BA628 - OPERATIONS AND SUPPLY CHAIN
TERM PAPER: DELL– SUPPLY CHAIN STUDY
SRUJANA SACHIDANANDA KHOT
Dell is well known for its uniqueness and the innovativeness in its supply chain. They were the pioneers for selling the PC at the cheaper rates. They ranked 2nd in the computer distributors.
The benchmark of their successful company was because of their unique Supply Chain Management which used the ‘Built – to – order’ and ‘Direct Sale Strategies’.
Supply chain management plays a vital role in any organization to increase the customer satisfaction and also to maintain the competitive advantage in the market. In case of the Dell, it uses ‘Dell Direct’ model. In this model there is no …show more content…
Earlier Dell didn’t manufacture any of the parts on its own. It mainly dealt with assembling the right products. It provides IT solutions and services along with the recovery of the asset, financing, infrastructure consulting, support, system integration and training.
Dell is a worldwide company and has about 108,800 employees in over 180 countries. (According to 2013). It provides about 400,000 solutions in the classrooms worldwide. It is also No 1 healthcare IT service provider. It has over 3.5 million connection on the social web communities of the company.
Dell was successful because of the great customer service it offered, it expanded globally. Financially also it gained a lot of growth because of being unique for the work it did. Most of the
things about the needs of the companies for production, demands and forecasting is done with the analysis done by the IT sector. So it plays a vital role today. Dell experienced decline in the sales of their PC market as the demands of the market changed. It derived most of its revenue from the sales of the PC or from the products like monitors, displays, televisions etc. Hence, they were in bad scenario financially. So CEO, Michael Dell decided to go private and take help from the Silver Lake Venture Capitalist. He thought about the long term improvement for the company. Initially they may experience high expenses for operating cost. In long term in will be beneficial and it may provide opportunity for Dell to get
Click here to unlock this and over one million essaysGet Access
Dell. Dell’s products—computers, servers and printers—are commodities. Dell tends not to develop the technologies underlying these products. Instead, it purchases the components from firms that develop the technologies (semiconductors and computer software). Dell’s direct-to-customer marketing strategy is not unique, but the extent to which Dell performs this strategy better than anyone else in the industry gives it a competitive advantage. Its size, purchasing power, quality control, and efficiency permit it to operate as a low-cost provider.
Since the beginning Dell has been selling customized computers. In 1988 Dell became a public company, turning the company more profitable by acquiring new investors. From 1990 to 1993, Dell used to sell computers in retail stores such as Wall Mart, Best Buy, Staples, etc. and because of low profit as results, in 1994, the company refocused its strategy to direct sales, eliminating retailers, wholesalers and consequently acquired satisfied customers by reducing cost and time for them and also the company. In 1997 the company became the low cost leader in pc vendors. During 2002-2007 the company had 7 elements as its strategy: making build-to-order manufacturing progressively more cost-efficient; partnering closely with suppliers to reduce cost of the supply chain; using direct sales techniques to gain customers; expanding into additional products and services and technical support; keeping R&D and engineering activities focused on better meeting the needs of customers, and using standardized technologies in all product offerings. As a conclusion, Dell has been always changing its strategy according to customer needs and in a way to make the company more profitable.
a. Dell computers cover needs pertaining to strategy and deployment, IT and business consulting, managed services and all around expert advice and world-class support. Dell products can be used within organizations to use business processes efficiently, and assist with technology infrastructure and applications services to pinpoint growth opportunities that essentially reduce costs.
Dell is a multi-national information technology corporation which designs, develops, manufactures, markets, sells, and supports a range of computer systems and services that are customized to individual customer requirements. As one of global PC suppliers, Dell set 2 strategic objectives to achieve, to be the No.1 global market share PC supplier, and optimize the balance of liquidity, profitability, and growth with a focus on increasing the mix of their product portfolio to higher margin products and recurring revenue streams. (Dell annual report 2009, pg 4). Dell existed in one of the biggest
Dell is a leading computer technology organization. Dell constantly keeps up with changes in their market to stay competitive. Dell is focusing on cost from issues of storage to transportation of products.
