Cost Program Management

Process

Eleazar Camez / Eric Henneke / Mollie Chang / Rose Broussard/Tammy Russell

02/2005
 Process Objectives

• Establish an Adequate Link Between PCBA Spend Reduction Goal and GCM
Cost Management Activities

• Provide Visibility to Areas of Opportunity at the Platform Component Level to

Meet Cost Reduction Goals

• Provide GCM with Data Set to Manage Cost Directly with Each Cost Category
Owner (Know what to ask)

• Provide Management with an Accurate Snapshot of Supportability for Current

Cost Forecast

• Provide Management visibility on total cost reductions for individual PCBA

programs & by Line of Business

• Establish rules of engagement to report cost reduction by program, LOB and

entire PCBA Organization
 Process Is / Is Not
• Complimentary to • A replacement of
Existing Cost Existing Cost
Management Tools Management Tools
• “Double Click” on Cost (Cost Curve, Merlin
Drivers for each Projection, etc.)
Platform • Decision Making Tool
• Baseline to Help Drive for 2X Source
Focused Cost
Reduction Activities
• Cost Reduction Rollup
 Cost Program Management Process

Spend
Spend Plan of Closure &
Data Savings
Savings Analysis Action Guidance
Collection Goal for the
Goal for the Update
Quarter
Quarter

• Data Collection
– Finance Spend Savings Goal and Unit Volume by Platform
– GCM Landed Cost Reduction Outlook (by category VCA, BB)

• Analysis
– 3 Month Cost Reduction Outlook
– Gap analysis Merlin Cost Loaded vs. Supported by Category

• Plan Of Action
– Steps to Close Gap (with confidence level)
– Report Status

• Closure / Update
– GCM Lead Action Plan / Complete and Final / Revised Guidance
 How the Template Works
• Step A: Data Collection
– Inputs
– Output
– How to Read
– Frequency of Updates
• Step B: Cost Analysis
– Inputs
– Output
– How to Read
– Frequency of Updates
• Step C: Plan of Action / Action Register
– Inputs
– Output
– How to Read
– Frequency of Updates
• Summary / Closure & Guidance Update
– Inputs
– Output
– How to Read
– Frequency of Updates
Step D: Cost Reduction Consolidation
- Platform data consolidation
- Line of Business (LOB) consolidation
-Multi LOB consolidation
-Summary Consolidation Results across all
LOB for PCBA
-Summary Charts:
-Total PCBA Cost Reduction
-Cost Reduction by Director
-Dell Managed Platforms
 Spend Saving Goal Calculation

CPO PCBA Savings Goal for Q1FY05 $20,000,000

PCBA Spend for Q1 FY05 $500,000,000

MDM Spend for Q1 FY05 $19,000,000

MDM Spend as % of PCBA Spend 4%

MDM Savings Goal $19,000,000 * 4% $762,000

MDM Spend is 4% of PCBA Spend

and therefore accountable for 4% of PCBA Cost Saving Goal
 How the Template Works
Supported Cost Details COMMODITY: NBK Graphics
P/N 1: w5322
Category pull down Baseline Mo1 Mo2 Mo3
• Step A: Input Sheet DM-Graphics-ASICS(Gfx) $32.50 $32.10 $31.90 $31.70
– Inputs: Commodity, Part Number or DM-Graphics Memory
EM Managed
$48.00
$3.51
$48.00
$3.44
$48.00
$3.37
$48.00
$3.31
Description, Baseline name, Mo1,Mo2, EM Managed $30.92 $30.55 $30.15 $29.76
& Mo3 name, Category, Baseline Cost Transformation $3.70 $3.70 $3.70 $3.70
Freight/Logistics $0.94 $0.94 $0.94 $0.94
by category, Month 1,2,3 supported
cost reduction forecast by category,
TAM split for mo1,2,3, and Merlin
Load for baseline, mo 1,2,3.
– Output: Baseline, Mo1, Mo2, Mo3,
Loaded vs Supported Summary, Cost
Analysis Summary and Summary
worksheets.
– How to Use: Complete data entry in
yellow colored cells for as many part
numbers as you require, from 1 to as
many as 25. Monthly cost projections
come from forward looking best bom,
VCA input from supplier or any other
data source that enables you to project Total $119.57 $118.73 $118.07 $117.41
cost for this period of time. Some
Volume:
information comes from the Finance P/N 1: w5322
Analyst, however it is the GCM Volume Mo1 Mo2 Mo3
responsibility to insure all data is from MRP 8,988 33,044 41,515
available to populate template. TAM 100% 100% 100%
Loaded Cost:
– Frequency of Updates: By 2nd P/N 1: w5322
Tuesday of every month Baseline Mo1 Mo2 Mo3
119.58 118.70 118.03 117.36

Quarter Goal: 423

 How the Template Works
Baseline Month
• Step B: Baseline Worksheet Category
DM-Graphics-ASICS(Gfx)
DM-Graphics Memory
w5322
32.5
48
w5322
0
0
3
0
0
4
0
0
5
0
0

