Multi-scale inventory balancing in an extended global supply chain
Author(s)Reyner, Amy M
Leaders for Manufacturing Program.
Jonathan L.S. Byrnes and Jeremie Gallien.
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Dell is a well-known consumer electronics manufacturer that has experienced astounding rates of revenue growth since its inception in 1984. Regarded as a supply chain innovator, Dell has attained success through industry-revolutionizing ideas such as vendor-managed inventory, pull manufacturing, and direct sales. Today, continuance of revenue growth for Dell requires not only rapid innovation, but also rapid geographic and product expansion. Until a few years ago, Dell only had one facility in the United States. All of Dell's US-based systems and processes were constructed to optimize this single factory. Since 1999, Dell has added a number of new facilities in the US - factories and merge centers - for the sake of proximity to customers as well as additional capacity. Also, Dell recently began practicing more product leveling than in the past, producing multiple types of systems at the same factory. Finally, Dell's US supply base has migrated to Asia, as have those of most in the industry. This confluence of complexities has led to a significant increase in instances of material imbalances, whereby any given part has not been distributed to the various sites in accordance with their proportion of actual demand, often resulting in costly expedites from site to site or delayed shipments to customers.(cont.) Part of the solution to this problem is what Dell has termed "Dynamic Replenishment". As Dell's US supply has shifted from America-based to Asia-based over the past five years, the effective lead time for most ocean-shipped parts has increased from days to several weeks. As a result, the site-level forecast for routing of an ocean shipment is more frequently incorrect by the time it reaches the US, and material imbalances occur. In order to reduce these imbalances, Dynamic Replenishment processes aim to proactively re-route material (if needed, based on campus inventories and forecasts) upon arrival at the US port. This thesis will focus on the tools, information, processes, and organizational roles that are required to ensure proper routing of material at the latest possible juncture in Dell's ocean-network supply chain. Treatment will also be given to the idea that the material balancing problem is one of many that result from Dell's rapid supply chain growth, and some related issues will be examined from this broader perspective. (A note on scope: The content of this thesis is related only to Dell's US-based operations. All history, facts, and comments should be taken in this regard.)
Thesis (M.B.A.)--Massachusetts Institute of Technology, Sloan School of Management; and, (S.M.)--Massachusetts Institute of Technology, Dept. of Mechanical Engineering; in conjunction with the Leaders for Manufacturing Program at MIT, 2006.Includes bibliographical references (p. 68-69).
DepartmentSloan School of Management.; Massachusetts Institute of Technology. Dept. of Mechanical Engineering.; Leaders for Manufacturing Program.
Massachusetts Institute of Technology
Sloan School of Management., Mechanical Engineering., Leaders for Manufacturing Program.