TRANSITION FROM LEVEL 3 TO LEVEL 4: THE BENEFIT CASE

Because there are few true examples of the level 4 extended enterprise, value
data on the benefits achieved are light. However, the results that have been
achieved are significant and point the way for others.
The level 4 value chain is characterized by:
_ The whole chain is agile, lean, and resilient, with quality at the highest
possible level.
_ Key processes flow up and down the chain between the enterprises, so
that
_ The flow of key commodities is coordinated and, for those key commodities,
_ Costs and inventories have been minimized.
_ The value to all participants in the chain is increased and
_ The end customer is experiencing excellent service and satisfaction.
One of the best examples of a level 4 value chain is the one built by Dell.
By implementing supply chain software from i2, Dell can now procure inventory
from suppliers over the Web in real time and pull materials into the
factories every two hours based on customer orders.
To meet the demands of these orders and to build the customized systems
in a timely manner, Dell created efficiencies in its materials management system.
With the implementation of i2�s supply chain tools, Dell has enhanced its
procurement processes so that almost 90% of the company�s purchases from
suppliers are on-line and there are only two hours of inventory on the factory
floor.
A key component of Dell�s supply chain management is having materials
in close proximity to Dell factories; therefore, suppliers are required to have
inventory hubs near the manufacturing plants. A huge benefit of this supply
chain solution is communicating with these hubs in real time to deliver the
required materials needed for every two hours of Dell customer orders.
Dell launched valuechain.dell.com, a secure extranet that acts as a portal for
Dell suppliers to collaborate in managing the supply chain. This site offers
suppliers a customized view of their materials at Dell, including reports on
material quality, performance management scorecards, negotiated and forecasted
cost reports, engineering change orders, supply/demand forecasting tools, and
material demand.