– Inputs: None required

EM Managed 3.5134131 0 0 0 0
EM Managed 30.92 0 0 0 0
Transformation 3.7 0 0 0 0
Freight/Logistics 0.941 0 0 0 0

– Output: Weighted percentage

0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0

against total volume of all part 0

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

numbers. Supported weighted

0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0

cost by category and overall 0

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

weighted cost by p/n and for all 0

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

p/n’s. Loaded weighted cost by

0 0 0 0 0 0
0 0 0 0 0 0
Total $119.57 $0.00 $0.00 $0.00 $0.00
Total Qtr Volume

p/n and overall weighted cost Qtr Volume

% of ttl volume
83547
50.00%
83547
50.00%
0
0.00%
0
0.00%
0
0.00%
167094
100.00%

for all p/n’s. Weighted cost (VCA cost * % of ttl volume)

Category w5322 w5322 3 4 5 Weighted Cost
DM-Graphics-ASICS(Gfx) 16.25 0.00 0.00 0.00 0.00 $16.25
DM-Graphics Memory 24.00 0.00 0.00 0.00 0.00 $24.00
EM Managed 1.76 0.00 0.00 0.00 0.00 $1.76
EM Managed 15.46 0.00 0.00 0.00 0.00 $15.46

– How to Use: Excel

Transformation 1.85 0.00 0.00 0.00 0.00 $1.85
Freight/Logistics 0.47 0.00 0.00 0.00 0.00 $0.47
0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00

automatically calculates 0
0
0
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
$0.00
$0.00
$0.00

weighted costs. This worksheet 0

0
0
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
$0.00
$0.00
$0.00

helps analyze what p/n’s have 0

0
0
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
$0.00
$0.00
$0.00

the highest vs lowest weighting.

0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00

– Frequency of Updates: By 2nd Total 59.79 0.00 0.00 0.00 0.00 $59.79

Loaded Pricing - Baseline

Tuesday of every month Loaded Pricing - Baseline
w5322
119.58
w5322
0
3
0
4
0
5
0

Baseline Volume from Paul's report 83547 83547 0 0 0 167094

% of ttl volume 50.00% 50.00% 0.00% 0.00% 0.00%

Weighted cost (VCA cost * % of ttl volume)

Total 59.79 0.00 0.00 0.00 0.00 $59.79
 How the Template Works
Month 1
• Step B: Mo1 Worksheet Category
DM-Graphics-ASICS(Gfx)
DM-Graphics Memory
w5322
32.1
48
w5322
0
0
3
0
0
4
0
0
5
0
0
EM Managed 3.4431448 0 0 0 0

– Inputs: None required EM Managed

Transformation
Freight/Logistics
0
30.55
3.7
0.941
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

– Output: Weighted percentage

0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0

against total volume of all part

0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0

numbers. Supported weighted 0

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

cost by category and overall

0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0

weighted cost by p/n and for all

0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
Total $118.73 $0.00 $0.00 $0.00 $0.00

p/n’s. Loaded weighted cost by Volume - Month 1

% of ttl volume
8988
50.00%
8988
50.00%
0
0.00%
0
0.00%
0
0.00%
Total Month 1 Volume
17976
100.00%

p/n and overall weighted cost Weighted cost (VCA cost * % of ttl volume)

for all p/n’s.

Category w5322 w5322 3 4 5 Weighted Cost
DM-Graphics-ASICS(Gfx) 16.05 0.00 0.00 0.00 0.00 $16.05
DM-Graphics Memory 24.00 0.00 0.00 0.00 0.00 $24.00
EM Managed 1.72 0.00 0.00 0.00 0.00 $1.72
EM Managed 15.28 0.00 0.00 0.00 0.00 $15.28
Transformation 1.85 0.00 0.00 0.00 0.00 $1.85
Freight/Logistics 0.47 0.00 0.00 0.00 0.00 $0.47
0 0.00 0.00 0.00 0.00 0.00 $0.00

– How to Use: Excel 0

0
0
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
$0.00
$0.00
$0.00

automatically calculates 0
0
0
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
$0.00
$0.00
$0.00

weighted costs. This worksheet

0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00

helps analyze what p/n’s have

0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00

the highest vs lowest weighting.

0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00
Total 59.37 0.00 0.00 0.00 0.00 $59.37

– Frequency of Updates: By 2nd Loaded Pricing - Month 1

w5322 w5322 3 4 5

Tuesday of every month

Loaded Pricing - Month 1 118.7 0 0 0 0

Month 1 Volume 8988 8988 0 0 0 17976

% of ttl volume 50.00% 50.00% 0.00% 0.00% 0.00% 100.00%

Weighted cost (VCA cost * % of ttl volume)

Total 59.35 0.00 0.00 0.00 0.00 $59.35
 How the Template Works
Month 2
• Step B: Mo2 Worksheet Category
DM-Graphics-ASICS(Gfx)
DM-Graphics Memory
w5322
31.9
48
w5322
0
0
3
0
0
4
0
0
5
0
0
EM Managed 3.3742819 0 0 0 0

– Inputs: None required EM Managed

Transformation
Freight/Logistics
0
30.15
3.7
0.941
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

– Output: Weighted percentage

0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0

against total volume of all part

0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0

numbers. Supported weighted

0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0

cost by category and overall 0

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

weighted cost by p/n and for all Total

0
0
$118.07
0
0
0
0
$0.00
0
0
$0.00
0
0
$0.00
0
0
$0.00

p/n’s. Loaded weighted cost by

Total Month 2 Volume
Volume - Month 2 33044 33044 0 0 0 66088
% of ttl volume 50.00% 50.00% 0.00% 0.00% 0.00% 100.00%

p/n and overall weighted cost Weighted cost (VCA cost * % of ttl volume)
Category w5322 w5322 3 4 5 Weighted Cost

for all p/n’s.

