Traditional manufacturing is described just as it is stated, “traditional”. The process starts when a product is to be produced and needs the manufacturing process to create the product for the customer that is, or will, order(ing) the product. Manufacturing processes are the steps through which raw materials are transformed into a final product. The manufacturing process begins with the creation of the materials from which the design is made. These materials are then modified through manufacturing processes to become the required part. Manufacturing processes can include treating (such as heat treating or coating), machining, or reshaping the material. The manufacturing process also includes tests and checks for quality assurance during or after the manufacturing, and planning the production process prior to manufacturing (Chegg, 2013). The inventory of raw materials will need to be kept on hand in order for the product to be assembled when it is needed for inventory refill. The main problem it inherently possesses is that of raw material overstock and that of finished product overstock that needs to be sold. If a product has completed its journey through the raw-to-finished material process and the products sales go down, the product will take up precious space in storage that could be filled up with other newer and/or more popular products that will move more quickly. This is the reason Dell has adapted to include just-in-time manufacturing in its product assembly.
Dell computers had the reputation for being reliable and affordable, depending on the models, but what really set it apart was the just-in-time ordering system Michael Dell built. It steered buyers to an online site that let them customize PC to their preferenc...
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References
Chegg. (2013, March 13). Definition of Manufacturing Processes. Retrieved Janurary 14, 2014, from www.chegg.com: http://www.chegg.com/homework-help/definitions/manufacturing-processes-5
Kelleher, K. (2013, November 14). Dell (Yes, Dell) Is About to Make History . Retrieved Janurary 14, 2014, from business.time.com: http://business.time.com/2013/11/14/dell-yes-dell-is-about-to-make-history/
Ray, S., & Black, T. (2011, March 24). The Downside of Just-in-Time Inventory. Retrieved Janurary 14, 2014, from www.businessweek.com: http://www.businessweek.com/magazine/content/11_14/b4222017701856.htm
Wilson, J. (2013, June 29). Real-Life Examples of Successful JIT Systems. (M. McDonough, Editor) Retrieved Janurary 14, 2014, from www.brighthubpm.com: http://www.brighthubpm.com/methods-strategies/71540-real-life-examples-of-successful-jit-systems/
Kuiper Leda lacks an effective Inventory Management to handle properly the increase in demand of stock and production. An inventory management plan would be capable of forecasting errors in production, client-required service levels, total lead time in manufacturing a unit or batch of the product, and demand priorities. Inventory control is a challenge currently because of the size of Midland Motor's order. In order to meet the demand the company needs to increase the inventory which increases the inventory costs. KL have an opportunity of using the Just - In - Time method of inventory control which eliminates waste by making the resources and labor available only in the time and amount required. It will help increase productivity, product quality and work performance while saving inventory costs for the company. (Curtin, 2008). Kuiper Leda also needs to keep in mind that they will still have to fill orders from other clients that have previously placed orders or even new customers.
Michael Dell founded Dell Computer in 1984 and grew it into one of the largest computer manufacturers in the world. Dell Computer’s success resulted in Michael Dell being the highlighted as “youngest CEO of a Fortune 500 company” (Krames, 2003, p.58). Michael Dell’s guiding principle is to focus on the customer. This principle routinely guided his leadership decisions including computer design and development decisions, the organizational structure of the company and in how Dell Computer used the Internet.
Michael Dell is the founder and CEO of Dell Computers Inc. one of the largest sellers of personal computers in the world. His contribution to the computer industry is the “one-to-one relationship between the company and the customer— there are no intermediaries, no middlemen” (Krames, 2003, p.59). Not only did he relinquish the middleman, he also perfected combination of the bottoms up strategy and the just-in-time (JIT) by waiting till he received orders from the customer to build computers. In doing this, Dell increased its return on investment (ROI) while reducing its inventory overhead cost.
Historically the personal computer (PC) industry has sold its products at reasonably high prices yet garnered only small profit margins. One reason for this is the high competition in the PC industry which led to competitive pricing among producers. Analyzing the competitive environment of the PC industry, it is evident that there is very little barrier to entry in this market. PC's have very low physical uniqueness and are made of standard components that require very little expertise to assemble.
