Just in Time - Dell

I. DELL COMPUTER CORPORATION

Dell has a bold plan of bringing the right computers directly to customers at the lowest price with the fastest delivery time possible. To be able to fulfill this plan, one of the important things the firm focuses is to reduce wastes during production process such as time, raw materials, energy, cost.. Among those things, inventory is the biggest enemy that Dell must get rid of. In the high-tech industry, keeping inventory can cause high risks since the firm can get stuck with obsolete inventory and it is vulnerable to product transitions, which causes significant loss and slow responsiness to customer demand. Computer components have a short product life cycle, their demand declines rapidly as more innovative or advanced technologies are continuously developed. As a matter of fact, component parts depreciate at a very high rate, for each week waiting in Dell's stock, computer inventory loses 1% of its value .

In fact, Dell has accomplished to hold only five days of inventory on hand which is the smallest amount of inventory of any company within the industry . Low inventory bring such a great effect on Dell's general performance. Since Dell holds minimal inventory, it brings in major cost advantages and shortens the time it takes Dell to get new generations of its computer models into the market place. Therefore, it is imperative for the firm to minimize inventory through operations management strategies that are going to be described following: build-to-order manufacturing, just in time supply chain and direct business model

1. Build-to-order manufacturing

Build to order is a production approach where products are only built as a confirmed order for products is received. BTO is the most appropriate approach used for highly customized products, therefore, it works perfectly for Dell since the firm applies mass customization.

Dell Computer is often mentioned as the leading build-to-order manufacturer. Its philosophy combines a profound knowledge of customer demand with the latest technology offerings. Unlike many companies who build for sales forecasts, every Dell personal computer has been built this way. Dell builds its computers, workstations, and servers until it has a customer order in hand, none are produced for inventory. Dell customers can order those products based on the needs of their applications of any size and complexity. A customer's order is transferred to the factory in less than 24 hours by using a streamlined production process. Customers normally receive their orders in just a few days, and they are guaranteed to get a product that meets their specific needs. Lately, Dell turns to build its PC using a process called "cell manufacturing" in which one group of people is responsible for building a PC (other cells are responsible for putting the necessary parts into a plastic