Dell Retail Supply Chain Journey

Karl Martin & Parag Chitalia April 3, 2012 Supply Chain World, Miami, FL

Agenda
De ll Supply Chain Supply Chain transfo rm atio n Se gm e nte d Supply Chain De ll in re tail CPFR initiative s with LFRs De m and se nsing initiative

Dell Global Analytics

Dell Global Analytics

Dell Global Analytics

Responding to changing market conditions

Changing markets
Opportunities in emerging markets BRIC

Response
Pre- set configuration Segmented supply chain Retail, BTS & Direct Global manufacturing footprint Simplified end- user purchase experience

Commoditization

Customer demands multiple channels

Simple purchase experience

Dell Global Analytics

Dell Global Analytics

In the past few years, Dell has made significant transformational progress in the supply chain
End to End Supply Chain Redesign aligned to Customer Needs
I w ant a product, service When can I get it? I buy from Dell My order is in production My order is in transit I got it & use it I get
services

Resulting in Capability Improvements

Segmenting the Supply Chain to align with Customer Channels and preferences Establishing Cost to Choice for production methods Increasing leverage with External Partners Enabling new product and solution categories Supporting Emerging Market leadership

Le ve rage Partne r De sign

De ll De signe d

Glo bal De m and Planning Wo rld Class Purc hasing & Supply Manage m e nt Wo rld c lass partne r re latio nship

Online

Build to Sto c k

Multiple transpo rtatio n m o de s

Se rvic e s

Sale s Age nt

Build to Plan

Partne r ne two rk

Warranty Custo m e r Care Te c hnic al Suppo rt

Standard Co nfiguratio n

Custo m izable Co nfiguratio n

Re tail

Build to Orde r

Custo m izatio n & Pe rso nalizatio n

Custo m e r c o m m itm e nts

Distributo r o r VAR

Co nfigure to Orde r

Supply Chain Se rvic e Optio ns

Cost to Choice Financials Tax/ Regulatory Considerations Data and Tools

Dell Global Analytics

Transformation results
Greater than 99% fewer consumer configurations; 3x improvement in forecast accuracy

Greater then 30% notebook freight cost reduction

Greater than 30% manufacturing cost reduction

* Pe rce nt e ligible
Dell Global Analytics

Dell in Retail
Backup

Dell Global Analytics

Retail Footprint

50,0 0 0 + re tail pre se nc e $6 billio n + re tail sale s re ve nue

(As o f FY20 11)

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Dell Global Analytics

The Dell Journey in Retail

Initiative: To enhance retail channel margins & improve market share
Retail Challenges Opportunity Analysis

Challenges
- Lo w m argin Vs DTC* channe l
- Marke t share o ppo rtunity - Effe ctive channe l m anage m e nt

Product
- O ptim al pro duct m ix - Se aso n transitio n

Promotions
- O ptim al disco unts - Effe ctive pro m o tio ns

Dell- Retail Challenges

Process Strengths
- Supply chain co re co m pe te ncy - Le ade rs in PC busine ss - Establishe d brands - Stro nge r de m and se nsing - Re ple nishm e nt planning - Pro active de cisio n m aking

People
- Inte rnal & e xte rnal alignm e nt - Inve stm e nt in skills & to o ls

*DTC Direct to Customer

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Dell Global Analytics

Collaborative Business Strategy & Process Model

Strategic Foundation
(7) Exception Mgmt. (8) Performance Assessment

Strategic Collaborative Model

Collaborative Operational Matrix

Analysis
(5) Order Generation (6) Order Fulfillment

Execution
(3) Sales Forecasting (4) Order Planning/Forecasting

Demand & Supply Management

(1) Collaboration Arrangement (2) Joint Business Plan

Strategy & Planning

Data synchronization Data registration Common data standards
Benefits

Time degree of trust & complexity

Dell Global Analytics

Dell created a tailored collaborative solution to address challenges and maximize the opportunities
Configured + Innovative + Unique + Best in breed = Dell Collaborative Solution

Com prehensive Analysis

Retail Scorecard

Strategy & Planning

Opportunity
Stro nge r de m and se nsing Pro ac tive de c isio n m aking Optim al pro duc t m ix Optim al disc o unt Effe c tive pro m o tio ns

Initiative
Pre se aso n LCV* planning In se aso n de m and se nsing Re tail pro duc t se gm e ntatio n De m and shaping so lutio n Co llabo rative disc ussio ns Re ple nishm e nt c o m m it analysis SKU sc e nario analysis Re tail sc o re c ard

Dell

Pre Season LCV Planning

SKU Scenario Analysis

Retailer

Retail Product Segm entation

Custom er
Replenishm ent Com m it Analysis In season Dem and Sensing

Inte rnal & exte rnal alignm e nt Re ple nishm e nt planning Se aso n transitio n Inte rnal & exte rnal alignm e nt

Collaborative Alignm ent w ith Retailer

Dem and Shaping Solution

Operational Execution

Dem and / Supply Managem ent

* LCV Life c yc le vo lum e

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Dell Global Analytics

Demand Sensing Initiative

Opportunity Stro nge r de m and se nsing Pro ac tive de c isio n m aking

Initiative Pre se aso n LCV planning In- se aso n de m and se nsing

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Dell Global Analytics

Unique model to sense Dell-LFR SKUs demand.

Collabo ratio n
Likew ise SKU Analysis

Internal alignment (Dell)

Prepare Time Series
Acco unt m anage rs Supply planne r Marke ting Me rchandising Sale s o pe ratio ns Analytics te am

LFR- Dell collaborative discussion

De ll acco unt m anage r LFR acco unt m anage r LFR fo re caste r Analytics te am

Forecast

Track & Improve

Drive s signific ant de c isio ns o n Pe rfo rm anc e analysis SKU planning fo r upc o m ing se aso ns Upside / do wnside o n LCV Se ll thro ugh assistanc e Se rvic e le ve l im pro ve m e nt (MABD/ CA/ DSI*)
Dell Global Analytics

Som e key factors considered in the m odel

Histo ric al Sale s List Pric e Pro m o tio ns Co m pe tito r pro m o tio ns Inve nto ry po sitio n Marke t tre nd

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# LFR Large Fo rm at Re taile r * MABD Must Arrive By Date * CA Custo m e r Availability * DSI Days Sale s o f Inve nto ry

Milestone achievements..
Dell has achieved a preferred technology supplier status with partners due to transformational efforts

Qu an tifie d Be n e fits

Process Benefits

Met ric Se aso n End Inve nto ry re duc tio n De m and se nsing ac c urac y Marke t share Adhe re nc e to CPFR c alls On tim e launc h

Change (FY2010 Vs. FY2011) 52% 39% 2.9% 98 % 27%

St at us

Standardizatio n o f se ll- thro ugh pro c e ss and inc re ase d pre dic tability Be tte r pro duc t transitio ns le ading to o n- tim e pro duc t launc h / c usto m e r de light Enhanc e d inte rnal alignm e nt ac ro ss inte rnal func tio ns o ne vie w o f truth Pro ac tive de c isio n m aking with lim ite d subje c tivity Im pro ve m e nt in o c e an shipm e nt (vs. air shipm e nt) vo lum e e nable d by advanc e d planning

NA

- Growth over last year NA Prior year data not available

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Dell Global Analytics

Q&A
Backup

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Dell Global Analytics