Life as a “Buyer”

1. Life as a “Buyer” 1

2. Outline • life of a buyer • a purchasing manager of Dell • Dell and Michael Dell • sourcing components and finished goods for manufacturing • a purchasing manager of a discount store • sourcing goods to sell • a fashion buyer • sourcing clothes to sell 2

3. Dell and Michael Dell 3

4. Background development of the semi-conductor industry and the computer industry early days 1950’s:mainframe  big, heavy, expensive 60’s to 80’s: minicomputer to suit the demand of a mid-range company gradually outdated by the development of PC (microcomputers) 80’s onwards: microcomputer (PC) 4

5. Background commodizatoin of microprocessors in Early 70’s early 70’s: Intel 8008 8-bit processor (1972); Intel 8080 sold US$360 (1974); Intel 8086 (1978) development of PC needs of small business and home computers 1975: Micro Instrumentation Telemetry Systems MITS Altair 8800 Basic interpreter in Altair (Paul Allen and Bill Gates) 1976: Apple I by Steve Wozniak and Steve Jobs 1977: Apple II by Apple and Commodore PET by Commodore 1977: Spreadsheet VisiCalc and word processor Wordstar 1981: IBM PC, open architecture; MS-DOS by Microsoft, the standard operating sysetm of IBM-compatible PCs 1985: Windows operating system … 5

6. selling through retailer chains traditional make-to-stock mode in multi-echelon supply chains manufacturers forecast demand, e.g., quarterly produce various models in large quantity forecast and production in rolling-horizon fashion … distributor distributor … retailer retailer retailer … retailer customers retailer … retailer Selling Computers in Early 80s manufacturer

7. Selling Computers in Early 80s drawbacks of the traditional selling model intermediary eats up margin does not really understand computers shields customer demands and market information from manufacturers mis-match of demand and needs holding inventory easy obsolete products in a fast evolving market 7

8. Dell Inc. and Michael Dell selling direct without any intermediary 83: assembling computers in his dorm room customized IBM compatible computers marketing practically by word of mouth 84: formed Dell orders through mail, phone, and (later fax) customized IBM compatible PC operations: assembly, software installation, testing, quality control, and repairing revenue US$ 6 million manufacturer 8

9. Dell Inc. 85: launched Dell’s first DC Turbo PC; revenue US$ 40 million 86: fastest 286-based PC 88: went public, though inexperience leading to tight cash flow and unsold inventory 89: too many computer chips, and plan to develop server dropped 90/91: also indirect sales 91: launching first notebook 92: encountering technical difficulty, especially in the notebook market 9

10. Dell Inc. 93 canceling a series notebook development top five computer companies in the world the first quarter loss ever since 94: loss US$ 36 million; Lithium-ion battery notebook 95: rebounded, with profit US$ 149 million 96: Dell.com, selling through web 98: Xiamen, China 99: number 1 in PC (the third in 2012, after HP and Lenovo) 02: other products ….. 10

11. A Purchasing Manager of Dell 11

12. Life of Mr.方國健in Dell(1)0:00; (2) 3:15-6:05; 8:00-8:30; (3) 8:00-09:30 life before Dell early life in Dell one-man band, installing software, handing correspondence, etc. sourcing, quotation, sample mailing, etc. company in progress office rental and personnel recruitment selecting outsourcing partners tour guide in site visits for overseas colleagues 12

13. Life of Mr. 方國健in Dell general work organizer of internal and external social functions screen, maintain, and manage, and develop suppliers partner with suppliers and their quality engineers on product development contract negotiation with suppliers especially on disputes, e.g., Inventec Corporation(英業達)、Compal(仁寶)、Acer Inc. (宏基)、Twinhead International Corp (倫飛 ) on money spent on design, mould, and parts when Dell cancelled orders market analysis and industry analysis on new products, new orders, competitors on problems in markets ensuring operations matching company goals and objectives select regional distribution centers and sourcing regional headquarters 13

14. Qualities of Mr.方國健 … 14

15. A Purchasing Manager for a Discount Store 15

16. Purchasing for a Channel identification of market trend, both short and long term interviewing suppliers to screen and negotiating with suppliers to develop products judge quality, value and market potential of products marketing activities of suppliers match with position of company product assortment types, brands, and prices of products maximization of revenue and profit balance profit and sales quota when necessary consistency with company policy and objective inventory planning 2nd: 00:00:55 to 00:17 16

17. Purchasing for a Channel material to be filled in … 4th: 00:03:43 to 00:07:10 4th: 00:12 to 00:22:27 17

18. A Fashion Buyer 18

19. Life of a Fashion Buyer fast fashion Next plc 19

20. Life of a Fashion Buyer generally responsible for a specific type of customers and of products, though affected by the size of a company small company: more variety, less involvement in design and technical issues large company: more hierarchical, and finer division of products travel to trade shows and to meet suppliers and designers qualities: versatile and flexible, from paperwork to communication, from technical to artistic issues requirements: experience, qualification, enthusiasm, and self-motivation 20

21. Life of a Fashion Buyer relationship with suppliers need good working relationship negotiate prices and delivery dates predict customer response, production cost, profit margin, etc. interactions with merchandiser: more strategic level issues such as assortment and budget of rate, set targets on time, margins, etc., and follow progress design: design ideas, consistency within and across ranges quality control: buyer more on aesthetic issues and QC on technical issues fabric technologist: sourcing the developing fabrics marketing and sales: … 21