Case Dell Essay

408 Words2 Pages
Inventory Dell Dell wants to reduce their inventory costs as much as possible. “Michael Dell talks about inventory velocity (the speed at which components move through Dell Computer’s operations) as a key measure of his company’s performance. In his mind, the less inventory the company has sitting in the warehouse, the better.”1 In recent years, Dell has improved the forecasting of supply and demand on a monthly, weekly and daily basis. Therefore the company does not buy too many components of their suppliers and the company does not produce too many products. So, there are less components and final products in stock, which reduce the overall inventory costs. Dell is implementing an anticipation inventory as you can read (Inventory that is held in anticipation of customer demand). The company also manages a low inventory by having a close relationship with their suppliers. Dell and their suppliers exchange a lot of their inside information, like demand forecasts. So suppliers can really respond to the information, by producing enough components. These components will be stored at SLCs (Suppliers Logistics Centers), which are already explained earlier. Because of these SLCs Dell has low inventories and therefore low inventory costs. Dell wants to produce and transport their products as quickly as possible, because the company is scared the products are losing value. As Dell’s CEO once said: “The longer you keep it the faster it deteriorates. You can literally see the stuff rot. Because of their short product lifecycles, computer components depreciate anywhere from a half to a full point a week. Cutting inventory is not just a nice thing to do. It’s a financial imperative.”2 Is Dell fulfilling this objective? Over here a column about days of supply in inventory from Dell’s financial report: As you can see Dell is not fulfilling this objective, but the company

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