DM-Graphics-ASICS(Gfx) 15.95 0.00 0.00 0.00 0.00 $15.95
DM-Graphics Memory 24.00 0.00 0.00 0.00 0.00 $24.00
EM Managed 1.69 0.00 0.00 0.00 0.00 $1.69
EM Managed 15.08 0.00 0.00 0.00 0.00 $15.08
Transformation 1.85 0.00 0.00 0.00 0.00 $1.85
Freight/Logistics 0.47 0.00 0.00 0.00 0.00 $0.47
0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00

– How to Use: Excel 0

0
0
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
$0.00
$0.00
$0.00

automatically calculates 0
0
0
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
$0.00
$0.00
$0.00

weighted costs. This worksheet 0

0
0
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
$0.00
$0.00
$0.00

helps analyze what p/n’s have

0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00

the highest vs lowest weighting.

0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00
Total 59.03 0.00 0.00 0.00 0.00 $59.03

Loaded Pricing - Month 2

– Frequency of Updates: By 2nd Loaded Pricing - Month 2
w5322
118.03
w5322
0
3
0
4
0
5
0

Tuesday of every month Month 2 Volume

% of ttl volume
33044
50.00%
33044
50.00%
0
0.00%
0
0.00%
0
0.00%
66088
100.00%

Weighted cost (VCA cost * % of ttl volume)

Total 59.02 0.00 0.00 0.00 0.00 $59.02
 How the Template Works
Month 3
Category w5322 w5322 3 4 5

• Step B: Mo3 Worksheet

DM-Graphics-ASICS(Gfx) 31.7 0 0 0 0
DM-Graphics Memory 48 0 0 0 0
EM Managed 3.3067963 0 0 0 0
EM Managed 29.76 0 0 0 0

– Inputs: None required

Transformation 3.7 0 0 0 0
Freight/Logistics 0.941 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0

– Output: Weighted percentage 0

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

against total volume of all part

0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0

numbers. Supported weighted 0

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

cost by category and overall

0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0

weighted cost by p/n and for all Total

0
0
$117.41
0
0
0
0
$0.00
0
0
$0.00
0
0
$0.00
0
0
$0.00

p/n’s. Loaded weighted cost by

Total Month 3 Volume
Volume - Month 3 41515 41515 0 0 0 83030
% of ttl volume 50.00% 50.00% 0.00% 0.00% 0.00% 100.00%

p/n and overall weighted cost Weighted cost (VCA cost * % of ttl volume)
for all p/n’s. Categoty
DM-Graphics-ASICS(Gfx)
DM-Graphics Memory
w5322
15.85
24.00
w5322
0.00
0.00
3
0.00
0.00
4
0.00
0.00
5 Weighted Cost
0.00
0.00
$15.85
$24.00
EM Managed 1.65 0.00 0.00 0.00 0.00 $1.65
EM Managed 14.88 0.00 0.00 0.00 0.00 $14.88
Transformation 1.85 0.00 0.00 0.00 0.00 $1.85
Freight/Logistics 0.47 0.00 0.00 0.00 0.00 $0.47

– How to Use: Excel

0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00

automatically calculates 0
0
0
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
$0.00
$0.00
$0.00

weighted costs. This worksheet

0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00

helps analyze what p/n’s have

0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00

the highest vs lowest weighting. 0

0
0
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
$0.00
$0.00
$0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00
0 0.00 0.00 0.00 0.00 0.00 $0.00
Total 58.70 0.00 0.00 0.00 0.00 $58.70

– Frequency of Updates: By 2nd Loaded Pricing - Month 3

w5322 w5322 3 4 5

Tuesday of every month

Loaded Pricing - Month 3 117.36 0 0 0 0

Month 3 Volume 41515 41515 0 0 0 83030

% of ttl volume 50.00% 50.00% 0.00% 0.00% 0.00%

Weighted cost (VCA cost * % of ttl volume)

Total 58.68 0.00 0.00 0.00 0.00 $58.68
 How the Template Works

• Step B: Loaded vs
Supported Summary Platform
GOAL DATA PROVIDED BY FPA

Base Line
Cost
PCBA Goal for the
Quarter Volume 1 Volume 2 Volume 3
Loaded cost
Month1
Loaded cost
Month2
Loaded cost
Month3
CURRENT DATA PROVIDED BY GCM

