Managing And Designing Value Chain Networks

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Leeds University
Business School

Assessed Coursework Coversheet
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Student Identification Number:

Module Code: LUBS 5242 M

Module Title: Managing and Designing Value Chain Networks

Module Leader: Dr. Nicky Shaw

Declared Word Count: 1499

Introduction
The value chain theory was initially developed by Michael Porter (1985) to describe a chain of value-adding activities/functions within an organisation that perform distinctively from competitors to achieve competitive advantage. However, several researchers posit that disaggregation of functions could also be implemented to an inter-firm system (e,g., Christopher, 2005;
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- Direct sales to customers
Dell has a distinct distribution strategy that disintermediating any middlemen as finished goods are delivered directly from plants to end customers by third-party logistics partners (figure 1) Figure 1. Direct distribution model of Dell vs Indirect
(Source: Manataki 2007 p. 11)

- Full visibility and partnerships with suppliers
Utilisation of internet and integrated real-time system is essential for Dell to communicate directly with customers and examine their purchasing behaviour. Dell implemented ERP system to align sales, production, and supply that linked directly to suppliers (Lawton and Michaels, 2001). This allows just-in-time strategy for suppliers to the production line of Dell. Figure 2 explained that there are numerous suppliers in computer industry which must be carefully maintained. Figure 2 Typical Value Chain Network of Computer Industry
(Source: Kothandaraman and Wilson 2001 p. 386) - Focused manufacturing
Dell is the pioneer of the adoption of postponed manufacturing in electronic industry where margins are tight and demand fluctuates. Dell’s value chain network is able to delay product customisation until closer to the time the
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