Towards A Value Added Strategy

1 Canada’s Asia-Pacific Gateway and Corridor Initiative Towards A Value Added Strategy Garland Chow Associate Professor, Sauder School of Business D...
Author: Stuart Bridges
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Canada’s Asia-Pacific Gateway and Corridor Initiative

Towards A Value Added Strategy Garland Chow Associate Professor, Sauder School of Business Director, Bureau of Intelligent Transportation Systems and Freight Security The University of British Columbia June 12, 2008

Dell Case Study to Illustrate 4 Points •  Dell needs just like any other Canadian manufacturer or retailer importing in demand driven and global environment •  Uses Total Landed Cost Analysis •  Utilizes Vendor Managed Inventory (VMI) and supplier hubs •  TPLs used but not everyone is a Dell

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Dell Supply Chain Planning & Execution Global / Regional Procurement

Demand/ Supply Management

Demand/Supply Balancing

Continuity of Supply

Sales Build to customer specifications

Supplier

Dell SLC

Customer

Supplier 2-5 days

2-5 days

Materials ordering cycle – 10-180+ days

  Supply Chain Management coordinates information, materials, and

logistics to support customer requirements.   Demand/Supply constraints are continuously communicated to sales/ operations/procurement.   Focus on continuity of supply and direct vendor relationships ensure material availability. 3

Current VMI Model VMI (supplier owns until title transfers)

Title Transfer

Explicit Costs

Embedded Costs

Material Transfer

Supplier Manufacturing

Factory / Merge Center

(SLC) Warehouse

Material $90

Freight

+ $5

+ $2

SLC

+ $1

Other (CCI) =

=

Total Landed Cost $98 4

Established a repeatable, reliable, consistent, air transportation network for Dell and our Suppliers.

EMEA Limerick Coventry Tilburg

AMF NFC AFC RFC

APJ Xiamen Penang (Aus,JPN)

Highlights   Three 747-400 Freighters per day   Leveraged volume of FG & Supplier Parts   Annual pricing (no peak rates)   Consistent Delivery   Cycle Time Improvements   Supply Chain Visibility

BCC

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Established a repeatable, reliable, consistent Ocean Network for Dell and it’s Suppliers EMEA Limerick Coventry Tilburg

AMF NFC AFC RFC

Avg. Cycle Time: 13 Days

Avg. Cycle Time: 20 Days Avg. Cycle Time: