There is a price war due to low margin.The continuing decrease in profit. postgraduate concentration of the market.Threat of substitutes-lowReasons-If we look at the survey evry 4 th person ahs a