Dell's head of manufacturing believes direct approach proved model of success

Since it located in the Republic eight years ago, Dell Computer has become a jewel in the crown of the IDA's inward investment…

Since it located in the Republic eight years ago, Dell Computer has become a jewel in the crown of the IDA's inward investment programme. It has invested £270 million (#342.8 million) here, and with plans to employ around 6,000 people within the next two years, it has become one of the State's biggest employers.

As part of this expansion the development of a £90 million third facility in Limerick will increase Dell's presence there to one mill ion square feet.

So, who does a company of Dell's size and ambition choose to run its Europe, Middle East and Africa (EMEA) manufacturing and development facility?

The answer is Padraic Allen, a soft spoken, unassuming man who, at just 42, cuts an unlikely figure to head an international operation of such logistic complexity. Dell, renowned for its youth culture and spearheaded by a 34-year-old entrepreneur, is a larger-than-life success story. It has achieved average growth in excess of 50 per cent for the last 12 quarters, and is now the world's second-largest personal computer (PC) maker.

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Mr Allen appears surprised - and almost apologetic - that he might be the subject of public interest. Throughout the interview he bears all the hallmarks of a man unused to - and uncomfortable with - talking about himself.

Just a year in his new position, he says one of the most difficult challenges of joining Dell was acquainting himself with the workforce. "There were 2,000 people here when I arrived, and since then we've added another 1,500. So now, not alone do I not know the first 2,000 people, but I don't know the next 1,500 either."

Unlike his boss, Michael Dell, Mr Allen has not experienced the thrill of overnight success. However, they both share the absence of a college degree on their CVs. Mr Allen worked his way up through the ranks of manufacturing line processes over the last 25 years, picking up certificates from the Institute of Industrial Engineering and the American Production Inventory and Control Society along the way.

Starting on the production line at the Leaf chewing gum plant in Kilcock, Co Kildare, in 1974, he left as production manager with responsibility for 15 people in 1978 to take up a similar position at NEC in Ballivor.

It was when he joined the start-up team that launched Apple Computer in Cork in 1980 that Mr Allen had his first taste of co-ordinating the manufacturing activities of a major multinational PC company.

"It was a great industry to be part of then as it was only starting to show its potential. Being involved with a multinational US company was a very exciting prospect. The recent developments there have been unfortunate, but I think Apple is turning around, and if they can consolidate their global operations I think they will grow again."

Working initially in the areas of control and materials management, Mr Allen became managing director of Apple's Irish operations, where he spent 10 years before being approached to join Dell in 1998.

At the time, Dell was planning to build a second facility, then the opportunity arose to buy the old AST plant in Castletroy. Mr Allen says he jumped at the opportunity to join a company with an unrivalled record of growth. "The direct model had the best chances of success in the industry."

The direct model has shaped Dell into a lean, mean, computer manufacturer, reseller and distribution company. By eliminating dealer and reseller costs it has focused on mastering the art of inventory and process optimisation.

At the end of Dell's second quarter last year it had just eight days of inventory, compared with a competitor who had 81 days, plus another 40 days in the dealer channel. This 16-week difference is how Dell manages to get the latest technology to its customers, without incurring the costs associated with interrupting preordained processes and obsolete components. From the time the order is placed to the time of delivery, the process takes approximately six days.

Mr Allen sees his job as ensuring the smooth and optimal operation of the direct process. Dell's suppliers are located close to the facility, and through a completely integrated electronic information system, details of a customer's telephone or online order are automatically conveyed to the relevant supplier.

Trucks then deliver the required components to the door of the Dell facility on an almost hourly basis. The beauty of the arrangement is that Dell does not take ownership of its supplies until the last minute, when that order has been secured.

Mr Allen firmly believes if Dell's competitors could start over again they would also choose the direct model. "By the time they do though, Dell will have moved on again."

Owing to the scale of the operation, Mr Allen is resigned to the fact that it is virtually impossible to be hands on in every area of the business. He describes himself as a good delegator, and goes out of his way to encourage consensus management based on everyone having a full understanding of the business.

He rejects the notion that his position as head of EMEA manufacturing operations is merely one of keyholder, and the real whip cracking emanates from Austin, Texas.

"The Irish management team has by far the biggest say in running the EMEA operations. We make decisions here as a board of directors in the long-term interests of the operation, otherwise Dell would pay the price later," he says. "It depends on the local management team to determine the success or failure of a local operation, and our employees' ability to meet every target and goal set down. This is why Dell is still investing and expanding here."

What about the burden then associated with being responsible for the livelihoods of 3,500 people?

"At times it can be a very scary prospect. But I'm very confident that with the way Dell is positioned it has a very long future here. There are no guarantees in this life of course, but when Michael Dell says the Irish operation is at the heart of the European operation, that is reassuring for people.

"Dell is not just chasing low costs; the flexibility and expertise of the workforce is just as important."

Mr Allen sees good expansionary prospects emerging for Dell's 120-strong product development team which focuses on software localisation for the international marketplace. In particular, he sees opportunities to develop European communications technologies to meet customers' needs.

"I want to grow that area more because the engineers and skills available are second to none, and the cost [of development engineers] here is more attractive than in the US."

Although he harbours fears about changes that may take place in the global computing industry, Mr Allen is adamant that while technologies and products change, the direct business model will stand the test of time. Clearly proud of his role, he believes Dell has played an important part in contributing to the Republic's current economic boom.

"It's a real honour to be part of an industry that has contributed so much to Ireland. We are such a buoyant and successful economy in the world today, and now I can look forward to that for my kids."

Family and work are Mr Allen's two primary drivers, and dividing his time between a home in Cork and an apartment in Limerick leaves little room for much else. He has to think very hard when asked what he might have done if he had not followed this career path. Eventually he suggests he might be running the small grocery shop his parents still operate in Summerhill, Co Meath.