Dell Revamps Manufacturing on Agile ERP

Dell Revamps Manufacturing on Agile ERP

This manufacturing story was an odd press release. It came about the time of Dell Technologies’ annual user conference Dell Technologies World. But it has no relationship to that event. It deals with implementing Lean with an MES, but doesn’t really mention the supplier who sent the release.

Dell has sold and manufactured based on Configure to Order since its beginnings. But we all know that CTO while holding prices down contains a unique set of challenges. As a part of its high-volume, high- variability, configure-to-order manufacturing model, the company established its eight manufacturing facilities completely differently. Each factory relied on different processes to produce the same products.

By 2010, it was a new world of higher competition and lower prices and this disparity added considerable IT challenges to the business. Each factory, for instance, had a unique IT footprint, with as many as 600 physical servers per facility. And across facilities, operations relied on more than 70 highly customized applications to guide each unit on its path through the factory and out the door to the customer.

Around this time, the global PC market was shifting towards standard product configurations instead of the traditional CTO model. To maintain competitive in a challenging market, Dell needed to transform its manufacturing operations, simplify its infrastructure and re-engineer its manufacturing processes from end to end.

Matt Griffiths, Executive Director of Manufacturing IT for Dell, says, “While the CTO model still worked for our enterprise and large customers, consumers were looking for a simpler product portfolio. We had to ask ourselves how we would react to that shift and drive the efficiencies of a simpler product portfolio into our factories and supply chains, so we could realize the cost savings and benefits of doing that change.”

A New Vision for Manufacturing

The first step in Dell’s business transformation was manufacturing simplification. Dell re-engineered its manufacturing processes based on lean principles, including just-in-time delivery of components from hundreds of suppliers. The new manufacturing model also required Dell to rationalize its technology infrastructure and ultimately rearchitect nearly all systems based on the new, simplified processes.

To support this transformation, Dell implemented Microsoft Dynamics AX. Leadership understood that a Microsoft Dynamics solution would enable them to standardize business processes around industry best practices and a single, global business model. The solution would also enable Dell to maintain maximum flexibility within each facility, allowing the company to respond quickly to changing market conditions. To further ensure flexibility, the company adopted a hub-and-spoke model, setting up each factory as an individual manufacturing business, with financials rolling up to the financial systems in place at Dell’s headquarters.

While flexibility at the plant level was important to Dell, the company opted to use much of the Microsoft Dynamics AX functionality out-of-the-box to allow for a rapid deployment. Griffiths says, “We were able to roll out Microsoft Dynamics AX to seven of our eight facilities over the last three years and we are now completing the final rollout in Poland.”

Griffiths notes that while the initial deployment took six months to complete, subsequent implementations were faster; the following deployment took only four months, and the three most recent deployments were performed simultaneously.

System Overview

Microsoft Dynamics now acts as Dell’s core Manufacturing Execution System (MES), while allowing the company to streamline operations using lean principles and industry best practices.

The MES uses the Lean, Production, Inventory, Quality, and Trade modules built into Microsoft Dynamics to manage more than one million transactions each day and all of Dell’s factory operations.

“We use Microsoft Dynamics end-to-end. It handles everything from raw materials coming in the front door, to kitting and material handling, all the way to our burn process through to shipping out the back door to our customers”, Griffiths says.

Allowing for a seamless connection and alignment with the company’s outsourced manufacturing network, Microsoft Dynamics AX also connects to Dell’s other enterprise applications using open, flexible communication methods.

Results

Implementing Microsoft Dynamics helped Dell dramatically simplify its IT infrastructure and realign its manufacturing processes based on lean principles—all while maintaining the flexibility the company needs to quickly retool its facilities to meet consumer demand for new or different products. With the new MES in place, Dell has realized considerable IT cost savings, while increasing efficiency and boosting agility.

40% Reduction of IT Costs of Goods Sold

Through the implementation of Microsoft Dynamics AX and adoption of lean manufacturing principles, Dell decreased manufacturing IT costs of goods sold by approximately 40%. This savings equates to about $50M, which is an estimated 6-month payback on its Dynamics investment—a timeframe in which the company was also able to fully recover its factory throughout efficiency.