Loaded Quarterly
Reduction
Supported
Month1
Supported
Month2
Supported
Month3
Supported
Quarterly
Reduction

– Inputs: None required

NBK Graphics $59.79 423 17,976 66,088 83,030 $ 59.35 $ 59.02 $ 58.68 $150,824 $59.37 $59.03 $58.70 $147,367

– Output: Loaded quarterly

reduction and supported
quarterly reduction.
– How to Use: Excel
automatically calculates
loaded and supported
quarterly reduction.
– Frequency of Updates: By
2nd Tuesday of every
month
 How the Template Works
• Step B: Cost Analysis Summary Platform: NBK Graphics

(Baseline Cost) Category

DM-Graphics-ASICS(Gfx)
DM-Graphics Memory
Base Line Cost
$16.25
$24.00
27%
40%
$
$
For What If Analysis Only
16.25
24.00
27%
40%
– Inputs: None required EM Managed
EM Managed
$1.76
$15.46
3%
26%
$
$
1.76
15.46
3%
26%

– Output: Detailed baseline cost

Transformation $1.85 3% $ 1.85 3%
Freight/Logistics $0.47 1% $ 0.47 1%
0 $0.00 0% $ - 0%
breakdown with cost weighted 0
0
$0.00
$0.00
0%
0%
$
$
-
-
0%
0%

percentage for each category 0

0
$0.00
$0.00
0%
0%
$
$
-
-
0%
0%
0 $0.00 0% $ - 0%
0 $0.00 0% $ - 0%
0 $0.00 0% $ - 0%

– How to Use: This defines the 0

0
$0.00
$0.00
0%
0%
$
$
-
-
0%
0%

baseline cost and weighted

0 $0.00 0% $ - 0%
0 $0.00 0% $ - 0%
0 $0.00 0% $ - 0%
percentage each category represents 0
0
$0.00
$0.00
0%
0%
$
$
-
-
0%
0%
from total landed cost. 0
0
$0.00
$0.00
0%
0%
$
$
-
-
0%
0%

• What if Analysis: (need to 0

0
$0.00
$0.00
0%
0%
$
$
-
-
0%
0%

unprotect sheet) this section allows total $59.79 100% $ 59.79

you to “zero out” categories which Platform: NBK Graphics

won’t have any reduction during Category

DM-Graphics-ASICS(Gfx)
Base Line Cost
$16.25 27% $
For What If Analysis Only
16.25 45%
the quarter and increase the DM-Graphics Memory
EM Managed
$24.00
$1.76
40%
3%
$
$
-
1.76
0%
5%
weighted percentage for the EM Managed
Transformation
$15.46
$1.85
26%
3%
$
$
15.46
1.85
43%
5%
categories that are left. Example: Freight/Logistics $0.47 1% $ 0.47 1%

No Transformation reduction is
0 $0.00 0% $ - 0%
0 $0.00 0% $ - 0%

anticipated, put zero for this 0

0
$0.00
$0.00
0%
0%
$
$
-
-
0%
0%

category and the percentage for all 0

0
$0.00
$0.00
0%
0%
$
$
-
-
0%
0%

other categories will increase to 0

0
$0.00
$0.00
0%
0%
$
$
-
-
0%
0%

accommodate the weight of the 0

0
$0.00
$0.00
0%
0%
$
$
-
-
0%
0%

eliminated category 0
0
$0.00
$0.00
0%
0%
$
$
-
-
0%
0%

– Frequency of Updates: By 2nd 0

0
0
$0.00
$0.00
$0.00
0%
0%
0%
$
$
$
-
-
-
0%
0%
0%
Tuesday of every month 0
0
$0.00
$0.00
0%
0%
$
$
-
-
0%
0%
0 $0.00 0% $ - 0%
0 $0.00 0% $ - 0%
total $59.79 100% $ 35.79
 How the Template Works
• Step B: Cost Analysis Summary
Mo1 Mo2 Mo3 Q Reduction
(Month 1,2,3 projection) DM-Graphics-ASICS(Gfx)
DM-Graphics Memory
$16.05
$24.00
$15.95
$24.00
$15.85
$24.00
2%
0%

– Inputs: None required EM Managed

EM Managed
$1.72
$15.28
$1.69
$15.08
$1.65
$14.88
6%
4%
Transformation $1.85 $1.85 $1.85 0%
– Output: Comparison of supported Freight/Logistics
0
$0.47
$0.00
$0.47
$0.00
$0.47
$0.00
0%
0%
vs. loaded monthly cost forecast, 0
0
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
0%
0%
and monthly savings 0
0
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
0%
0%
0 $0.00 $0.00 $0.00 0%
0 $0.00 $0.00 $0.00 0%
0 $0.00 $0.00 $0.00 0%
– How to Use: 0
0
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
0%
0%
• Monthly cost projections are 0
0
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
0%
0%
utilized to determine spend savings 0
0
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
0%
0%
for the quarter as shown on 0
0
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
0%
0%
“savings” row 0 $0.00 $0.00 $0.00 0%
0 $0.00 $0.00 $0.00 0%
• Monthly cost projections need to tie 0 $0.00 $0.00 $0.00 0%
$59.37 $59.03 $58.70 totals
to data on TAB Input Sheet: Data Units 17,976 66,088 83,030 167,094

