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Electronics Production | April 03, 2008

Dell to increase on ODM/EMS

Dell announced plans to outsource more work to contract manufacturers to reduce manufacturing costs.
Comments by executives at Dell's analyst meeting showed that the computer company plans to move away from its direct-only sales model.

Reuters reports that Mike Cannon, Dell's president for global operations, wants to have more and deeper partnerships with ODMs and EMS companies where they can satisfy the needs of customers and lower costs.

The company still wants to grow the direct business, says Reuters, but opportunities to grow the channel-based business faster are being pursued, according to Paul Bell, a senior vice president and head of Dell's Americas business. The indirect-sales business accounts for about $10 billion of Dell's roughly $61 billion in annual revenue and he said the proportion should grow.

Mike Cannon, the former chief executive of EMS provider Solectron and disk-drive manufacturer Maxtor, said that the company relied too much on its businesses to design and make computers. He declined to say how much the changes in supply-chain would contribute to the $3 billion savings goal.
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