Sunday, July 20, 2003
posted by Joel at 8:27 PM
Well, I spent the weekend helping a buddy install some machines into a Dell facility in Round Rock. I have been to Dell facilities before, installing machines, but it never ceases to fascinate me.
I have been to manufacturing/assembly plants in Mexico and they just dont compare. What Dell is, as a company, is beautiful to behold. It is a company that is fanatical about selling, building, and distributing thier product as efficiently as possible, and reaping the rewards that come with doing that. The engineering of thier assembly machinery and processes is only one aspect, they also have excellent management techniques which keep thier employees engaged and as productive as possible.
Now dont mistake this as a love letter about Dell, they are no utopian organization. People who supply Dell are masochists, because Dell will do everything in thier power to get 110% from you for 10% in return. If you can make money supplying Dell, you can make money anywhere, because you Sir, have your shit together.
There are some very key dichotomies to make though. Most companies cite labor costs as thier reason to move operations to Mexico or some other low labor cost (and regulatory cost) environment. Dell doesnt seem to locate it's Assembly Plant locations based on labor costs, but more based on geography and how it relates to the distribution of the product. Granted, they try to maximize thier labor cost savings, by purposely locating plants in right to work non-union controlled labor forces. They do seek low labor costs, but not at the expense of having a central location with which to ship from. i assume this has to do with the costs of shipping thier product...seeing as how most transportation is union.
From the 3 or 4 facilities that I have been in, Dell is married to technology and the production benifits that it can deliver. They will spend 10's of thousands of dollars to save seconds per unit, if the numbers show that they can make thier operation more efficient. Some companies would just hire low wage labor to get the same effect and have a large HR department to deal with the high turnover. Dell is driven to cut thier costs and raise thier production per square foot. Thier focus on raising productivity is utterly amazing, it is ambient in thier plants. They are very reminiscient of a Japanese management style, but without all the class warfare. It is bottom line politics, measured in performance metrics, not pretty rhetoric or seniority.
If you ever have a chance to tour a Dell plant, and have any interest in how capitalism encourages innovation, take the tour.