Building Building the ERP Business Casethe ERP Business Case

Building Building the ERP Business Casethe ERP Business Case

2005. 6. 82005. 6. 82005. 6. 82005. 6. 8Taeseong JeonTaeseong JeonYonwook RaYonwook RaYoungGoog KimYoungGoog Kim

Taeseong JeonTaeseong JeonYonwook RaYonwook RaYoungGoog KimYoungGoog Kim

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INDEXINDEX

Dell? (Background)

Market share and revenue

SWOT analysis

GAP analysis

The results of ERP Implementation

Conclusion

11

22

33

55

66

44

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1. 1. Dell?Dell?

DELL Computer Inc (found in 1984)DELL Computer Inc (found in 1984)

By Michael Dell with $1000 asset. Produced the customized computer to meet customer's need

s based on his own experience.

StrategyStrategy

Cyber management "Build-to-order" Customized PC that are ordered by individuals each time.

• Exceptional customer service • 24/7 Toll free technical support• Sending out repair person next day after the customer's request.

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1. 1. Dell?Dell?

Result of strategy Result of strategy

Increased net profit of 168 million dollars per a year Number 1 computer retailer in the world past 4 years Internet ordering makes more profit than phone

ordering• Daily profit of around 4-6 million dollars• Expecting 120 million dollars next year

SupportSupport

Let individual customers choose and educate themselves about the products

More than 30000 downloads per a day from Dell's website

15 million dollars savings in customer service budget.

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2. 2. Market share and RevenueMarket share and Revenue

Market Share in PC marketMarket Share in PC market

Market Share

16%

6%4%4%

52%

18% Dell

HP

IBM

Fusitsu

Acer

Etc

[Source: IDC, 2005]

DellDell HPHP IBMIBM FusitsuFusitsu AcerAcer Etc.Etc.

QtyQty 31,770,100

28,063,000

10,492,000

7,182,000 6,451,000 -

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2. 2. Market share and RevenueMarket share and Revenue

Dell’s net revenueDell’s net revenue

0

5,000

10,000

15,000

20,000

25,000

30,000

January 1, 2003 January 1, 2004 January 1, 2005

(year)

($: m

ilion)

BusinessU.S. ConsumerEurope Asia Pacific- J apan

[Source: IDC, 2005]

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3. SWOT Analysis3. SWOT Analysis

Dell’s SWOTDell’s SWOT

SWOTSWOT

StrengthsStrengths WeaknessWeakness

OpportunityOpportunity ThreatsThreats

Keeping Cost down

A build-to-order manufacturing

Just-In-time inventories

Direct sales to customer

Pioneering use Internet

No chance for the buyer to take a look at the actual products before purchase

Short product life due to the low quality parts

Dell ranked number 1 computer retailer in the USA

IDC forecasts 8.7% of growth in PC market, 2005

New HP & IBM are right behind for competition

Longer delivery period (3X slower than HP)

HP’s partnership with Intel is expected to place HP on the cutting edge PC

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4. 4. GapGap Analysis Analysis

Dell’s As-Is & To-BeDell’s As-Is & To-Be

Forecasted growth in PC

market

Need improvement in relationship with partners

Competitors selected alliance strategy (HP+Int

el)

Longer delivery time compared to other competitors

ERP Implementation

VisionVision

• Customer satisfaction guarantee• Efficient management in supply chain• Keeping leader position in PC market• Accomplishment in technical advantage between partners

• Customer satisfaction guarantee• Efficient management in supply chain• Keeping leader position in PC market• Accomplishment in technical advantage between partners

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5. The results of 5. The results of ERP ImplementationERP Implementation

Real Case – BPIC Real Case – BPIC

[Source: BPIC.co.uk, 2005]

Inventory Reduction

On time delivery or stock availability

Manufacturing cost due to both more efficient use of people and equipment as well as productivity

Stock record accuracy

Bill of material accuracy

30%

To 95%

Down 10%

Up to 95%

Up to 98%

75%

To 99%

Down 50%

Up to 99%

Up to 100%

TypicalTypical Better Better companiescompanies

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6. Conclusion6. Conclusion Dell has potential growthDell has potential growth

Last year, PC market increased by 14.7% IDC forecasts the growth of PC market will be 8.7%

Dell can accomplish the vision by ERP implementationDell can accomplish the vision by ERP implementation Inventory system will be improved Delivery time will be fast up to 99% Dell’s data loss will be decreased Dell can have sufficient information efficiently

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Thank youThank you