SUPPLY CHAIN

supply chainOrder DescriptionRead the case (Dells Transformative Journey through Supply Chain Segmentation) and address the following questions and issues below. I will be providing you the case.Required:Your report should be structured and, where appropriate, address the questions referred to below:• Title page with your name and student ID.• Contents page.• Executive Summary.• Body/content of the Report:1. Describe the supply chain structure of Dell and the challenges faced.2. Discuss the transformation approach implemented by Dell, by explaining the various phases.3. Comment on the results obtained due to Dells transformation approaches.4. What do you think are the critical success factors identified by Dell?5. What lessons have been learnt from this study?6. What do you think are the different skills required in the implementation of supply chain segmentation?7. Provide recommendations for their supply chain performance improvement.• Conclusion• Reference List. Word Limit is 1900 to 2,500 words. This does not include your Executive Summary, contents page, Reference list or Appendices. •you should develop an Argument : Well developed, logical planning and sequence, supporting evidence for arguments, conclusion and recommendations well structured.• Referencing): Use of Harvard referencing style, adequate and correct in-text referencing, use of quotation, matches in-text references.Case study
Publication Date: 12 November 2010 ID Number: G00208603© 2010 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or itsaffiliates. This publication may not be reproduced or distributed in any form without Gartners prior written permission. Theinformation contained in this publication has been obtained from sources believed to be reliable. Gartner disclaims allwarranties as to the accuracy, completeness or adequacy of such information and shall have no liability for errors,omissions or inadequacies in such information. This publication consists of the opinions of Gartners research organizationand should not be construed as statements of fact. The opinions expressed herein are subject to change without notice.Although Gartner research may include a discussion of related legal issues, Gartner does not provide legal advice orservices and its research should not be construed or used as such. Gartner is a public company, and its shareholders mayinclude firms and funds that have financial interests in entities covered in Gartner research. Gartners Board of Directorsmay include senior managers of these firms or funds. Gartner research is produced independently by its researchorganization without input or influence from these firms, funds or their managers. For further information on theindependence and integrity of Gartner research, see “Guiding Principles on Independence and Objectivity” on its website,http://www.gartner.com/technology/about/ombudsman/omb_guide2.jspCase Study for Supply Chain Leaders: Dells Transformative Journey Through Supply Chain SegmentationMatthew DavisFaced with ever-changing customer needs, product commoditization, unique global requirements and new, low-cost competitors, Dell embarked on a three-year journey to segment its supply chain response capabilities. The company designed its supply chains based on a mix of cost optimization, delivery speed and product choices that customers value, while aligning internally across all functions to execute against this vision.Key Findings Dells market and business strategies changed, requiring the company to move from a single supply chain to a customer segmentation supply chain approach. A unified, cross-functional business strategy with collaborative, decision-making processes across sales, marketing, product design, finance and supply chain is essential for segmentation. Segmentation is enabled by a cost-to-serve (CTS) methodology to dynamically allocate costs to business decisions, highlight net profitability and drive the right actions for each supply chain. Supply chain segmentation is a multiyear journey enabled by the development and alignment of organizational skills to the needs of the journeys different phases.Recommendations Start with segmentation of your companys customers and channels to understand the different demand rhythms and cycles. Focus on decreasing the time required to sense or shape changes to end-customer demand. Begin the design of your supply chain portfolio by isolating and quantifying costs of an end-to-end supply chain that optimizes for operational efficiency. Repeat this analysis for supply chains that require different supply chain responses (for example, agility rather than efficiency). Use a clear set of goals to align cross-functional metrics and incentives to your portfolio in order to drive the right business decisions for each supply chain.Publication Date: 12 November 2010/ID Number: G00208603 Page 2 of 11© 2010 Gartner, Inc. and/or its Affiliates. All Rights Reserved.Refine and govern your supply chain portfolio continually by establishing crossfunctionalreview processes between sales, marketing, product design, finance andsupply chain.Publication Date: 12 November 2010/ID Number: G00208603 Page 3 of 11© 2010 Gartner, Inc. and/or its Affiliates. All Rights Reserved.WHAT YOU