I’ve been a Dell customer for many, many years. Partly due to their offering the right computer for my needs at the right price… not the most exotic but still with the features I need. And partly due to my respect for what they’ve done with their supply chain. I drive my computers pretty hard, and generally replace them every two years.
Dell isn’t really lean, but they do have a pretty efficient supply chain. Their factories are amazingly efficient as well; now if they’d only leverage that efficiency to see the value in a shorter supply chain. Parts may be cheaper when sourced from southeast Asia, but the supply chain risk is higher… and that’s a real business cost.
That supply chain risk, and the resulting cost, may soon include my business.
It is about time to replace my D620, which only a year or so ago replaced my X1. It hasn’t been two years yet, but some self-induced problems has created the need. As usual I went to the Dell website and checked out some new products that have the power and portability I need such as the D630 and XPS M1330. Then I went to the configurator to build a couple possible machines… and instead of seeing a delivery date a week or so from now, it said the earliest ship date was in late September.
What the…? Dell purposely doesn’t keep much inventory of parts, but their lead times are usually a couple days, not a few weeks. What’s going on? Turns out I’m not the only person that has been surprised by the new lead times. Several blogs and articles are discussing the situation.
Reporters for DigiTimes have broken the story that multiple notebook component suppliers are suffering serious shortages … which means notebook manufacturers like Dell, HP and others will have to suffer through shipping delays. Of course, the bottom line is that customers will have to suffer the most. The parts shortages are coming just in time for "back to school" buyers leaving students without notebooks for class.
The parts of some of the more unique features… white LED backlit LCD’s, slot drives, and the like. I guess several final assemblers, such as Dell, got a little too greedy for the profits those new features would generate and decided not to wait until all the kinks had been worked out by the suppliers. But some mistakenly believe it is related to lean manufacturing.
Some experts are blaming the parts shortages on the unexpected growth of demand for notebook computers around the world. Others are blaming manufacturers such as Dell for keeping only 1-2 weeks of parts inventory on hand … the "lean" manufacturing policies such as only ordering parts as you need them may indeed have contributed to the delays we’re seeing now.
No, I don’t think so. For one thing, Dell keeps even less than 1-2 weeks of inventory on hand. But lean didn’t contribute to this situation. If the demand exists, and the supplier can’t make components consistently, then the ability to maintain additional inventory is meaningless. The supplier is already cranking out as much as possible, and creating that additional inventory wouldn’t be possible. Assuming increasing final product demand, which is happening in the case of the D630 and M1330, an inventory build simply delays the impact of the shortage.
Long supply chains are risky. Dell weathered the Long Beach port strike a few years ago by chartering planes to deliver parts from Asian suppliers. An admirable recovery, but very costly. Now they are are experiencing new delays from factories almost 10,000 miles away, delays a chartered plane can’t solve. How would communication improve if the subs were built next door to Round Rock (or any other Dell facility)? I bet the value, albeit off balance sheet, would offset the higher labor costs, which are already offset by higher shipping costs.
Dell could do a better job at communicating, and they should have waited to sell the new products until their suppliers were confident in their production capacity. The comments on an actual Dell blog give a clear view of the customer service problem that has been created.
I am still wondering how Dell supply chain can promise customers something that it cannot keep. This is pure greed on Dell’s part and this is not the way to run a business. I will sell a product only if I know that I have the product on hand and can satisfy its owner. Is Dell listening?
That was just one I could print without significant editing. I need to make a decision in a couple weeks. Will Dell come back? Or will my long-time business shift to Sony’s Vaio or perhaps even an Apple running Bootcamp?