Dell Executive Summary

Dell has a special vendor-managed-inventory (VMI) arrangement with its suppliers. Suppliers decide how much inventory to order & when to order while Dell sets target inventory levels & records suppliers’ deviations from the targets. Dell withdraws inventory from the revolvers as needed -- on average every two hours. It uses a quarterly supplier scorecard to evaluate how well each supplier does in maintaining this target inventory in the revolver.

This not only reduces costs as returns grow disproportionately as the carrying costs and obsolete stock is avoided, but it also saves enormous amounts of money on purchasing components because the component prices drop by 3 percent per month, reduces handling cost and other opportunity costs, rent

We expect our suppliers to publish a Global Reporting Initiative (GRI)-based sustainability report on their corporate websites and update the report annually. In addition, Dell expects suppliers to report annually via the CDP Supply Chain Climate and Water programs, as well as to maintain a 5-year responsible water risk mitigation plan on its corporate website and update the report annually. To embed socially responsible behaviour into business activities, key suppliers must undergo reviews of their social and environmental progress in quarterly business reviews. The reviews include audit performance data, assessment of policy compliance and specific implementation plans for suppliers’ own programs for compliance and environmental

These includes exchange inventory for information, velocity, value and volume, constant change and criticality of coordination .

Coordination is critical and coordination efforts at Dell continued to be extensive, in order to prevent suboptimization. The top management team of 16 executives meet monthly, quarterly, and ad hoc to discuss everything from strategy and new product development to alignment, empowerment and optimization.

To keep all elements of the organization moving in the same direction, while at the same time responding to changes and movements in the environment, coordination between individuals, business units, and geographical segments was necessary. Coordination throughout the company was achieved through keeping the business model first and foremost in the minds of the employees. Effort was spent on trying to help people know where to find information, not just on communicating information. The human resources group provides tools that assisted in keeping a consistent message. Dell focuses a lot on orientation and training for new hires too. But their strength point is that, from early times they relied on communications over the