NEED TO KNOWDell revolutionized supply chain management with its direct model, configure-to-order (CTO)manufacturing, just-in-time inventory model and impressive cash-to-cash conversion cycle. Thecompany has been a staple in the top five of the AMR Supply Chain Top 25 every year since itstarted in 2004. But demand for commoditized products, changes in customer channelpreferences, emerging market growth, component cost declines, a more capable supply base andglobalization have challenged the singular supply chain.In this case study, Gartner examines Dells period of transformative change as it segmentedcustomer requirements to create a portfolio of supply chain capabilities that provided multipleofferings focused on cost efficiency, speed to customers, choice of features and personalizationand/or services. We follow the journey from the perspective of key leaders within Dells supplychain transformation: Annette Clayton, VP of global operations and supply chain; JenniferLoveland, disruptive strategy senior manager; Perry Noakes, director of global businessexcellence and lean; and Bruce Raven, global supply chain optimization senior manager.CASE STUDYIntroductionDell responded to changes in the market by determining how different segments of customersderive value from its products and services. The companys analytics showed customer demandhad become quite complex. The B2B market demands predictability, speed, customization,services and precision delivery. Consumers want multiple channel options, the ability topersonalize for niche products, low-price options and devices that deliver content. This complexitywill only increase as content and virtualization begin to drive the market. To address these issues,Dell segmented its supply chain as part of a multiyear transformation (see Figure 1).Publication Date: 12 November 2010/ID Number: G00208603 Page 4 of 11© 2010 Gartner, Inc. and/or its Affiliates. All Rights Reserved.Figure 1. Dell Supply Chain EvolutionSource: Dell (November 2010)Historically, Dell was organized by products and/or region. As part of globalization, the companyaligned organizations to customer value consistently across regions. In 2008, it began to leverageits partner network of suppliers where capability, quality performance and cost had improved. Dellwould retain its in-house network where strategic differentiation was valued by customers andprovided a competitive advantage. This work was a precursor for and an enabler of supply chainsegmentation. In this research, we review the “Customer Value — Segmented Supply Chain”portion of Dells transformation.The ChallengeDell had three main challenges to solve in end-to-end segmentation:Long-term demand sensing to continually refine its portfolio — Dells direct modelprovided extensive customer insights, with over two billion online customer visits peryear. But the company also had to figure out how to predict where the market washeaded, define a three-year outlook of customer needs and support multiple globalcustomer groups.Supply chain design for a new environment — It had to address a changing businessstrategy, product commoditization and proliferation, emerging markets, global supplynetworks and multichannel sales and fulfillment.Publication Date: 12 November 2010/ID Number: G00208603 Page 5 of 11© 2010 Gartner, Inc. and/or its Affiliates. All Rights Reserved.Complexity reduction — Dell had to carve out an end-to-end, “low-cost” supply chainfocused on efficiency, while maintaining its responsive heritage provided by its CTOcapability. This required simplification of product designs, configuration managementand planning processes.ApproachThe transformation moved through six different phases, resulting in a governance processfocused on continued improvement and portfolio evolution:Identify Customer ValuesDell used historical customer knowledge from contracts, survey results, business intelligence (BI)data and platform sales to begin its customer-centric view of value. To provide a robust, outsideinperspective, Dell invested in resources to complete detailed configuration profitability analysis,targeted surveys and external marketing insights from multiple industries.Understand Dells StrengthsAs Mr. Raven stated, “We had to figure out what we needed to change and what we needed toretain based on what customers value. We were trying to identify what skills would be mostimportant for long-term supply chain excellence.” The company identified the following corecompetencies: deep customer relationships, supply chain agility and a lean culture thatcontinually improved and automated processes.Understand the External EnvironmentAn external perspective was provided through partnerships with Dr. David Simchi-Levi (thenprofessor of engineering systems at Massachusetts Institute of Technology), Dr. John Gattorna(then a visiting professor at Cranfield School of Management), cross-industry leaders and variousconsulting firms. According to Ms. Clayton, “The perspective of looking outside in is extremelyimportant. We learn from who we believe is doing things best from a variety of industries.” Dellscompetitive analysis focused on price points by configuration, new market entrants, such astablets and smartphones, emerging market requirements