Dell is a computer corporation recognized for manufacturing computer systems through parts assemble. In 1983, Michael Dell saw an opportunity in using IBM compatible computers for a new assembly line that can be sold to local businesses. The idea as explained by Michael Dell, in one of his interview, is that in the early days of computers' manufacturing, companies had to be able to produce every part of the system. As the industry matured, companies started to focus on single parts and to become specialized in creating items that can be assembled with other parts to prepare a computer. As a result, Dell understood that to have a competitive edge in the market, they needed to
When Dell started its campaign to allow customers to configure and customize their computers according to their needs and budget Dell had serious issue regarding Inventory Management. Dell needed and Inventory which comprised of right computer parts at right time and right place. To manage this entire Dell
The direct supply chain model that Dell has been using for many years to sell customized PC’s to customers via the internet has been very successful. Dell designed and structured the supply chain to provide customized computers in a quick manner and with a reasonable price. Customers can visit the Dell website and configure the PC they desired and see the cost options they selected. Once the order was finalized, Dell would then start the building of that customized computer to meet the customer’s selection and ship the finished product directly from the manufacturing
Dell is able to sustain a competitive advantage over competitors in the computer industry because of an extremely efficient supply chain/distribution system and its JIT inventory system. Since inventory and labor are the highest liabilities of a firm and Dell operates with a few days of inventory, they are able to cut costs on warehousing, hiring people to track and maintain inventory, and avoid holding on to obsolete technology.
Dell Computer Corporation was founded in 1984 by Michael Dell. From the early 1990s until the mid-2000s, Dell was ranked as a PC market leader relying on their distinctive marketing pattern “Direct Model” which undertook direct communication with customers and provided customized products. Recently, the PC industry is facing inconceivable worldwide competition, and Dell is gradually losing their competitive advantages by using its direct model in critical business segments. The company is facing shrinkage of growth, increasing competition, declining quality of customer service, and limitation of expansion. These issues have an enormous impact on Dell’s position as a technological giant in the PC industry.
The efficient roll-out of new products may be impacted negatively due to lack of communication between these two key departments. Also suppliers were picked based on cost, and little regard was given to the overall supply chain cost.
MICROSOFT (windows server) 2. INTEL ( cutting-edge technology) 3. SAP ( IT infrastructure) 4. VMWaRE ( virtual infrastructure solutions) 5. ORACLE ( database solutions) 6. BMC (data centre automation.) 7. BROCADE ( networking solutions) Cost structure36 1. Cost of Revenue $48260m 2. Sales & Admin expense $7664m 3. R&D Expense $856m 4. Capital Expenditure $675m 5. Total Acquisition $2562m 6. Total Operating expense $57640m 7. Software&network 33 %&39% increase Revenue streams21 Key resources35 1. Acquisition 2. Brand equity 3. Long ability (as high per company) 4. Intellectual property 5. R&D and revenue stream 6. Human resource 7. Core competence Key activity37 1. Support & deployment Services 2. Cloud & security services 3. Software & peripherals ( Printer, TV, networking, wear less product, anti-virus) 4. Client product (PC, Monitor, note book, work station, tablet, Smart phone) 5. Developing technologies ( in 2011 its open the dell silicon valley research and development centre ) Value proposition 1. Dell customization 2. Direct sell approach 3. Product configuration 4. Pre & post sell customer
In other words, Dell made an effort to understand what customers valued and how to deliver it and then raised the expectation level of the consumers. Dell computers gaine a reputation for being reliable and affordable; buyers were able to go online and customize their PC to their preference (Kelleher, 2013).
We can see that the growth rate of sales was far higher than the growth rate of sales of the industry. This aggressive startgey gave Dell the impetus to capture a huge market share and propel it s growth,