World Bank Seminar
FDI and Supply Chain Integration
Kip Thompson, Vice President Dell Inc.
May 9, 2006
Dell Confidential
Dell at a Glance
Worldwide Share of PC Shipments
Net Revenue (in billions)
$49.2
$55.9
18.2%
17.8%
$41.4
16.7%
FY04
FY05
FY06
2003
2004
Global Headcount (in thousands)
Global Square Feet (in millions)
65.2
14.8
11.3
11.7
FY04
FY05
8.6M in the US
Dell Confidential
2005
55.2
46.0
FY04
FY06
1
FY05
FY06
Dell Worldwide
Americas
• Argentina
• Brazil
• Canada
• Chile
• Colombia
• El Salvador
• Mexico
• Panama
• Puerto Rico
• United States
Dell Confidential
•
•
•
•
•
•
•
•
Europe, Middle East and Africa
• Ireland
Austria
• Russia
• Italy
Belgium
• Saudi Arabia
Czech Republic • Luxembourg • Slovakia
• Morocco
Denmark
• South Africa
• Netherlands • Spain
Finland
• Norway
France
• Sweden
• Poland
Germany
• Switzerland
• Portugal
Greece
• United Arab Emirates
• Romania
• United Kingdom
2
Asia Pacific
• Australia
• China
• Hong Kong
• India
• Indonesia
• Japan
• Korea
• Malaysia
• New Zealand
• Philippines
• Singapore
• Taiwan
• Thailand
Dell’s Product Portfolio
Client Portfolio
Precision
Dimension
Latitude
Precision
Enterprise Portfolio
OptiPlex
PowerEdge Servers
PowerVault &
Dell|EMC Storage
Inspiron
PowerConnect Switches
Software &
Peripherals
Displays
Printers
Storage & Networking
Dell Confidential
3
Dell Business Model Drives Priorities
 Direct
 Build-to-Order
 Customer Focused
 Continuous Productivity Improvement
 Low Cost = High Value
Dell Confidential
4
Dell’s Direct Model = Perpetual Success
Pass cost savings
on to customer
Industry's most
efficient
procurement,
manufacturing
and distribution
process
Efficient
Model with Lowest
Cost Structure
Competitive
Pricing
Help
Drive
Supplier
Business
Competitive pricing
ignites demand
Dell Confidential
Drives
Market Share
5
Lower cost drives
increased demand
The Dell Business Model
Dell delivers high-value industry-standard solutions
that help maximize business flexibility and optimize ROI
Customer
Most
Efficient Path
to the Customer
Dell Confidential
Single Point of
Accountability
Industry Standard
Technology
6
Build-to-Order
Low Cost
Leader
Supply Chain Management
Advantaged: Simple, Focused, Efficient
Cycle Time
1 – 7 Days
• 3 days of inventory
• Inventory turns of 122 per year
Customer
Dell Factory
Cycle Time
1-30 Days
HUBs
Cycle Time
6 – 8 Hours
Dell Factory
Cycle Time
6 – 8 Hours
Suppliers
Local
Suppliers
Dell’s supply chain symphony – one of the wonders of the flat world
Dell Delivers Superior Value
The Dell Business Model drives significant benefits for our customers
Outstanding
Supply Chain
Management
+
Focus on
Continuous
Product &
Business Process
Improvement
Access to latest
relevant technologies
Enhanced business &
technology flexibility
Low Prices
Excellent customer
experience
Dell’s Different Approach
Cost of Components
Product is Made after the Sale
Mfr Buys
Components
Mfr Assembles
Product
Distributor Gets
Product from
Cost to
Mfr
Competitors
Mfr Inventory
VAR Gets
Product from
Distributor Customer Places
Order
Dell Procures
Components,
Assembles, &
Ships
Channel
Inventory
Dell Cost
8 Weeks
Ago
6 Weeks
Ago
4 Weeks
Ago
3 Weeks
Ago
Today
Time
Customer
Benefits
Dell Confidential
Consistent
Supply Globally
Immediate Response to
Customer Needs
9
Lowest
Cost Consistently
Single Point of Accountability
Dell’s business model creates streamlined
and fast access to the right resources
Dell Customer Account Team
- Technical Sales Experts
Products
- Desktops
- Storage
- Workstations - Switches