and supply chain services.Chart Clear Course and BenefitWith a good understanding of customer requirements and the direction of the market, Dell beganto design the new supply chain portfolio. It started by defining the supply chain extremes of agilityand efficiency (see Figure 2).Publication Date: 12 November 2010/ID Number: G00208603 Page 6 of 11© 2010 Gartner, Inc. and/or its Affiliates. All Rights Reserved.Figure 2. Chart a Clear Course: Align Product Strategy to Customer ValuesSource: Dell and Dr. David Simchi-Levi (November 2010)This basic framework was the first step in creating a range of supply chain capabilities. The keywas to define the right number of supply chains to fill the gap between most efficient and mostagile. Dell went through an extensive exercise to complete this analysis. The company defined 18potential options, and then simplified to six supply chains. The final result was a portfolio basedon a mix of configurations predetermined by Dell and products configurable by customers, pairedwith “need it now,” planned and flexible delivery cycle times. Dell also aligned the warranty andservices processes to its new portfolio for complete, end-to-end customer solutions.Engage the Entire OrganizationSegmentation of Dells supply chain required extensive cross-functional collaboration: ITtransformation had to occur in tandem with supply chain transformation, supply chain had to workwith finance to enable a CTS methodology and process, and supply chain capability had to befully integrated with product design throughout the development cycle. Plus, aligning the go-tomarketplans with sales and marketing was essential to driving the desired demand patterns.Continue to Govern and Refine PortfolioThe result of Dells customer channel and supply chain segmentation was the creation of an endto-end model in which multiple capabilities can be arranged in unique configurations to satisfyspecific customer requirements (see Figure 3):Publication Date: 12 November 2010/ID Number: G00208603 Page 7 of 11© 2010 Gartner, Inc. and/or its Affiliates. All Rights Reserved.Figure 3. Engage the Entire Organization: Transformation Is End to EndSource: Dell (November 2010)Dell used the “voice of the customer” value chain to identify the range of capabilities it wouldneed in different functions. The different combinations of these capabilities is what creates theunique supply chain offerings.The company created a standard process to introduce new supply chain requirements. It has adedicated center of excellence (COE) that intakes requirements from sales, marketing andoperations, evaluates the customer benefit and business strategy, and then enables the rightchanges within product development and supply chain design. Critical to this effort is continuousimprovement that utilizes lean methodologies to maintain a focus on what the customers valueand conducts benchmarking to provide an outside-in perspective.ResultsDells transformation yielded both financial and qualitative gains:Stronger connection to customers — In Ms. Claytons words, “We knew we had toleverage supplier capability and scale, but still control the things that are most importantto the customer. We redeployed our resources focused on controlling imaging, deliveryand parts of design. We enable best value solutions … giving the customer the exactvalue they want.”Complexity reduction — Product options had become too complex. In response, Dellreduced configuration complexity in line with customer requirements. As Mr. Noakesstated, “Product offerings had exceeded customer requirements and were addingunnecessary cost and responsiveness waste in the supply chain.”Improved internal collaboration — Identifying and managing functionalinterdependencies have driven collaboration across product design, supply chain,marketing, sales and finance. Dell also simplified interactions by centralizing globaloperations, while aligning to customer verticals.Publication Date: 12 November 2010/ID Number: G00208603 Page 8 of 11© 2010 Gartner, Inc. and/or its Affiliates. All Rights Reserved.Cost reduction — “We have realized approximately $1.5 billion of operational costreductions between 2008 and 2010. This transformation was a critical factor in thatreduction,” said Ms. Clayton. Key drivers in this improvement were leveraging suppliercapability and scale, building out new capabilities for the customer, simplified design andreductions in complexity.Improved forecast accuracy — The reduction in complexity and better connection todemand resulted in a three-times increase in forecast accuracy at the product, platformand configuration levels.Critical Success FactorsDell identified four critical success factors:Start with customer value — Historically, customers were segmented by verticals(e.g., consumer, corporate, government and small business) as well as regions andsize. Dell had to look across an aggregated view of these existing groupings to identifyshared values relating to product features and supply chain capabilities. A global viewwas critical to this process. As Mr. Noakes stated, “[Our] growth markets are not intraditional regions. We need to adjust our model to the new requirements.”A unified, end-to-end business strategy — The Dell team stated this