entry section Supported Cost

figures. A reconciliation row (blue
cells) should always be zero Savings
Supported from Step A
$7,552
$59.37
$49,868
$59.03
$89,947
$58.70
$147,367

indicating both data sets are equal Difference $0.00 $0.00 $0.00

– Frequency of Updates: By 2nd

Tuesday of every month
 How the Template Works
• Step B: Cost Analysis Summary (Goal vs.
Supported)
– Inputs: None required
– Output: Required quarterly cost reduction
by category and by platform. Comparison Required Supported Delta: Required
Reduction for Q by Reduction for Q to Supported by
Required: Q/Q Supported: Q/Q Delta: Unit Required
Unit Reduction Unit Reduction by to Supported by

of required vs. supported quarterly cost by Category

$
Category
423
by Category Category by Category Category Category

category DM-Graphics-ASICS(Gfx) $192 $56,634 ($56,441) $0.00 $0.34 ($0.34)

DM-Graphics Memory $0 $0 $0 $0.00 $0.00 $0.00
EM Managed $21 $13,807 ($13,786) $0.00 $0.08 ($0.08)

– How to Use: Excel automatically calculates EM Managed

Transformation
$183
$22
$76,927
$0
($76,744)
$22
$0.00
$0.00
$0.46
$0.00
($0.46)
$0.00

cost reduction goal for each category and

Freight/Logistics $6 $0 $6 $0.00 $0.00 $0.00
0 $0 $0 $0 $0.00 $0.00 $0.00

compares to cost reductions entered by 0

0
$0
$0
$0
$0
$0
$0
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00

GCM (required vs. supported). The table 0

0
$0
$0
$0
$0
$0
$0
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00

helps identify which category (ies) is/are 0

0
$0
$0
$0
$0
$0
$0
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00

short (red) or in excess of goal reduction 0

0
$0
$0
$0
$0
$0
$0
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00

and to allow program managing of each 0

0
$0
$0
$0
$0
$0
$0
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00

category 0
0
$0
$0
$0
$0
$0
$0
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00

• Required Q/Q reduction by category, this 0

0
$0
$0
$0
$0
$0
$0
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00

total is the total amount this platform needs 0

0
$0
$0
$0
$0
$0
$0
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
to decline starting on the first day of the 0
0
$0
$0
$0
$0
$0
$0
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
quarter to meet savings goal. If weighted $423 $147,367 ($146,944) $0.00 $0.88 ($0.88)

cost percentages are changed (what if) the

amount of reduction for each category
changes accordingly

– Frequency of Updates: By 2nd Tuesday of

every month
 How the Template Works
• Step B: Cost Analysis Summary (Goal vs.
Supported Chart)
– Inputs: None required Platform Quarterly Cost Reductions by Category

– Output: Bar representation of required $90

$80
vs. supported cost reductions for each
$70
category of this platform $60

– How to Use: Visual representation of $50

Thousands
cost reductions by category $40

– Frequency of Updates: Automatically $30

changes when source data is modified $20

(cost projection or volumes) $10

$0

0
EM Managed

EM Managed

Transformation

Freight/Logistics
DM-Graphics Memory
DM-Graphics-ASICS(Gfx)

Required Reduction for Q by Category Supported Reduction for Q by Category

 How the Template Works
• Step C: Action Register
Action Register for NBK Graphics
– Inputs: GCM lead initiatives to eliminate
gap between loaded and supported cost
Confidenc
e Level
C=

reduction outlook.
CLOSED
H = High
(90%)
M = Med

– Output: Total cost reduction impact of all Category Sub-category Description

Closure Deadline to
Impact Quarter Cut-in
Potential Impact
Per Board Potential Impact to Quarter
(50%)
L = Low
(0%) Status Confidence Weighted Impact

identified initiatives for this platform BOM

BOM
Other

Comp PASSIVE
best bom for riptide & whatever
ASIC (COMS) IN for whatever
$
$
$
-
-
-
L # OPEN $
CCLOSED-Move
L
#
#
to Supported
$
$
-
-
-

– How to Use: Enter each action by selecting Other Other C #

#
#
$
$
$
-
-
-

category and subcategory from drop down #

#
#
$
$
$
-
-
-

menus. Then enter dates for completion and #

#
#
$
$
$
-
-
-

unit impact. The tool will calculate #

#
$
$
-
-

aggregate impact for this action. Finally

# $ -
# $ -
# $ -

select the confidence level for this action to #

#
#
$
$
$
-
-
-

close on time. High, Medium or Low, the #

#
#
$
$
$
-
-
-

aggregate impact is adjusted based on this Total

Confidenc
e

confidence level, the higher the better. Total Potential

Impact $ -
Weighted
Impact: $ -

• Note when these actions are completed they

do not increase cost reduction guidance but
rather allow to close gap between already
required and supported guidance