The production process is determined by the way its elements are designed within the organization according to the overall vision of the company. The managerial belt is therefore responsible for designing the processes and the flow of manufacturing of products or services. One way to operate the production is called traditional. It is based on the presumption that the previously met demand on the market will determine the upcoming one. Thus, the operation is planned the way that allows to create enough inventory for being ready to address any customer’s need. It turns out that this inventory, or work-in-process (WIP) accumulates, whilst the empirical evidence shows that in dependence with the
Just in time is a key strategy companies use to increase efficiency and decrease waste by receiving goods only as they are needed in the production process thereby reducing inventory cost. ‘With the JIT manufacturing system, materials are purchased in small quantities delivered frequently just before they are needed for production’. It is a proven system of producing product effiently while keeping cost low and this is seen in two very successful companies such as Dell and Toyota. Toyota follow the ‘Kanban’ system which means they are able to change quickly in relation to demand without
Dell's strengths were oriented around listening to the customers, responding to the customers, and delivering what the customer wanted. The direct relationship was first through telephone calls, then through face-to-face interactions, and now through the internet. It has enabled them to benefit from real-time input from real customers regarding products and future products they would like to see developed. The company also doesn't use reseller or retail channels because every computer is built-to-order, which allows less inventory. The direct model allows them to take the pulse of whatever market and provide the right technology for the right customers.
Dell is one of the renowned companies in the world. If someone is asked to name the companies, which sell computers, he/she will definitely include the name of Dell (Martin 2002). In fact, it is widely accepted brand in the world. However, with the arrival of rival companies, post 2007, for Dell, it was testing to stay alive in the race in the computer industry. Dell in effect is acknowledged by some experts as one of the vulnerable brands. Hence, it would be preemptive for the corporation to continue to exist in the contest, where big companies, such as Apple and Acer have dominated the market by this
The flow of materials from suppliers into Dell starts by the company putting in orders to factories that are based on two categories. These two categories are product type and geography.
In 1986, Dell unveiled the industry's fastest-performing computer, pioneers the industry's first thirty-day money back guarantee, and offers the industry's first onsite service program.
Dell made the bold decision in 1994 to eliminate their products from retail stores and focused on mail order customers. In 1996 Dell began selling through their website as well. By eliminating the retail store presence Dell was able to reduce costs, reduce inventory, and maximize profit. Dell utilized a built to order system that allowed customers to specify exactly what they did and did not want on their Dell computer. Dell's just in time inventory system lowered inventory to 6 days and storage costs were saved.
Historically, personal computer companies produced most of the components for a computer which they assembled into their final products and distributed to resellers. The manufacturing of these components was vertically integrated into the organisation. Dell, as a small start-up, could not build this infrastructure. Instead, they developed a model where they developed relationships with organisations that could provide these components, allowing Dell to focus on selling and delivering computers. By selling directly to customers, initially through mail orders and later by using the internet, Dell avoided reseller mark-up. Dell also enabled customers to order customised computers, which Dell then assembled after receiving the order (Magretta, 1998, p.73-74). “Customers got exactly the computer they wanted and Dell saved money making the computers only when they were ordered” (Hill & Seggewiss, 2008)....
Inventory management is a method through, which a business handles tangible resources and materials to ensure availability of resources for use. It is a collection of interdisciplinary processes including a full circle from the demand forecasting, supply chain management, inventory control and reverse logistics. Inventory management is the optimization of inventories of manufactured goods, work in progress, and raw materials. According to Doucette (2001) inventory management can be challenging at times; however, the need for effective inventory management is largely seeing more as a necessity than a mere trend when customer satisfaction and service have become a prime reason for a business to stand apart from its competition. For example, Wal-Mart’s inventory management is one of the biggest contributors to the success of the company;
Dell’s initial competitive strategy, when it was founded in 1984 by Michael Dell, was to focus mainly on differentiation. Its strategy was to sell customised personal computer systems directly to customers, which was a rapidly emerging market at that time (1). This was done by targeting second-time customers, those that already understand computers and know what they wanted. Meanwhile other companies at the time was selling “’plain brown wrapper’ computers” (2). By offering customisations, Dell gained a better understanding of customers’ needs and wants. This helped the organisation position itself differently against the more popular brands, such as Compaq and IBM.
Dell Inc had very effectively used the direct marketing channel for the sales of computers to the end consumer. When all the other pc makers were selling through retailers and distributors, Dell had started efficient use of the direct channels.