Dell is proud and protective of the business processes it uses to take advantage of technology
Business technology can help people accomplish amazing things.
But so can a six-pack of Lone Star.
There are so many lessons to learn from a visit to one of Dell's just-in-time factories, and this is one of them. Output at the Morton L. Topfer Manufacturing Center outside Austin, Texas, is more than 2,000 unique, customized Omniplex desktop PCs every two hours. Dell uses a portal to keep suppliers updated on real-time demand, and once parts are ordered, Dell expects suppliers to deliver in 90 minutes, which they do from nearby third-party logistics centers. The factory itself stores only about seven hours worth of inventory.
No one's surprised a company like Dell loves its business technology and leans on it to run an operation like the Topfer Center. The lesson of the six-pack, though, is how Dell is just as proud--and protective--of the business processes it uses to take advantage of technology and how tightly aligned the two are.
Any salesperson who has tried to get a rush order through manufacturing will recognize the opportunity at Topfer Center: With the entire production run planned every two hours, you're never more than a few hours away from being able to get a high-profit (and high-commission) order built. But how do you decide which orders get expedited?
Dell used to do it with beer. OK, beer wasn't the primary currency used to get something built, but the process was heavily influenced in that semiformal fashion where relationships and favors--hey, help me out, I'll buy you a beer sometime--could get an important order moved up.
Today, salespeople have a Web portal to Topfer Center, and real-time data tells them when an order can be built. If they want it moved up, they can assign a priority ranking from one to seven, but they have only a limited number of those rankings. Says Chris Cowger, director of transactional marketing and until recently director of operations at Topfer Center: "We took the beer-buying out of the process."
Dell CIO Mott is leading the company's change effort.
Photo by Matthew Mahon
It's the kind of marriage of process and technology that Dell not only loves, but protects. The company has more than 1,000 patents, and more than 30% of them cover process innovations, not technology. For example, Dell has patented a method (U.S. Patent No. 6,567,714) for manufacturing a computer system with the assistance of a wireless information network. "It's business integrated with IT," says Dell CIO Randy Mott.
Mott, who left Wal-Mart Stores Inc. three years ago to join Dell, is leading a change effort within the company's IT organization, and this vision of an inseparable integration of business and technology is at the core. The goal is to make Dell's IT more efficient, more global, and more closely tuned to business performance. (See story below on Dell IT's global goals.)
Dell's IT philosophy can be seen in the software used to run Topfer Center. It's a mix of off-the-shelf and custom-built programs, all of them closely integrated so that everyone--from plant managers to salespeople--can get the information they need, such as how long it will take to get an order built and shipped.
The factory schedule is run using i2 Technologies Inc.'s Factory Planner software. That tool takes about an hour to calculate a schedule and factors in surplus parts in the factory and parts availability in vendor inventory; it balances that with capacity planning for each unit that a factory worker will build by hand. But this isn't an off-the-shelf operation. Dell staff built the portal application that lets Dell share real-time demand with suppliers and order just-in-time parts. "The customization is around the edge," says Steve Finnerty, the former CIO of Kraft North America who joined Dell this year as VP leading manufacturing-side IT efforts.
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