– Frequency of Updates: By 2nd Tuesday of

every month
 How the Template Works
• Summary NBK Graphics Action Register Summary
Closure Confidence

– Inputs: None required $200,000

Category Description Deadline Potential Impact
best bom for riptide & whatever
1/0/00 $ - L
Confidence Weighted Impact
$ -
BOM IN for whatever 1/0/00 $ - C $ -

– Output: One page snapshot of all key $150,000 $- $3,457

BOM
Other
1/0/00 $
1/0/00 $
- L
- C
$
$
-
-

variables for managing program cost $100,000

1/0/00 $
1/0/00 $
-
-
0% $
0% $
-
-
1/0/00 $ - 0% $ -

– How to Use: Bar chart, green column $50,000

$147,367 $150,824 1/0/00 $
1/0/00 $
-
-
0% $
0% $
-
-

indicates supported cost reductions for the $- $423

1/0/00 $
1/0/00 $
-
-
0% $
0% $
-
-

quarter; yellow column represents actions

1/0/00 $ - 0% $ -
Supported Actions Gap vs. Load Loaded Gap vs. Goal Goal 1/0/00 $ - 0% $ -
$(50,000) 1/0/00 $ - 0% $ -

to implement to close gap between loaded $(100,000)

$(150,401) 1/0/00 $
1/0/00 $
-
-
0% $
0% $
-
-

and supported goal. Light blue bar is the $(150,000)

1/0/00 $
1/0/00 $
-
-
0% $
0% $
-
-

current load or projected cost reductions for $(200,000)

1/0/00 $
1/0/00 $
-
-
0% $
0% $
-
-

the quarter in Merlin. Dark blue column

1/0/00 $ - 0% $ -
1/0/00 $ - 0% $ -
1/0/00 $ - 0% $ -

represents reduction goal for the quarter Platform Supported Actions Gap vs. Load Loaded
Additional Gap
vs. Goal Goal 1/0/00 $ - 0% $ -

(e.g Step A Goal) ideally the 2 blue and NBK Graphics $ 147,367 $ - $ 3,457 $ 150,824 $ (150,401) $ 423 1/0/00 $
1/0/00 $
-
-
0% $
0% $
-
-

green bars should have the same height. Total Current

Gap to Goal
Any red bars indicate negative gaps. $ (146,944)
1/0/00 $

1/0/00 $
-

-
0% $

0% $
-

• The right side of summary page is a copy

1/0/00 $ - 0% $ -
1/0/00 $ - 0% $ -
1/0/00 $ - 0% $ -
of action plan defined in step C with Total

corresponding status / total dollar impact Total

Potential
Impact
$ - Confidence $
Weighted
Impact:
-

vs. spend reduction goal

– Frequency of Updates: By 2nd Tuesday of

every month
 SAMPLE TEMPLATE
Link: Esg2$ on audsrr506 -> Cost Reduction -> Cost Reduction Process
& Blank Template -> Cost Reduction Blank Templates

Microsoft Excel
Worksheet
Steps For Creating PCBA Cost Reduction
Rollup From Individual Program Files
 Rules of Engagement
(GCM Requirements to Enable Cost Outlook Consolidation for PCBA Group)

GCM shall adhere to the following rules when setting up individual Platform/program files:

1) All Individual Program Cost files shall have the following naming convention:
• Commodity_Platform.xls E.g DT_Carlin.xls. SVR/GFX/WIRED/WLESS
2) File names cannot be changed, as this will prevent accurate data consolidation.
3) All files shall reside on the ‘E’ pubshare in the corresponding folders:
/Cost Reduction Folder
/GCM Cost Reduction Folder
/Q2FY05 Folder Folder
/Respective LOB Cost Reduction Folder (example: CPG Cost Reduction Templates)
/Individual Platform Cost File (example: DT_Carlin.xls)

4) The revised Q3 template (Cost Reduction Template rev 05) resides in each Line Of Business folder for use for
FY05 rollup.
5) New (Q3 template) includes the revised list of Category names (18) to use. GCMs shall not add/delete
category names.
6) Process and template will continue to be revised for improvements. Any changes/suggestions shall be
communicated to Sr. Project Analyst for review/implementation.
7) All GCM Platform files shall be updated, where necessary, as a result of the weekly Cost Alerts.
• Step D: Platform Data Consolidation
– Inputs: Selected data by platform
– Output: Platform Data Consolidation
– How to Use: Select and highlight the cell
range of data to be consolidated.
• Category, Required, Supported &
Delta columns
– Type ‘con’ in the Text Reference
Reference box. This names the data for
consolidation
– Save and close the file
• Step D: Line of Business (LOB)
Consolidation
– Inputs: Platform Data Consolidation
– Output: CPG Workbook (LOB
consolidation)
– How to consolidate: From a new Excel
worksheet, go to Data/Consolidate pull-
down
– Browse to find the Platform to
consolidate, click once on the platform
file name and click OK
– Highlight the entire filename and type
‘con’ in the Consolidate window
– Click Add from the Consolidate
window. Follow these steps to add all
platform file names for consolidation
– Check boxes Top row, Left column and
Create links to source data
– When finished adding files, click OK
• Step D: Multi Line of Business
Consolidation
– Inputs: CPG/ESG/GFX/COMMS
Workbooks
– Output: All Line of Business Rollup
– How to Use: In each Line of Business
file, select the cell ranges of data to be
consolidated.
– In the Text Reference Box type ‘con’
Save file & close
– From a new Excel worksheet, go to
Data/Consolidate pull-down.
– Browse to find the Line of Business files
to consolidate, click once on the
platform file name and click OK.
– Highlight the entire filename and type
‘con’ at the end of the filename from the
Consolidate window
– Click Add from the Consolidate
window. Follow these steps to add all
LOB file names for consolidation
– Check boxes Top row, Left column and
Create links to source data
– When finished adding files, click OK
Summary Consolidation Results for All
Line of Business
• When the data is consolidated, the
spreadsheet is derived showing the selected
categories that were consolidated by the
platform/program files. The data also reflects
the cost aggregate reduction for required,
supported and delta required.

