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To understand Dell's situation, you have to go back to the start. After being founded in Michael Dell's dorm room at the University of Texas at Austin in 1984, the company mastered the science of supply-chain efficiency. It was a model that made Dell the top-performing stock in the S&P 500 during the 1990s. Because it curtailed its retail store business early on and sold directly to consumers and businesses, Dell could build computers "just in time," which meant that it didn't have to assemble a machine and then let it sit in a warehouse or a retail location until someone bought it. Instead, it generally put together PCs only after customers had already ordered them. That meant Dell could order certain parts for its computers just days before they were needed—and often not pay for them until after the assembled computers were shipped off to customers

derstand Dell's situation, you have to go back to the start. After being founded in Michael Dell's dorm room at the University of Texas at Austin in 1984, the company mastered the science of supply-chain efficiency. It was a model that made Dell the top-performing stock in the S&P 500 during the 1990s. Because it curtailed its retail store business early on and sold directly to consumers and businesses, Dell could build computers "just in time," which meant that it didn't have to assemble a machine and then let it sit in a warehouse or a retail location until someone bought it. Instead, it generally put together PCs only after customers had already ordered them. That meant Dell could order certain parts for its computers just days before they were needed—and often not pay for them until after the assembled computers were shipped off to customers. But in the past few years, Dell has tried to expand its market by selling in stores. That has forced Dell to deal with several new challenges, among them that big chains such as Best Buy and Wal-Mart stock their shelves with a fixed lineup of PCs rather than customizing machines for each buyer. "We've had to change the entire supply chain to build fixed configurations," the company's chief financial officer, Brian Gladden, recently told Technology Review. And retailers order these machines months in advance, not days or weeks. google_protectAndRun("ads_core.google_render_ad", google_handleError, google_render_ad); As a result, Dell must try to figure out over the summer what to charge for PCs that will actually be made and sold during the holiday season. If the price of a major component such as memory chips jumps between July and December, Dell's profits can get squeezed. That's what happened in 2009. Even a plunge in prices can be damaging, because the company hedges many of its component purchases to lock in prices within a certain range. If prices fall way below the expected level, it has overspent for the parts. E-mail Print Favorite Share 12 Related Articles Bringing Down the High Costs of Business Forecasting Cloud-based services now provide a way for companies to plan ahead without relying on cumbersome spreadsheets. But what's a boon for smaller companies is disrupting the market for higher-end solutions. Dating Sites Try Adaptive Matchmaking New software is inspired by algorithms that target online ads or recommend books and movies. The Brainy Learning Algorithms of Numenta How the inventor of the PalmPilot studied the workings of the human brain to help companies turn a deluge of data into business intelligence. Tags business business impact Dell Predictive Modeling To comment, please sign in or register Username Password Forgot my password Adverti

niversity of Texas at Austin in 1984, the company mastered the science of supply-chain efficiency. It was a model that made Dell the top-performing stock in the S&P 500 during the 1990s. Because it curtailed its retail store business early on and sold directly to consumers and businesses, Dell could build computers "just in time," which meant that it didn't have to assemble a machine and then let it sit in a warehouse or a retail location until someone bought it. Instead, it generally put together PCs only after customers had already ordered them. That meant Dell could order certain parts for its computers just days before they were needed—and often not pay for them until after the assembled computers were shipped off to customers. But in the past few years, Dell has tried to expand its market by selling in stores. That has forced Dell to deal with several new challenges, among them that big chains such as Best Buy and Wal-Mart stock their shelves with a fixed lineup of PCs rather than customizing machines for each buyer. "We've had to change the entire supply chain to build fixed configurations," the company's chief financial officer, Brian Gladden, recently told Technology Review. And retailers order these machines months in advance, not days or weeks. google_protectAndRun("ads_core.google_render_ad", google_handleError, google_render_ad); As a result, Dell must try to figure out over the summer what to charge for PCs that will actually be made and sold during the holiday season. If the price of a major component such as memory chips jumps between July and December, Dell's profits can get squeezed. That's what happened in 2009. Even a plunge in prices can be damaging, because the company hedges many of its component purchases to lock in prices within a certain range. If prices fall way below the expected level, it has overspent for the parts. E-mail Print Favorite Share 12 Related Articles Bringing Down the High Costs of Business Forecasting Cloud-based services now provide a way for companies to plan ahead without relying on cumbersome spreadsheets. But what's a boon for smaller companies is disrupting the market for higher-end solutions. Dating Sites Try Adaptive Matchmaking New software is inspired by algorithms that target online ads or recommend books and movies. The Brainy Learning Algorithms of Numenta How the inventor of the PalmPilot studied the workings of the human brain to help companies turn a deluge of data into business intelligence. Tags business business impact Dell Predictive Modeling To comment, please sign in or register Username Password Forgot my password

One of the top challenges supply chain executives list in any survey is lack of visibility.  Whether it is the status of orders, location of shipments or quantity of inventory, managers struggle to have the latest information about goods in the supply chain.  The lack of visibility contributes to a significant amount of inefficiency and waste.  Assuming the worst, most organizations stock buffer inventories to overcompensate for any potential supply shortages they may be unaware of.  The result is that more inventory than necessary is in the supply chain tying up working capital and inflating corporate balance sheets.

.P. Morgan offers the premier Order-to-Pay service for global commerce that automates purchase order delivery, invoice and payment processing, and discount management. By connecting buyers with their suppliers across a secure settlement network, the service automates transaction processing and optimizes working capital.