Software launch uses its manufacturing experience
Dell is best known as a computer hardware manufacturer, and it was one of the most copied manufacturers in America in the last decade. Its made-to-order process for building Dell computers has been the model for many manufacturers. Now Dell is releasing a new profit management tool for manufacturers. We talked with Mike Morrison, executive director of manufacturing services, about Dell’s move into the manufacturing supplier space and what it has learned as a manufacturer over the years.
PE: Some people might be surprised that you’ve launched a profit management tool, and launched it in the manufacturing sector. Why shouldn’t people be surprised?
Morrison: A key part of Dell’s strategy is to become an end-to-end solutions provider. One initiative supporting that goal is an increased focus on having solutions that meet the specific needs of different industries. As a manufacturer ourselves, we understand the challenge of producing the right products, at the right time, at the right price. Given today’s global economy and competition, this has become increasingly difficult. Dell believes DPPA provides insight to the profitability of products and customers at a granular level, a level which is essential to manage a profitable business. It also aligns with the Dell quick start data warehouse offering that we have launched.
PE: Dell’s manufacturing strategies have been celebrated over the years for their efficiency and flexibility. What are you still learning about manufacturing?
Morrison: One of the many things Dell has learned is the volatility of the global supply chain. Over the past few years we’ve seen the impact of items such as rapidly changing material costs, natural disasters affecting key components/parts, and costs of transportation on product profitability. DPPA is a tool that gathers real-time data and provides a detailed, granular view of all cost components for a given product or portfolio of products for a given customer. It also provides the ability to simulate changes in the detailed cost structure to understand what the true impact will be on profitability.
Sensitivity analysis around the cost of a raw material or part can provide manufacturers with boundaries of acceptability and an understanding of when they may need to source from different providers. Being able to understand the extent to which a given component is used throughout all products or the portfolio for a customer can help a manufacturer determine alternative plans in case there are parts or raw material shortages. This ability to get detailed, real-time information and then be able to simulate or model alternatives is valuable for a manufacturer.
PE: In talking with your customers about manufacturing, what are their biggest concerns? Conversely, why are they optimistic about manufacturing right now?
Morrison: Our customers’ biggest concerns relate to the hyperlocal marketplace. Competition is everywhere and forces tremendous pressure to produce at the lowest cost, deliver better and better quality, and innovate at a rapid pace. Our customers are cautiously optimistic. They see an increase in demand and therefore the opportunity to grow their business. Yet, the decisions they make to address these opportunities are hypercritical, and the ramifications of a missed opportunity or a poor decision can have an even greater negative impact on the company as compared to just a few years ago.
They are trying to ensure that the business decisions they make are based on factual, relevant, and current data—which products to produce for which markets, what price to charge, what suppliers provide the best, most economical components or raw materials. These are difficult decisions and, with today’s competition, decisions that need to be revisited regularly.