Dell Value Chain

Dell uses a just in time order fulfillment policy and accurate forecasting of sales to minimize inventories. This allowed Dell to hold inventory of finished products far below levels of their competitors (10-20% compared to 50-70% industry level) and furthermore allowed them to quickly implement changes to their product lines as new technologies became available. This quick inventory turnover also allowed Dell to retain more capital. Finally, this policy enabled Dell to respond immediately to technological progress in components and deliver state of the art new finished products (e.g. Pc’s holding the newest Pentium microprocessors) while competitors

Value chain is an important notion that highlights the role of information technology in the operations of a company. “A Value-Chain is the whole series of activities that create and build value at every step. The total value delivered by the company is the sum total of the value built up all throughout the

Removing multiple layers and working closely with customers and suppliers removes the possibility of misinformation, reaction time and ability to not only react, but to make more accurate forecasts. Dell has been able to streamline their customer response times by helping the customer ‘decide’ what they need. They make it easier for the customer to make the decisions and are ultimately preparing for it while the conversation is happening. Dell acts as a consultant and trainer getting direct feedback and key information for planning, research and development. They include key people from a wide range of responsibilities in regular meetings to ensure communication, ideas and overall commitment from the entire supply chain. Virtual integration goes even further to merge the traditional roles and boundaries of the supply chain.

The value chain is a concept developed by recognized Harvard business management expert Michael Porter in his book "Competitive Advantage (1985)." It breaks up the various elements of producing and

A critical aspect of logistic management is managing inventory moving raw materials into the facility and moving finished goods out to customers. Moving finished goods out to customers is known as distribution. Distribution refers to the process through which goods and services go on their way to customers. The faster and more accurate accompany can fill customers order , the lower the cost for the organization the greater the likelihood that the customers will return .Dell uses a direct channel of distribution. Logistics management helps to contain costs as it relates to transportation when it is well coordinated. Example :when a customer orders a pc from Dell using the direct channel of distribution a courier is contracted to deliver the product to the customer in a specified. With logistics management a customer will be able to receive products ordered on

Supply chain management has gradually been accepted by strategy makers in corporations all over the world, who are keep trying to make corporations more competitive through supply chain management. During this process, information system means a lot, which determines whether the supply chain can work well. Success of DELL is mainly determined by the quick response supply chain system, using an efficiency information system. Especially in this informative period, information acquiring ability means everything. Details on DELL supply chain managing through information system are also stated here.

A value chain is a chain of activities that a firm operating in its industry. A value chain has two parts: support activities and primary activities. Support activities are firm infrastructure, human resource management, technology and procurement. Primary activities are inbound logistics, operations, outbound logistics, marketing and sales and service. Not all activities make profit for the firm. But each part of operation is linked. The straights are for the activities which make real profit. Analysing value chain can improve the core competitiveness of company.

Internal collaboration: One of the key aspects in the success of Dell supply chain is ‗internal collaboration‘. Through this, Dell sometimes tries to shift the demand using product promotion on its web portal. The company‘s direct communication system helps its ‗people‘ to communicate within different hierarchical levels. ‗Direct‘ refers not only to communication with its customers, suppliers and vendors but also with its employees and team members.

There are, however, some exceptions. For example, Dell may manipulate the schedule when there is a need to replace defective units or when facing large customers with specific service-level agreements (who have nonstandard quoted manufacturing lead times) for their orders. In most cases, Dell has significantly less time to respond to customers than it takes to transport components from its suppliers to its assembly plants. Many of the suppliers are located in Southeast Asia and their transportation times to Austin range from seven days for air shipments to upwards of 30 days by water and ground. To compensate for long lead times and buffer against demand variability, Dell requires its suppliers to keep inventory on hand in the Austin revolvers (for “revolving” inventory).Revolvers or supplier logistics centers (SLCs) are small warehouses located within a few miles of Dell’s assembly plants. Each of the revolvers is shared by several suppliers who pay rents for using their revolver. Dell does not own the inventory in its revolvers this inventory is owned by suppliers and charged to Dell indirectly through component pricing. The cost of maintaining inventory in the supply chain is, however, eventually included in the final prices of the computers. Therefore, any reduction in inventory benefit Dell’s customers directly by reducing product prices. Low inventories

Dell responded to changes in the market by determining how different segments of customers derive value from its products and services. The company 's analytics showed customer demand had become quite complex. The B2B market demands predictability, speed, customization, services and precision delivery. Consumers want multiple channel options, the ability to personalize for niche products, low-price options and devices that deliver content. This complexity will only increase as content and virtualization begin to drive the market. To address

sold. The customer did not have to come to a store to buy a computer, and Dell was

Bargaining power of buyers: Low switching cost and shortened product life cycles are required for Dell to remain competitive in this industry, customers will be looking a new set of products from manufactures, as the technology changes customers would be ready to buy a product even at a higher price, if it is perceived that the product is better than other products available. Customers value price but will generally be looking at getting a better quality of service from their manufacturers.

     Our recommendations allow Dell to enhance their supply chain management system, increase customer service, gain market share, and increase revenue.

In the fall of 2007, Dell announced partnerships with major computer retailers, including Wall-Mart, Best Buy and Officeworks. These partnership ended Dell’s historical reliance on the direct-to-consumer channel and allowed the company to access the mass merchandise distribution channel, which is an enormous potential business opportunity for the company. Dell continued it’s direct to customer marketing initiatives but also sought to promote its new partnerships in television and print advertising, often in conjunction with its retail partners. In doing so, Dell has begun to complete more heavily on price, as retailers such Wal-Mart are known as low-price shopping destinations for all types of goods. Recently, Dell’s marketing efforts have been less focused on product features and customizability and more focused on low price as the defining feature of Dell consumers.

Price reasonability and the availability of support, after sales services and parts have alleviate Dell's position from others.