• Chart for each Line of Business CPG

Millions 4

(1)
DM-Chipset

DM-Comp PCB

DM-Comms-

Freight/Logistic

Transformation

DM-Audio

DM-Mech

DM-Comms-

EM Managed

DM-Comp Conn

DM-Comp

DM-Comp IC's

DM-Memory
PASSIVE
Codec

Analog
LOM

GOAL SUPPORTED
PCBA Summary Cost Analysis
• This report and chart shows the total
aggregate cost reduction outlook across
all PCBA platforms
• Baseline report & charts shall be
published the first week of each quarter.
Monthly report and chart will be
maintained & published

5
Millions

0
DM-Chipset

DM-Comp PCB

DM-Comms-LOM

Freight/Logistics

Transformation

DM-Audio

DM-Mech

DM-Comms-

EM Managed

DM-Comp Conn

DM-Comp

DM-Comp IC's

DM-Graphics-

DM-SDRAM

DM-Controller

DM-Comms-

DM-VRM

DM-Memory
PASSIVE
Codec

Wireless
Analog

(1) ASICS

(2)

(3)

GOAL SUPPORTED
PCBA Summary Cost Reduction by Director
This report and chart shows total cost
reduction outlook for by Director

15

Millions
10
5
0

Schweppe

D. Allen

S. Anne

K. Brown

D. Boliek

Masselink
(5)

R.
G.
GOAL SUPPORTED
 Cost Reduction Process Definitions
• PCBA Preliminary Goals – Unofficial quarterly goals
• Quarterlock Goals – Official goals (obtained after Quartelock)
• PCBA Cost Reduction Template – template depicting goal vs supported cost
savings by platform across PCBA LOB

• Monthly Cost Review File – monthly update of goals vs. actual savings(Merlin)
• GPA – tool used to communicate monthly purchase order pricing to suppliers
• Merlin – tool used to forecast monthly part cost internally (net rebate)
• BomCat – database used communicate monthly component pricing (pre-rebate)
• Internet Negotiations – negotiation process to achieve cost savings at the
component or finished part level
 Who/What/When
• FPA sends preliminary goals 4th week in the 1st month of the quarter
– GCM load cost reduction template on Tuesday 2nd week of month
– Component GCM complete bomcat pricing by TBD
• Cost Initiatives
• FPA receives Quarter-lock goals 4th week in the 2nd month of the quarterGCM
revise cost reduction template (where necessary)
– Component GCM validate pricing discrepancies as required (Trigger: EMs inability to
get supplier pricing)
• Action Register, Analysis
• Monthly Status sent from FPA to GCM
– GCM revise cost reduction template on Tuesday 2nd week of month
• Action Register, Analysis
• GCM send FPA list of new part numbers when applicable
• GCM Update Merlin & GPA last week of the month
• Platform GCM updates PCBA Guidance to Mechanical Team last week of the month
 TIMELINE CRITERIA
•Platform GCM update cost •Platform GCM update cost •Platform GCM update cost
reduction template by 2nd reduction templat by 2nd reduction template by 2nd
Tuesday each month Tuesday each month Tuesday each month
•Update Merlin & GPA last •Update Merlin & GPA last week •Update Merlin & GPA last
week of the month of the month week of the month
•Send Mechanical GCM L5 •Send Mechanical GCM L5 •Send Mechanical GCm L5
pricing pricing pricing

•Component GCM finalizes •Component GCM begins

Internet Negotiation pricing Internet Negotiation pricing
effective next quarter out effective next quarter out-
being revised
•GCM loads 4% cost reduction goals by •Goals are locked for the
2nd Tuesday of the month next quarter in week 3. •GCM updates next quarter goals
•FPA receives next quarter by 2nd Tuesday of each month (if
goal updates to GCM by the necessary)
COST: 4th week of the month.
4% spend reduction

