Dell Retools Its Supply Chain for the Cloud

"Industrialization" is becoming a buzzword in the data center industry, as companies like Digital Realty Trust, IBM and HP seek to build data centers faster and cheaper through the use of standardized components and designs and supply chain efficiencies.

One of the most interesting examples of industrialization is occurring at Dell, whose Data Center Solutions (DCS) unit is helping some of the largest players in cloud computing fill their data centers with servers.

DCS is a business unit within Dell that specializes in custom server sales to the 20 largest "scale-out" customers. The DCS team works closely with these customers - including Microsoft - to provide servers and storage optimized for their applications and facilities.

'Four Pillars' for Scale-Out Customers
"For us, it's all about large-scale environments," said Andy Rhodes, Marketing Director for Dell DCS. "Our portfolio was built around the old tenets of enterprise computing. Now we see four pillars: power, efficiency, cost and density are the driving forces. This is the shift in computing over the next 10 years, and we had to get on board."

The move has helped Dell become a major player in equipping the cloud computing sector. Rhodes says that if viewed as a stand-alone company, DCS would be the third-largest vendor of x86 servers.

"A lot of the innovation we bring is in the supply chain," said Rhodes. "We have a saying: 'arrive and live in five'" - meaning that server-filled racks are up and running within five hours of their arrival on site.

"It's all about logistics: just-in-time delivery of vast amount of compute, ready to plug-and-play," said Rhodes. "We have to rebuild our supply-chain to accommodate these customers."

Chris Thompson is the man who makes that happen. As Director of Supplier Quality for DCS, Thompson oversees a supply chain that had to adapt to shipping huge custom orders, and doing it faster than ever. Orders that previously would have required eight or nine weeks are now shipping in two to three weeks.

It's a challenge that aligns with Dell's legacy as a pioneer in online ordering that allowed individuals to customize their PCs and notebooks. Many of the same principles are now applied to pre-loading racks with hundreds and even thousands of custom servers, and sometimes packing them into containers.

"We know how to build and ship with short lead times," said Thompson. "We've been able to go back and work through the engineering team to leverage capabilities within Dell. It's actually taking the knowledge and skills that are Dell's core competency and applying that to this DCS model, which is really a custom configuration for the customer."

Cross-Team, Cross-Function Coordination
For Thompson and his team, the accelerated deliveries require coordination across nearly all aspects of the supply chain. "We have very focused processes," said Thompson. "We use forums to organize and review progress on a cross-team, cross-function level. It helps us get the organization focused on this particular hardware."

The closer relationship with customers has benefits for end-users, but also helps with logistics and pricing.

"Cost management is one of the areas I'm most excited about," said Thompson. " Providing a forecast is the key to managing cost. Some customers will now provide us with 90-day (purchasing) forecasts in exchange for shorter delivery times. Large deals are a great negotiating tool for the partner base. I can come to them and say 'let's go win this.'"

But there are also areas where the DCS paradigm brings new challenges. Chief among them is Dell's growing modular data center business.

New Challenges With Modular Supply Chain
"It's significantly more complex than our regular products," Thompson said of the container/modular product line. "We're building relationships with the supply chain that Dell doesn't ordinarily deal with. We buy 55 million hard drives a year. There's a lot of rabbits I can pull out of a hat with motherboards and memory modules. But it's a totally different mindset than motherboards."

It's been a big job. But Thompson says the challenge is commensurate with the size of the market, as cloud computing drives bulk purchases of sleeker servers.

"From the supply chain logistics standpoint, this shift is exciting stuff," he said. "We're  pushing the envelope on supply chain because we're willing to invest in this place (cloud computing) that seems like an industry transition. It's created a huge opportunity for this company."

In this video, Thompson discusses the DCS supply chain with Dell's Barton George.