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: Ally who wrote (36856)	4/7/1998 12:39:00 PM
From: jbn3	Read Replies (2) \| Respond to of 176387

re your Dell still has to maintain inventory of the components.. mother board, power supply, ram, graphics, etc. wouldn't it? Denise, No, and that is the beauty of it! CPQ is currently experiencing problem with excess inventory (of machines) in the channel. DELL's entire inventory (of components) is what is sitting in the vans parked at the loading docks. DELL has no inventory of finished machines, because they are shipped as soon as the order is filled; in the case of a large order, as soon as a portion of that order is finished. My understanding (someone correct me if I'm wrong) is that the components do not belong to DELL until they arrive at the unloading dock. That is when they enter DELL's inventory and are paid for. Four to eight hours later, when the truck on the other side of the construction bay departs, they leave DELL's inventory, and DELL receives payment. That is why, when a supplier, say INTEL cuts prices on a current chip by $150, changes its pricing DELL can realize the savings or pass them on to the customer within hours or days. That is also the reason that DELL does not face the situation where machines, the component prices of which cost (example) $1000 2 months ago but which could now be built with the same or better components for $700, are sitting on the shelves with a price tag of $900. That's one reason I'm DELLish, 3.

To: Ally who wrote (36856)	4/7/1998 1:43:00 PM
From: Chuzzlewit	Respond to of 176387

Denise, the purpose of JIT manufacturing is to maintain as close to zero inventory as possible. JIT enables a much more financially efficient BTO system, but is not required for a BTO system. The idea behind a JIT system is that inventories are pushed back on the suppliers. Of course Dell must maintain a raw material inventory or else everything comes to a grinding halt in case of a supplier slowdown. The trick is in knowing how low that inventory can go without incurring undue risk of shutting down the line. The genius of Dell is that it has been able to accomplish this while its competitors have not. Gateway is probably the closest, but it too had some inventory problems the past fall. I haven't been following them recently, but I believe that over the next several years Gateway may emerge as Dell's biggest competitor because it doesn't need to completely reinvent its manufacturing and marketing system as do Compaq, HP and IBM. Regards, Paul