Thomas Friedman: Let me tell you a little bit about the computer I am writing this on. It’s a Dell Inspiron 600m notebook, service tag number 9ZRJP41. As part of the research for my book, I visited the management team at Dell, near Austin, Texas. I shared with them the ideas in this book and in return I asked for one favour: I asked them to trace the entire global supply chain that produced my Dell notebook. Here is their report.

My computer was conceived when I phoned Dell’s 800 number on April 2 2004, and was connected to sales representative Mujteba Naqvi. He typed in both the type of notebook I ordered as well as the special features I wanted, along with my personal information, shipping address, billing address and credit card information. My credit card was verified by Dell through its work-flow connection with Visa, and my order was then released to Dell’s production system. Dell has six factories around the world – in Limerick, Ireland; Xiamen, China; Eldorado do Sul, Brazil; Nashville, Tennessee; Austin, Texas; and Penang, Malaysia.



My order went out by email to the Dell notebook factory in Malaysia, where the parts for the computer were immediately ordered from the supplier logistics centres (SLCs) next to the Penang factory. Surrounding every Dell factory in the world are these supplier logistics centres, owned by the different suppliers of Dell parts. These SLCs are like staging areas.



If you are a Dell supplier anywhere in the world, your job is to keep your SLC full of your specific parts so they can constantly be trucked over to the Dell factory for just-in-time manufacturing. “In an average day, we sell 140,000 to 150,000 computers,” explained Dick Hunter, one of Dell’s three global production managers. “The orders come in over www.Dell.com or over the telephone. As soon as these orders come in, our suppliers know about it. They get a signal based on every component in the machine you ordered, so the supplier knows just what he has to deliver. If you are supplying power cords for desktops, you can see minute by minute how many power cords you are going to have to deliver.”



Every two hours, the Dell factory in Penang sends an email to the various SLCs nearby, telling each one what parts and what quantities of those parts it wants delivered within the next 90 minutes – and not one minute later. Within 90 minutes, trucks from the various SLCs around Penang pull up to the Dell manufacturing plant and unload the parts needed for all those notebooks ordered in the last two hours. This goes on all day, every two hours. As soon as those parts arrive at the factory, it takes 30 minutes for Dell employees to unload the parts, register their barcodes, and put them into the bins for assembly. “We know where every part in every SLC is in the Dell system at all times,” said Hunter.



So where did the parts for my notebook come from?



To begin with, he said, the notebook was co-designed in Austin, Texas, and in Taiwan by a team of Dell engineers and a team of Taiwanese notebook designers. It happened that when my notebook order hit the Dell factory in Penang, one part – the wireless card – was not available due to a quality-control issue, so the assembly of the notebook was delayed for a few days.



Then the truck full of good wireless cards arrived. On April 13, at 10.15am, a Dell Malaysia worker pulled the order slip that automatically popped up once all my parts had arrived from the SLCs at the Penang factory. Another Dell Malaysia employee then took out a “traveller” – a special carrying tote designed to hold and protect parts – and started plucking all the parts that went into my notebook.



Where did those parts come from? Dell uses multiple suppliers for most of the 30 key components that go into its notebooks. That way, if one supplier breaks down or cannot meet a surge in demand, Dell is not left in the lurch. So here are the key suppliers for my Inspiron 600m notebook: the Intel microprocessor came from an Intel factory either in the Philippines, Costa Rica, Malaysia or China. The memory came from a Korean-owned factory in Korea (Samsung), a Taiwanese-owned factory in Taiwan (Nanya), a German-owned factory in Germany (Infineon), or a Japanese-owned factory in Japan (Elpida). My graphics card was shipped from either a Taiwanese-owned factory in China (MSI) or a Chinese-run factory in China (Foxconn). The cooling fan came from a Taiwanese-owned factory in Taiwan (CCI or Auras). The motherboard came from either a Korean-owned factory in Shanghai (Samsung), a Taiwanese-owned factory in Shanghai (Quanta), or a Taiwanese-owned factory in Taiwan (Compal or Wistron). The keyboard came from either a Japanese-owned company in Tianjin, China (Alps), a Taiwanese-owned factory in Shenzen, China (Sunrex), or a Taiwanese-owned factory in Suzhou, China (Darfon). The LCD display was made in either South Korea (Samsung or LG Philips LCD), Japan (Toshiba or Sharp), or Taiwan (Chi Mei Optoelectronics, Hannstar Display, or AU Optronics). The wireless card came from either an American-owned factory in China (Agere) or Malaysia (Arrow), or a Taiwanese-owned factory in Taiwan (Askey or Gemtek) or China (USI). The modem was made by either a Taiwanese-owned company in China (Asustek or Liteon) or a Chinese-run company in China (Foxconn). The battery came from an American-owned factory in Malaysia (Motorola), a Japanese-owned factory in Mexico or Malaysia or China (Sanyo), or a South Korean or Taiwanese factory in either of those two countries (SDI or Simplo). The hard-disk drive was made by an American-owned factory in Singapore (Seagate), a Japanese-owned company in Thailand (Hitachi or Fujitsu), or a Japanese-owned factory in the Philippines (Toshiba). The CD/DVD drive came from a South Korean-owned company with factories in Indonesia and the Philippines (Samsung); a Japanese-owned factory in China or Malaysia (NEC); a Japanese-owned factory in Indonesia, China, or Malaysia (Teac); or a Japanese-owned factory in China (Sony).



The notebook carrying bag was made by either an Irish-owned company in China (Tenba) or an American-owned company in China (Targus, Samsonite or Pacific Design). The power adaptor was made by either a Thai-owned factory in Thailand (Delta) or a Taiwanese, Korean or American-owned factory in China (Liteon, Samsung or Mobility). The power cord was made by a British-owned company with factories in China, Malaysia and India (Volex). The removable memory stick was made by either an Israeli-owned company in Israel (M-System) or an American-owned company with a factory in Malaysia (Smart Modular).



This supply chain symphony – from my order over the phone to production to delivery to my house – is one of the wonders of what I have called the flat world.



“We have to do a lot of collaborating,” said Hunter. “Michael [Dell] personally knows the CEOs of these companies, and we are constantly working with them on process improvements and real-time demand/supply balancing.”



Demand shaping goes on constantly, said Hunter. What is “demand shaping”? It works like this: at 10am Austin time, Dell discovers that so many customers have ordered notebooks with 40-gigabyte hard drives since the morning, its supply chain will run short in two hours. That signal is automatically relayed to Dell’s marketing department and to Dell.com and to all the Dell phone operators taking orders.



If you happen to call to place your Dell order at 10.30am, the Dell representative will say to you, “Tom, it’s your lucky day! For the next hour we are offering 60-gigabyte hard drives with the notebook you want – for only $10 more than the 40-gig drive. And if you act now, Dell will throw in a carrying case along with your purchase, because we so value you as a customer.” In an hour or two, using such promotions, Dell can reshape the demand for any part of any notebook or desktop to correspond with the projected supply in its global supply chain.



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