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 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.
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
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
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.
Speaking about the business model of Dell, it has ability to remain on the higher end of the scale for a particular time period. Dell has business model, which primarily focuses on direct selling line of attack. It in a straight line supplies the PCs to the regulars. It does not believe in intermediary, retailers for the business practices. Undeniably, this gives them an edge to serve customer well. Nevertheless, it understood the importance of retailers and start offering products on the premises of retailers, such as Wal-Mart, Sam’s Club and so on. Next, Dell administration is certain of the exclusive business of PCs. As time goes on, however, observing the
The sites give both Dell and its partners a real-time access to order and manufacture systems, so that replenishment can be tied closely to orders.
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.
Dell Inc. has realized that the most efficient path to the customer is through a direct relationship, with no intermediaries to add confusion and cost. With the power of their direct model and their team of talented people, they are able to provide to their customers high-quality, relevant technology, customized systems, superior service and support, and products and services that are easy to buy and use. HISTORICAL REPORT Dell Inc, was founded as “PC’s Limited” in 1984 by Michael Dell, while still a student at the University of Texas at Austin, with just $1000. From Michael Dell's off-campus dorm room at Dobie Center, the startup aims to sell IBM-compatible computers built from stock components. Michael Dell started trading in the belief that by selling personal computer systems directly to customers, PC's Limited could better understand customers' needs and provide the most effective computing solutions to meet those needs.
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.
Dell have used their internal resources and competences as a way of gaining a competitive advantage to great effect over the past few decades. There are three basic resources: tangible assets, intangible assets and organisational capabilities. Dell’s greatest resource in generating a competitive advantage has been their direct model approach to sales. This direct model approach means that customers buy directly from Dell through their website. The advantages this brings are that the customer can customise their product, buying exactly what is right for them. Whereas competitors offer the customer the choice of number of models, Dell allow the customer to choose exactly they want. Dell’s direct model means that Dell does not have to sell via
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 has managed to become remarkably successful in a short span of time by following a direct "business to customer" model. By selling computers directly to customers, they have been able to best understand their needs and provide effective solutions to meet those needs. Dell built PCs to order, so customers received only what they wanted. Dell's just-in-time inventory system allowed them to order only parts that customers demanded, thus keeping the minimal inventories and enjoying the cost-reductions which in turn were passed to customers. Dell's extensive use of e-commerce contributed to further cost minimization, reduced the order and delivery time for customers, and customization. There are three golden rules at Dell: disdain inventory, always listen to the customer, and never sell indirectly.
In manufacturing process there are different steps and jobs needs to be done in specific ways and time such as sourcing the parts we need in the production, make the items, and shipping it for the customers.