Dell has recently become the number one maker of file servers in the United States (computers used to serve up files on a computer network – as found in a university library, for example), and holds the number two position worldwide. Dell builds servers efficiently, and their customers know exactly where their server is during every step of the production process.
The production process begins when the customer orders the server. This information is placed in a production queue that itemizes every component to be built into the server. The required inventory is then sent to the assembly area to make sure that it is queued. Dell collaborates closely with its suppliers to provide them with real-time production data, so it can have inventory available on the loading docks connected to the factory floor. This allows Dell to keep only two hours’ worth of inventory on the factory floor.
Assembly begins when the chassis, motherboard and memory are put together and moved to the ‘kitting’ area, where the other various internal components (same as drives, cards and connectors) from suppliers are added to the ‘kit’ tray. These kits are then moved to the assembly area, where they are automatically routed to the next available assembler. Each assembler can build a variety of servers (each is typically certified to build up to 15 different models). Once a server has been completed and tested, it is mechanically placed in a container and shipped out. Although production occurs very quickly, each server is customized specifically. The factory produces servers on a mass scale.
What is Dell’s strategy and unique approach to order processing?
How has the design of its products helped mass customization?
What makes it possible to deliver high variation at competitive prices and lead times?
Why don’t its competitors do the same?