75% Reduction of IT Footprint and Downtime

In conjunction with its Dynamics implementation, Dell retired almost 2,000 physical servers and 75 custom- developed applications for an overall reduction of its IT footprint by about 75%.

At the same time, this highly simplified environment has seen vast improvements in uptime. Griffiths says, “In 2008, we saw downtime of about 2% of man capacity. Now, our most mature factory is at about 0.5% in downtime. That’s a 75% reduction.”

Streamline Manufacturing to Remain Competitive

With an MES in place, Dell was able to standardize its manufacturing processes across its global manufacturing facilities. While enabling the company to implement lean principles, this change has also helped the company to remain a leader of customized products, manufactured just in time.

With all of these processes now happening on a single system, Dell can fulfill customer orders in a much timelier fashion, while maintaining complete visibility and control over its manufacturing operations.

More importantly, this new manufacturing environment has enabled Dell to adapt to a new way of doing business. Griffiths says, “As the manufacturing industry evolved and shifted away from each unit being completely different, we changed our business processes to take advantage of that. Microsoft Dynamics, with its Lean module, was fundamental in helping us to do that.”

Drive Agility

Griffiths goes on to say, “Now as new products or processes are being introduced into our facilities, we only have to develop them once and roll them out across all locations. Before Microsoft Dynamics, we had to literally develop our processes seven different times. Today, our development teams are significantly streamlined. We can reuse our testing across factories, and any defects we find we can fix once and apply across the whole business in one big swoop.”

This story was sent to me by a company called MCA Connect. I was intrigued by the story and wrote with a number of questions to follow up. I have not heard another word. But I like the idea of using software to supplement, not subvert, Lean.

Too Many Decisions

Too Many Decisions

For decades, the most popular magazine in America was devoted to helping people decide what to watch on TV from among three choices (TV Guide).

How do you decide today? There are too many shows, yet not enough quality. And the quality is spread among too many carriers.

I am upset at the sudden large increase from Spectrum for TV service. I’d like to cut the cord. How many subscriptions will I need to replace it? Will the cost of Netflix plus Amazon Prime plus a new Disney streaming channel plus many more in the end cost more than cable?

Seth Godin calls it cognitive overload in this blog post.

Try shopping at the local “super” grocery store. I’d like to buy a box of cereal. Not so simple.

We have the same thing in evaluating manufacturing technology. Even with industry consolidation on the one hand, we’re faced with IT companies coming in with very powerful edge devices and ever new organizations and consortia. Choosing the wrong TV platform is one thing; choosing the wrong process automation partner carries far worse ramifications.

From Seth—

Here’s my list, in order, of what drives behavior in the modern, privileged world:

  • Fear
  • Cognitive load (and the desire for habit and ease)
  • Greed (fueled by fear)
  • Curiosity
  • Generosity/connection

The five are in an eternal dance, with capitalist agents regularly using behavioral economics to push us to trade one for the other. We’re never satisfied, of course, which is why our culture isn’t stable. We regularly build systems to create habits that lower the cognitive load, but then, curiosity amplified by greed and fear kick in and the whole cycle starts again.

That is where practices such as meditation and breathing come to our rescue. We slow down, focus, breathe, meditate. Slow down Seth’s eternal dance until we can handle it.

Playbook from a Trillion Dollar Coach

Playbook from a Trillion Dollar Coach

There is an equally critical factor for success in companies: Teams that act as communities, integrating interests and putting aside differences to be individually and collectively obsessed with what’s good for the company. Research shows that when people feel like they are part of a supportive community at work, they are more engaged with their jobs and more productive.

Thus begins the book that you should read next. Trillion Dollar Coach: The Playbook from Silicon Valley’s Bill Campbell, by Eric Schmidt, Jonathan Rosenberg, and Alan Eagle. (The three authors were senior leaders at Google / Alphabet–and coached by Bill.)

