Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: rudedog who wrote (145345)	10/20/1999 2:10:00 PM
From: jim kelley	Read Replies (2) \| Respond to of 176387

Dog, There are several problems with ordering large batches of the same components. First, the technology seems to be changing every few months which may render the batch of components useless. Second, forecasting the number of required component sets accurately is extremely difficult. Third, a batch of defective components can wreak havoc with your manufacturing process. I might add that ordering large batches of components does not automatically guarantee the lowest cost. It really depends on how well a company can forecast its needs and negotiate with its suppliers. Build to order is intrinsically a more efficient process and does not require the large inventory writedowns that accompany batch manufacturing. The real trick is to negotiate long term build to order supply contracts with suppliers which can accommodate the rapid changes in the technology. Looks like DELL got burnt this quarter because of the RAMBUS fiasco and the Taiwan earthquake. This memory price problem will affect all of the box makers especially those who were preparing to introduce RAMBUS systems or those sub zero PC producers where the memory cost is a relatively larger portion of the system cost. Fortunately, this is a temporary probrem. It looks like E-machines may catch a bullet. We will know soon how CPQ is faring.