Jamie Smyth, Technology Reporter, listens to Dell's mantra of always focusing on the bottom line.

The Government could do a lot worse than take a crash course in the art of managing costs from Dell Computer. The world's biggest computer manufacturer prides itself on its ability to review its business constantly to cut out excess flab and boost its profits.

This obsessive mantra to focus on the bottom line has enabled Dell to flourish at a time when many of its main competitors are faltering in the worst slump in the history of the technology industry.

Just last month the Texas-based computer giant recorded its best ever financial quarter, simultaneously regaining the number-one position in the global PC and server industry. It has also set aggressive growth targets to double in size by 2007.

So how can the computer dynamo, which employs 4,500 staff in Dublin and Limerick and whose revenue last year equated to 5.8 per cent of Irish gross domestic product, buck the global trend?

Mr Nicky Hartery, vice-president of services and operations at Dell's European hub in Limerick, ascribes Dell's success to its supply chain management and the velocity with which it is able to process and deliver orders.

"As soon as we receive an order through our systems, we aim to meet it in 24-76 hours depending on what it is," says Mr Hartery, a former executive at the US company Eastman Kodak and a native of Waterford.

"Many other firms take weeks to do this but we measure ourselves in days and hours." This has enabled Dell's Limerick manufacturing facility to maintain its position as the group's most efficient global site, he says.

Walking through the bustling assembly lines at Dell's 320,000 sq ft factory, the sheer speed at which Dell's workforce assembles computers equipment, storage equipment and servers is staggering. During a five-hour trip to the factory, hundreds of customer orders will be fed from Dell's internet site to its manufacturing plant. By the time you leave the site many of these orders will have been transformed into completed computer systems or servers and are ready to be shipped out to customers.

Dell's 1,700 "manufacturing associates" in Limerick, the people who put the computers together, can assemble desktops at a rate of 16-17 per hour. Laptops and servers take a little longer but not much, explains Mr Sean Corkery, Dell's European vice-president of production. The whole production process is controlled by proprietary software that links the firm's sales and production systems to a network of about 25 suppliers who have set up in Limerick to supply Dell with vital components, he says.

To ensure that the production line cannot be held up by a shortage of components, Dell's system automatically contacts a supplier when a certain number of orders are placed. This "just-in-time" manufacturing technique means Dell has no warehouse to store components, removing additional cost from its business.

"This means we have to forecast what demand will be like a few weeks ahead," says Mr Hartery. "We also communicate hourly with our vendors to let them know how demand is."

This is an example of how Dell has introduced lean management techniques such as business process improvement into its operations. The techniques have been developed in universities such as MIT and firms such as General Electric, says Mr Hartery. "We introduced business process improvement in early 2000 and are training staff how to constantly change and improve work practices... It is about reducing low to no-value work in our processes."

These initiatives have produced direct savings worth between €45-€50 million in Limerick alone and about €150 million in Europe. This is the engine which drives lower prices for consumers, says Mr Hartery.

The drive to review work practices constantly at Dell is not just focused on its "manufacturing associates". Every area of the firm, including managers and even the public relations personnel, must evaluate how they do their jobs on a regular basis.

To keep employees focused on business process improvement, Dell has set up a rewards structure based on different coloured belts to motivate employees. These run from a white belt all the way through to a master black belt - the top honour for the firm's employees.

Amercian? Very definitely, but with Dell's Limerick operation claiming that productivity increased 247 per cent in 1997- 2002, Dell's management has no plans to phase it out.

Dell's Limerick plant, which was the firm's first manufacturing site based outside the US, is responsible for a number of innovations that have subsequently been adopted by the worldwide group. One of these is the company's shift from progressive production techniques - essentially assembly line production where workers perform a single task - to a process known as "single person build".

The process, which is adopted for desktops and servers, means a single employee assembles a product from start to finish. Dell's theory is that this makes the assembly process more interesting for staff and creates better quality devices, says Mr Corkery.

This facilitates Dell's policy of customising each computer to the specific requests of customers. The "build-to-order" technique, which is facilitated by Dell's direct internet sales model, requires a high degree of human input in the assembly process.

Each electronic component is bar coded to ensure that the work of every "associate" can be tracked through the assembly process. Faulty components can also be traced through the production process, he says.

The production performance of different manufacturing shifts is marked on a white board in the factory to breed a certain level of competitiveness among staff.

After assembly, the computers are tested for up to two hours to ensure there are no faults. The completed units then move along conveyer belts which run the full length of the factory towards 40 loading bays. The computers, systems and servers are then shipped by lorry to various locations across Europe, the Middle East and Africa, says Mr Corkery.

Dell's distribution network is not exempt from the rigours of business process improvement either. The company's products are distributed all over Europe from Limerick via fleets of trucks that pull up to its plant every few minutes at peak times.

The trucks converge on a network of 8,000 third-party logistics centres to pick up a range of peripherals, such as monitors or printers, that have been requested by customers before being delivered direct to people's doorsteps.

All these steps, from ordering over the internet via Dell's direct sales model to doorstep delivery of a Dell computer, are minutely managed by Dell's own software systems to maximise efficiency.

But even Dell has not been immune to the escalating cost structures in the Republic, says Mr Hartery, who has advised the Government on competitiveness.

"I would not consider Ireland a low-cost destination anymore; rather it is medium or even a high-cost location. Asia is low cost," he says. "Wage rates in China are at a ratio of between one to six or even one to eight of ours. To compete we have to get our orders out to customers at least between seven to nine days. That is a very difficult thing to do in Asia."

The Republic's inflation rate needs to be curtailed, he says, because this is increasing costs for business. The Government should also tackle the cost of big infrastructure projects bybenchmarking them against best practice overseas, says Mr Hartery.

"We [Ireland Inc] are getting there but the cost of getting there and the velocity of getting there is what Government has to improve," he says. For Dell to remain competitive in the Republic, the Government will have to respond to the challenge of a rapidly changing and global world, says Mr Hartery.

• Dell's Irish Scorecard for 2002

  €7.3 billion exports were equivalent to 38.3 per cent of Ireland's total computer and data processing exports in 2002

  Dell paid 125 million to the Exchequer in taxes and PRSI

  Dell revenues equated to 5.8 per cent of GDP during 2002

  During the November-January quarter, Dell's revenues surpassed $2 billion for the first time

  Productivity at Dell's Limerick operation has increased 247 per cent between 1997 and 2002

  Dell employs about 1,300 people in Bray and Cherrywood in IT support and sales functions

  Dell employs a further 3,200 staff at its main European manufacturing site in Limerick Source: Dell Computer