Bill Campbell’s journey took him from head football coach at Columbia University, to the top sales and marketing job at Apple, to CEO of a couple of technology companies (Intuit and GO). Then he became a coach. He coached Steve Jobs at Apple. The three leaders and then many more at Google. And more than 80 other Silicon Valley CEOs and leaders. And his middle school football team that he coached at the same time.

He was most likely the most influential and respected man in Silicon Valley.

And his values and teaching are appropriate to all of us no matter the organization we’re with.

For example, he let everyone know his blocked time for coaching his football team of 13- and 14-year-olds. He wouldn’t answer his phone if you tried calling. One person, though, would ignore the time and call. Bill would pull his phone out of his pocket and look at the caller ID. The kids around him would look, also. They would see the name Steve Jobs, and then see Bill decline the call. They all knew that when Bill was with them, he was with them.

Read this book–and put the principles into practice in your life. You may not be building the next Google. But you can be the determining influence in someone’s life.

Too Many Decisions

Personal Productivity Requires Focus Not Time Management

This excellent essay in The New York Times takes us on a journey of personal productivity. I’m a Getting Things Done guy. Capturing ideas and notes, sorting them, making to do lists. I even have an affiliate link to a GTD app called Nozbe on my site.

In this article, psychologist Adam Grant talks about attention, or lack thereof, as the culprit that steals your time.

And I admit, I fall prey to the seductions of things that steal my attention. You wonder what some word means. By the time you’re through chasing squirrels through Google, you’ve blown an embarrassing amount of time.

You do have to decide what the important thing is to work on. But then you must direct your attention to that problem and focus on the work.

Playbook from a Trillion Dollar Coach

Fill Your Mind Intentionally This Year

You become what you think about. (Ancient Wisdom from many traditions.)

We begin a new year leaving behind a tumultuous one. If you were a news junkie, your mind must be close to mush.

I don’t recommend New Year’s Resolutions or any of a variety of goals.

Better is to review last year and decide what new or replaced habits will make me better as a human and contributor this year.

One I suggest if you have not already done it is to go on “news fasts.” Filter your news sources and pare them back. Check news like you would email–just a very few times a day.

Instead fill your mind with new learning and ancient wisdom. Always be learning. Always aware of opportunities coming toward you. Ready to act when opportune.

This way of life has changed me.

What will I learn this year? How will I contribute this year?

Here’s a wish for a good 2019 for you.

Playbook from a Trillion Dollar Coach

Make Healthy Habits

Go ahead, admit it. You’ve already started your list of New Year’s Resolutions.

You know you will forget them by January 15.

I’m preparing for a jump in attendance in my Yoga class next week.

Of course, by the end of January attendance will be pretty much where it has been.

Resolving that “I will be healthier this year” or “I will weigh a health 1XX pounds” won’t do it.

Deciding on one or two new habits will make the change permanent.

Tomorrow morning I will make a breakfast of oatmeal with fruit. And the next morning. Maybe even laying out the bowl the night before. Do that for 30 days, and you will be moving on your way to a healthier and slimmer you.

Tomorrow morning I will get up and either go to the gym or the park and run/walk for 30 minutes. Do that for 30 days along with one change in eating, and you will have new habits and be on your way to health and fitness.

After a couple of months, you could say, for example, “since I am already at the gym to run or walk daily (maybe skipping weekends or something), I will add using the weight machines to firm up my muscles.”

Apply this to business. We never say, “I resolve to fail.” But perhaps you could change one habit. Maybe in how you compliment people. Maybe, if you are in sales, make it a habit that every day at 9 am I will make 10 sales calls. I don’t schedule meetings, I make calls. I add it to my calendar. Make it a habit.

Habits are a nice way of talking about disciplines. Rather than saying “I will grow spiritually,” say, “tomorrow morning I will get up 15 minutes earlier and read from the Bible (or other spiritual book) followed by meditating on the thought for 5 minutes.” Have a chair with the book on the table beside it. Get up, brew your coffee or tea, and sit down to do your spiritual work. After 30 days you will have a habit that everyone will notice.

Warning: Don’t try too many new habits all at once. You’ll be overwhelmed. One habit change can noticeably change your life.