Case Study - Dell Value Chain

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Question 1
How has Dell used its direct sales and build-to-order model to develop an exceptional supply chain?
The many challenges in order to improve the supply chains usually come with the unidentified. Many companies produce products they think their consumer will want. After that, they ship their products to retail stores. Then, these stores try to sell the products to the customers. Here, the supply chains slows down as they are figuring out what to build next. Then, these companies deal with their suppliers to get the materials for the products. Here, the supply chain slow down more and even slower as they wait for the product to get sold and get paid.
Dell's assembly plant in the US

Dell has used its direct sales and
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Dell can introduce a new product to customers over the internet as soon as the first model is ready. In an industry where products have lifecycles measured in months, Dell enjoys a huge early-to-market advantage.
Dell has compressed its supply chain by directly linking the orders directly to the suppliers. Suppliers can view existing orders so they know if or how many components to produce and ship. This supply chain compression gives Dell a substantial unit cost advantage over someone else. With an inventory turnover rate of about 60 times per year, Dell has minimized the rapid depreciation and inventory write-off costs that typically hurt the PC industry. Also because of its direct sales model, Dell operates on a negative cash conversion cycle. Dell receives its money prior to having to pay its suppliers for the components.
Dell's Logo and Tagline

Dells direct sales model has improved operations because the customer can order exactly what they would like without Dell having to worry about stocking every imaginable product. Dell receives the orders and payment for the item and the customer receives the exact product and accessories they want within day’s delivery right to their house.

What are the main disadvantages of Dell’s direct sales model?
Dell’s direct sales model has many advantages but there are a few disadvantages of the direct sales model.
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