- Software
- Notebooks
- Peripherals
- Servers
- Product Marketing Specialists
- Product Service Specialists
- Program/Project Mgmt Experts
- Services Account Managers
Customer
ACCOUNT
MANAGER
Dell Services
Direct Online Alternatives
Dell Confidential
10
- Support Services
- Professional Services
- Customer Training &
- Certification
- Managed Services
- Financial Services
Site Selection Process
Cost
Site Selection Process Focuses on Best Cost Solutions
Operating Costs
Key Site Selection Criteria
Labor
Dell Confidential
Labor
Flexibility
• Focus on strategically cost advantaged locations
• Evaluate labor quality, scalability and competitive landscape
• Analyze productivity and flexibility
Infrastructure
• Ensure availability, reliability and cost
Location
Attractiveness
• Determine geopolitical risks and stability
11
Growth Areas
Glasgow
Halle
Edmonton
Ottawa
Oklahoma City
West Chester
Winston-Salem
Casablanca
Bratislava
Dalian
Chandigarh
Bangalore
San Salvador
Panama City
Gurgaon
Hyderabad
Manufacturing
Contact Centers
Dell Confidential
12 of 1012
Miyazaki
Xiamen
Pasay
Global Manufacturing Presence
Only Major Computer Company Manufacturing in the US
EMEA
23 % of FY06
Revenues
APJ
12 % of FY06
Revenues
Americas
65% of FY06
Revenues
Americas
 Austin, Texas
 Lebanon, Tennessee
 Winston-Salem, North Carolina
 Alvorado, Brazil
Europe, Middle East
and Africa
 Limerick, Ireland
Asia Pacific - Japan
 Xiamen, China
 Penang, Malaysia
Dell Manufacturing Differentiators
 Global Leader
 Customer Focus – Direct Model
 Cost Leader – Democratization of Technology
 Efficient Distribution – Supply Chain Symphony
 Significant Ripple Effect
 Product Quality Leader
 Competitive
Dell Confidential
14
North Carolina Manufacturing
 Construction began in February 2005
 M&E installed in July and August 2005
 Investment 100M+
Dell Confidential
15
North Carolina Manufacturing
First customer shipment September 19, 2005
Total economic impact over 5 years estimated at $3.5B to $4.0B*
* Prepared for the Greensboro Economic Development Partnership by the Office of Economic Research at
the University of North Carolina at Greensboro
Dell Confidential
16
Business Centers
Slovakia
Morocco
Panama
El Salvador
Philippines
December 2002
July 2003
August 2003
April 2005
February 2006
Languages
German
English
French
English
Spanish
English
English
Headcount
1,300
1,400
1,800
950
550
Sales
Tech Support
Operations
Back Office
Financial Svcs
Sales
Tech Support
Customer Care
Back Office
Financial Svcs
Tech Support
Customer Care
Tech Support
Opened
Functions
Sales
Tech Support
Back Office
Finance COC
Labor Force
2.24M
11.19M
1.39M
2.81M
36.73M
Unemployment
11.4%
10.5%
8.7%
6.5%
12.2%
Dell Confidential
17 of 1017
The RIGHT Location
 Business friendly environment
 Match of people capabilities
 Logistics advantages
 Regulatory efficient movement of product
 Infrastructure
 Speed of execution
 Globally competitive cost structure
 Long term commitment
Dell Confidential
18
Economic Growth Principles
 Invest in People - education and training
 Embrace the concepts of Cost, Efficiency and Productivity
 Advance policies that enable and strengthen supply chains
 Ensure commitment to free and open trade
 Enable open and flexible economy
–
–
Low taxation
Modest regulation
 Continue investment in modern infrastructure
Dell Confidential
19
“The 21st Century Belongs to the Process
Organization Centered on Customers
and…Operates With High Quality, Enormous
Flexibility, Low Cost, and Extraordinary Speed.”
- Dr. Michael Hammer