VOLUME:
MPP DT/WS/Servers
MRP from ESC COMMS/GFX/WLESS

Month 1 Month 2 Month 3

Current Quarter Next Quarter

 QUARTERLY COST REDUCTION TASKS
Task/When Month 1 Month 2 Month 3

Comp IN
Component (month 3 of
Finalize IN &
GCM previous qtr)
load Bomcat

Send PCBA Send PCBA

FPA Preliminary Monthly Cost
Qtr Lock Goals
Goals to GCM Review File
to GCM

Revise Cost
Load Cost Revise Cost
Platform GCM Template where
Reduction Template where
necessary
Template necessary

Update
Supply Update
Cost Cost
Project Cost
Reduction Reduction
Analyst Reduction
Rollup Rollup
Rollup
 MONTHLY COST REDUCTION TASKS
Task/When Week 1 Week 2 Week 3 Week 4

Cost Review
FPA File sent
to GCM

Update Cost Load Merlin,

Platform Template Update GPA,
GCM where necessary Send Mech.
Guidance

Supply
Project Rollup PCBA
Analyst Cost Savings
 DELL FISCAL CALENDAR FY06
D e ll I n c .
F is c a l Y e a r 2 0 0 6
(J a n 2 9 , 2 0 0 5 - F e b 3 , 2 0 0 6 )

Q 1 Q 2 Q 3 Q 4
W K # F eb r u a r y W K # M ay W K # A u g u st # W K # N o vem b er
S S M T W T F S S M T W T F S S M T W T F S S M T W T F

1 29 30 31 1 2 3 4 14 30 1 2 3 4 5 6 27 30 31 1 2 3 4 5 1 40 29 30 31 1 2 3 4
2 5 6 7 8 9 10 11 15 7 8 9 10 11 12 13 28 6 7 8 9 10 11 12 2 41 5 6 7 8 9 10 11
3 12 13 14 15 16 17 18 16 14 15 16 17 18 19 20 29 13 14 15 16 17 18 19 3 42 12 13 14 15 16 17 18
4 19 20 21 22 23 24 25 17 21 22 23 24 25 26 27 30 20 21 22 23 24 25 26 4 43 19 20 21 22 23 24 25

M arch J une S ep tem b er D ec em b er

S S M T W T F S S M T W T F S S M T W T F S S M T W T F

5 26 27 28 1 2 3 4 18 28 29 30 31 1 2 3 31 27 28 29 30 31 1 2 5 44 26 27 28 29 30 1 2
6 5 6 7 8 9 10 11 19 4 5 6 7 8 9 10 32 3 4 5 6 7 8 9 6 45 3 4 5 6 7 8 9
7 12 13 14 15 16 17 18 20 11 12 13 14 15 16 17 33 10 11 12 13 14 15 16 7 46 10 11 12 13 14 15 16
8 19 20 21 22 23 24 25 21 18 19 20 21 22 23 24 34 17 18 19 20 21 22 23 8 47 17 18 19 20 21 22 23
9 48 24 25 26 27 28 29 30
A pr il J u ly O c to b er J an u ary
S S M T W T F S S M T W T F S S M T W T F S S M T W T F

9 26 27 28 29 30 31 1 22 25 26 27 28 29 30 1 35 24 25 26 27 28 29 30 # 49 31 1 2 3 4 5 6
10 2 3 4 5 6 7 8 23 2 3 4 5 6 7 8 36 1 2 3 4 5 6 7 # 50 7 8 9 10 11 12 13
11 9 10 11 12 13 14 15 24 9 10 11 12 13 14 15 37 8 9 10 11 12 13 14 # 51 14 15 16 17 18 19 20
12 16 17 18 19 20 21 22 25 16 17 18 19 20 21 22 38 15 16 17 18 19 20 21 # 52 21 22 23 24 25 26 27
13 23 24 25 26 27 28 29 26 23 24 25 26 27 28 29 39 22 23 24 25 26 27 28 # 53 28 29 30 31 1 2 3

(X X )= > A M F P r o d u c ti o n D a y s i n p e r i o d . = > P a y D a te .
S C O = > S h i p p i n g C u t- O ff (L a s t F r i d a y o f F i s c a l M o n th ) = > C o r p o r a te H o l i d a y
W W => W o rk w e e k

K e y to M o n th l y D e l i v e r a b l e s (D e a d l i n e s )
=> S u p p l ie r s s u b m it P r e l i m in a r y V C A to D e l l C M . O n c e a p p r o v e d , s u p p l i e r s c a n th e n u p d a te G P A ?
= > F IN A L D e a d l i n e f o r D e l l C M to a p p r o v e F I N A L 4 - m o n th r o l l i n g p r i c i n g i n G P A ?

C u r r e n t Q u a r te r S ta tu s
N e x t Q u a r te r P r e lim in a r y
G o a ls
N e x t Q u a r te r Q L O C K

N e x t Q u a rte r S ta tu s

S ta r t C o m p o n e n t In te r n e t
N e g o tia tio n s -T B D

F in a liz e C o m p o n e n t In te r n e t
N e g o tia tio n s - T B D

P C B A G u id a n c e to M e c h a n ic a l T e a m
 Upcoming Changes

• New Process to Manage Cost Alerts

• How to get ORCA finance data to
validate Cost Savings
• How to Account for Pre RTS Cost
Savings
Q&A