Dell aims for seven hour inventory turnaround

Dell will pile the pressure on its direct and indirect rivals next year when it plans to go to war on PC pricing by making huge savings on managing its inventory. Dell will shake-up its direct sales service, including sales through the Internet, in an attempt to increase order speeds and ultimately reduce its inventory turnaround periods from eight days to just seven hours, according to vice-chairman Kevin Rollins. The direct selling giant, which claimed it attracts two million hits a week on its Web site, believes the immediacy of the Internet can help the company cut its inventory time by enabling it to source every component it needs as and when it is required for an order. According to Padraic Allen, Dell's vice-president for manufacturing in Europe, this will enable the company to pass on any cost savings it makes in the form of cutting prices on its machines. "We are building relationships with our suppliers so that we can have quick and easy access to components and parts," he said. "This means when an order comes through, we can source what we need locally and finish orders more quickly. Once finished they can be out the door and on their way to the customer." Allen added that with component prices dropping by an average one per cent a month, Dell will be able to take advantage of current pricing as and when the order is made. This is unlike indirect manufacturers, which tend to have bought large quantities of components at a more expensive price, months earlier. "It's not unusual for the indirect channel to have inventory turnaround periods of between four and six weeks," said Allen. The indirect manufacturers therefore tend to be stuck with older prices in order to achieve good margins. "There is also the problem that stock can get stale very fast," added Allen, "therefore it has to be our goal to get inventory down to within a day." ® Click for more stories