Lean Manufacturing at Dell

 

Dell has also used Just in Time principles to make its manufacturing process a success.  They leverage their suppliers use JIT. Dell is about quickly assembling the part which are sourced from their suppliers and delivering to customers. They force their suppliers to carry inventory and Dell stays lean on inventory. Short lead times are provided to customers and thereby shorter lead times are demanded from their suppliers. Quick assembling and quick shipping is the USP of Dell. They have been able to do successfully implement JIT because of variety of reasons. It has had a Dependable supplier base. They have been able to meet Dell’s demanding lead time requirements. Also it has a seamless system that allows Dell to transport its system requirements. The systems are very efficient as they arrive in time to help Dell fulfill its lead times. Somehow Dell has been able to fore the suppliers to carry inventory and this willingness of suppliers to carry inventory on hand allows Dell to have low costs on inventory.

Because of JIT it has been able to successfully reduce the inventory related costs.  In 1993 it followed a practice of carrying over 10 weeks of inventory. Since 2001 it carries 1 week of inventory. This saves it majority of costs now. Inventory costs are even higher in computer industry as rate of depreciation is very high. By this rate Dell used to lose roughly 10% of the value of inventory per year.  After implementing JIT it loses roughly 1%. By this calculation dell has been able to save 9% costs in inventory management.

References : www.inventorymanagementreview.org/justintime/

The writer of this article, Naman Jain, a PGP student of Indian Institute of Management, Raipur has worked in GE Healthcare Labs. He has done his B.Tech in Computer Science & Engineering from Vellore Institute of Technology, Vellore and can be reached at namanvit @ gmail . com

Improving the quality and efficiency of fast food restaurants

Fast food restaurants are unique operational systems designed to provide customers with efficient and responsive services. Such systems consist of three interdependent subsystems: input, processing and output. The success of the operational system of a fast food restaurant is directly related to the degree of co-operation and co-ordination among these three subsystems. Any attempt to improve the efficiency, quality and responsiveness of the operational system must focus on these subsystems and their interactions.

The fast food service industry is becoming increasingly multifaceted and extremely competitive. In such an environment, restaurant owners and managers are finding themselves hard to face a two faced problem. On one hand, sales are slowing down and operating costs are increasing. On the other hand, customers are becoming more demanding and increasingly selective of the types of services they receive. These two factors combined with others are presenting restaurant managers with a special challenge, how to maintain profitability in a shrinking market while providing the sophisticated customers with high quality and efficient services. In achieving this seemingly impossible objective, fast food restaurants can pursue two strategic avenues. First, they can focus on means to improve operational efficiency of the system. Second, they can take actions to enhance the operational quality of the operational system.

Specific tactics geared to the first strategic option include improving inventory systems to reduce the cost of materials handling and waste, measures to reduce food service costs through better menu management, and ways to increase labor efficiency by cutting labor costs through better scheduling.

The second strategic option that stresses means to enhance the operational quality of the input, processing and output subsystems includes use of quality control measures to monitor the quality of incoming material, work-in-progress and the output. It also underscores the importance of understanding the needs and attitudes of customers and the adoption of technological and marketing innovations to provide customers with high quality services.

These two strategic orientations are not mutually exclusive. However, in the fast food industry there is a misconception that high quality compromises efficiency and that, from a bottom-line point of view, a quality orientation cannot be justified. This misconception can be attributed to a lack of understanding of the interdependency among the three subsystems of the operational system in relation to operational efficiency and quality. This lack of understanding coupled with the myth that quality costs money impede measures to enhance quality and efficiency of the operational systems of fast food restaurants.

Aniket Choudhary is a PGP student of Indian Institute of Management, Raipur. He has done his B.E. in Mechanical Engineering from College of Technology and Engineering, Udaipur. Aniket can be reached at aniketchoudhary87 at gmail . com