Dell Supply Chain Management Essay

The shortage of chipset is not only due to manufacturer’s capacity constraints; it could be defects from manufacturing. Therefore, Dell wouldn’t want to just rely on supplier but to take control of the internal operational improvement to target cost saving model and maintaining manufacturing flexibility.

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 uses a push-pull strategy. It produces computers by using components after a customer order. Dell’s model is called a Direct model where suppliers deliver to Dell and Dell is directly in relationship with the customer without distributors and/or retailers. The customer is in the beginning (specific order) and at the end of the process. Suppliers are situated very close to the plant which results in a easy coordination. There are few suppliers and it saves money through shipping directly to customers. Next to specific components, Dell also uses some components through all orders. Each order consists of a motherboard for example.

For Dell, they created an extranet for suppliers. Suppliers could see all order information and Dell’s production schedule. They could feed this information into their own production system. And produce the computer for different orders.

Dell argues that the direct model and virtual integration is beneficial to the customer from distribution to

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.

Dell was more capable of maintaining the Direct Model strategy than most, if not all, of its competitors. The resources that supported this advantage were the close relationship Dell had with its suppliers, a solid just-in-time inventory management system, and proximity of warehouses and production facilities to assembly operations. In addition, Dell’s computers developed a reputation of reliability and the company excelled at customer service. While the Direct Model seemed to challenge competitors, many other companies were able to imitate Dell’s reliability and customer service.

The advantages of Dells model are: The internet allows Dell an extensive scope and reach for its products at a relatively low price (Dedrick and Kraemer 2001). Using the internet Dell has been able to automate many of its business functions, such as product configuration, order entry and technical support (Dedrick & Kraemer 2001), therefore the company can achieve higher revenues without customer service costs increasing greatly. Online configuration ensures that the customer gets exactly what they want. Dells build to order strategy means that inventory levels are low, they only hold approximately 4-8 days of stock, therefore inventory costs are low (Breen 2004).

Supply chain management is a practice that involves the planning, supervision, and implementation of strategies and controls to direct the movement of goods and services provided to customers. The intent of this essay is to incorporate a synopsis of existing literature and to provide the reader with a general understanding of how supply chain management correlates with the organizational design and structure of modern firms. The essay comprehensively reviews the components of supply chain management and their integration with functional areas within an organization. The information presented in this essay

Weaknesses of Dell’s BPM sequenced version ............................. 41 Enriched-MIT Process Handbook version of Dell’s BPM ............ 42

Supply Chain Management (SCM) has been defined by Supply Chain Management Institute to be “the management of relationships in the network of organizations, from end customers through original suppliers, using key cross-functional business processes to create value for customers and other stakeholders”(SCM-Institute, 2016).

According to (Lummus & Vokurka, 1999, p. 2) “Supply chain management is an integrating philosophy to manage the total flow of a distribution channel from supplier to ultimate customer”. The theory behind this definition looks at how supply chain management allows companies to focus on there unique skill sets and how understanding supply chain objectives and individual roles, an ability to work together, and a willingness to adapt in order to create and deliver the best products and services possible. Technology and teamwork are a huge part of supply chain management, if organisations have advanced technology and good teamwork efficiency and effective processes will be created which will create more value for the end customer, but if

By grafting its system of custom direct sales onto the Internet infrastructure, Dell has transformed these activities, creating an innovative and efficient procurement, production, and distribution network. The innovative advance made by Dell in deploying Internet communication as the foundation of its production network, is a process innovation. Although to some extent, the Internet has enabled Dell to create a new product -- a PC custom-configured through Internet communication -- it is the process of organizing flows of materials and information within its network, from customer order to procurement, production and delivery, by means of Internet communication, that defines the innovation at the Firm. The case supports this notion by stating “While most other PCs were sold preconfigured and pre-assembled in retail stores, Dell offered superior customer choice in system configuration at a deeply discounted price, due to the cost-savings associated with cutting out the retail middleman. Additionally, an important side-benefit of the Internet-based direct sales model was that it generated a wealth of market data the company used to efficiently forecast demand trends and carry out effective segmentation strategies. This data drove the company’s product development efforts and allowed Dell to profit from information on the value drivers in each of its key customer

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.

Supply Chain Management (SCM) has been defined by Supply Chain Management Institute to be “the management of relationships in the network of organizations, from end customers through original suppliers, using key cross-functional business processes to create value for customers and other stakeholders”(SCM-Institute, 2016).