effort was “trulya corporatewide transformation.” Key to this was the ability to clearly articulate the needfor change, the vision and the role of different organizations. To support thiscommunication, several leaders started an internal blog to keep people up to date.Executive sponsorship — The segmentation strategy and potential benefits wereshared with the entire executive leadership team to drive cross-functional alignment.Vice Chairman Jeff Clarke was the sponsor of the effort throughout design andimplementation. Ms. Clayton added, “We conduct a weekly, cross-functional executiveproduction governance [meeting] where we spend two-thirds of our time on the futurequarters and one-third of our time on how our current quarter plan is being executed.Our planning has become much more unified and strategic.”Dedicated COE — Dell identified 12 key work streams. Each has a VP sponsor, withsmall teams coordinating and program-managing the change. The company alsointegrated lean techniques to look across work streams, with four to five value streamsto ensure the customer needs were being met by the proposed changes.Lessons LearnedAccording to Mr. Noakes, “Dells industry-leading supply chain history has given us the skills to beagile and flexible. Its this history that provides the framework and skills to reach the next levels ofsuccess and supply chain leadership.”Five lessons are critical for this evolution:Implementation of Supply Chain Segmentation Is a JourneyDell recognized that the scope of this change would require a multiyear plan and investment. Thecompany set short-term goals to show traction against the overall plan. A key component of thestrategy was to pilot capabilities manually, while designing the automated, scalable solution inparallel. This allowed quick wins to build momentum and mitigated risk during the transformation.Publication Date: 12 November 2010/ID Number: G00208603 Page 9 of 11© 2010 Gartner, Inc. and/or its Affiliates. All Rights Reserved.Different Skills Needed Throughout the JourneyDell had to adapt the following COE skills:Phase 1: vision/design — The skills required are an outside-in perspective focused oncustomers, knowledge of market and other industries, end-to-end supply chain designand business acumen.Phase 2: change management — The skills required are process design, lean/SixSigma expertise, data analytics, systems optimization, process automation, programmanagement, organizational influence and communication.Phase 3: orchestrating the ecosystem — Phase 3 denotes a continuously evolvingorganization focused on translating customer needs to supply chain capabilities bycoordinating and influencing internal and external partners.Cross-Functional Participation Very NecessaryCommunication across organizations can be difficult, so messages must be tailored to eachgroup. As Ms. Loveland stated, “The broader the span of communications, the more simplifiedthe message needs to be.” For example, Figure 3, which mapped the portfolio, was simplifiedwhen shared across functions (see Figure 4).Figure 4. Engage the Entire Organization: Target Messages by OrganizationSource: Dell (November 2010)To ensure long-term, cross-functional collaboration, Dell integrated supply chain design intoexisting product design processes and created a phase-gate review process to standardize futurechanges to the supply chain. “Phased releases drive step-function improvements, rather thanconstant adjustments,” said Ms. Clayton. Finally, metrics across all functions were aligned to thegoals of the supply chain portfolio.Transparency of Data EssentialDynamic visibility to customer requirements, demand, cost, materials, forecasts, product roadmaps, revenue mix and multiple views to margin are required to drive the right decisions.Publication Date: 12 November 2010/ID Number: G00208603 Page 10 of 11© 2010 Gartner, Inc. and/or its Affiliates. All Rights Reserved.A Balanced Scorecard With Clear Accountability RequiredMs. Clayton said, “We are now able to better balance customer metrics with operational metrics.Were aligned to customer value. For example, we can even provide better ‘green solutions forcustomers by balancing logistics nodes with cycle times to take advantage of low-carbontransportation and packaging methodology.”The key for Dell is that end-to-end segmentation is an ongoing, evolving journey. Optimization isnever done, but rather continuously realigned to changing customer values.RECOMMENDED READING“Supply Chain Segmentation on the Increase, With High Tech Leading the Pack”“Supply Chain Strategy for High-Tech Manufacturers: The Handbook for Becoming DemandDriven”“Supply Chain Segmentation Helps Plexus Evolve From Contract Manufacturer to ProductRealization Partner”“Top Supply Chain Planning Processes”“Key Issues for Cross-Industry Supply Chain Leaders, 2010”Publication Date: 12 November 2010/ID Number: G00208603 Page 11 of 11© 2010 Gartner, Inc. and/or its Affiliates. All Rights Reserved.REGIONAL HEADQUARTERSCorporate Headquarters56 Top Gallant RoadStamford, CT 06902-7700U.S.A.+1 203 964 0096European HeadquartersTamesisThe GlantyEghamSurrey, TW20 9AWUNITED KINGDOM+44 1784 431611Asia/Pacific HeadquartersGartner Australasia Pty. 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