Dell's Supply Chain Management

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Direct Sales and Build-to-Order Model: Dell’s computers, workstations, and servers are built-to-order and none are produced for inventory purposes which clearly cuts Dell’s cost on inventory. Dell customers could order through their website or even via phone, custom-made servers and workstations based on the needs of their applications. For desktop and laptop, customers are able to order whatever configuration of microprocessor speed, random access memory (RAM), hard-disk capacity, CD-ROM drive, fax/modem, monitor size, speakers, and other accessories they favored. The orders will then be directed to the nearest factory. Dell has proven to be successful in minimizing inventory and bringing new products in the market quickly enabling them…show more content…
In Dell’s website, there is also an interface called the ‘premier page’ for corporate customers to facilitate B2B or Business to Business sales and to separate them from the personal use customers. The interface is designed for purchasing manager or whoever is in charge to log on and place an order. This interface is also customized according to the company’s needs. The bullwhip effect is also being reduced as a result of Dell’s direct sales model. Dell contracts special web pages for suppliers, allowing them to view orders for components they produce when a customer orders them through Dell’s website. This will give suppliers the advantage and the possibility to plan based on customers demand. This also allows Dell to achieve substantial unit cost advantage. Dell is able to minimize rapid depreciation and inventory write-off costs by its direct sales model. Through Dell’s direct sales model, Dell is able to collect payment in 5 days on average after a product is being sold. However, Dell still continues to pay their supplier according to the traditional billing schedule as when it comes to money, the traditional way of billing, invoicing and etc is still preferable. Inventory is low and is negative in Dell’s working capital, thus, making able for Dell to concentrate on increasing its performance.

Q3. What are the main disadvantages of Dell’s direct sales model? The most remarkable thing about Dell is its direct sales model. A

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