An overview of Dell Inc‘s Supply chain
OMS 511
Introduction
The Personal Computer industry has revolutionized the way of life. Technological forces have the most significant influence on the computer hardware industry. The extremely short product life cycle for computers, influenced by the upgrade cycle, has both positive and negative effects on companies within the industry. It challenges companies to maintain superior inventory management and supplier relationships: areas where Dell excels. Technological change also drives waves of additional computer purchases within a mature market.
Dell, Inc was the first major company to really seize the opportunity of selling via internet. It was founded in 1984 by Michael Dell. Traditionally,
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By being in direct contact with the changing market, Dell is able to sense the altering customer demands and synchronize its operations through internal collaboration to meet these demands before its competitors. The market demands keep changing quickly which makes it difficult to foresee them. It is a challenge to meet these demands and hence Dell focuses on managing them by continuously rebalancing the demand and supply. If the demand exceeds supply, the company works with its suppliers and looks out for external options to meet the exceeding demands. It also focuses on demand shift through product promotion on its web portal in no time (Brian, 2004)
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.
Leveraging partners: Dell signals its suppliers about the customer demand, the projected market shifts and sourcing strategies and in return expects the suppliers to share information regarding new technology drivers and capacity outlooks. With the help of information systems, it pools data on demand and supply trends. It also
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. 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.
Ford Motor Company is facing a major decision with regards to its supply chain strategy moving forward. The underlying question is, “how should the company use emerging information technologies and ideas from new high-tech industries to change the way it interacted with suppliers?”. Within Ford, there are 2 major, and opposing views. First, there are those that feel strongly that Ford should follow Dell’s model of “virtual integration” (reaping the benefits of vertical integration without vertically integrating) – using the model to communicate effectively with its suppliers, achieve and focus on inventory velocity, and allow its component suppliers to specialize. The other group believed that the Dell model would not
Third, Dell has a rapid-response system for linking all suppliers, workers, managers, and customers to Dell’s value chain. This interactive real time communication system is employed to order parts, manufacture and outsource computer modules, and coordinate assembly and distribution of products to customers. Managers employ this system for all human resource functions, workers and suppliers for all coordination sequencing and quality control processes,
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
Supply Chain Management is becoming more and more important for the success of today’s business world. Dell has realized this trend from its very first steps and has become one of the most successful PC companies in the world by putting emphasis on its supply chain, orchestrating its build-to-order and direct sales strategies. While most of the literature that covers Dell’s business and supply chain strategies is too theoretical, we suggest an analysis of a lower level using knowledge-based techniques. So, we have developed a business
In the past, Dell's supply chain was focused on being able to provide customers with a made to order computer. Dell are finding that although this strategy is profitable for customers that customise their configurations to the higher end of the configuration price bracket, when they are selling the base model, the cost of their complex supply chain is not efficient, as most of the complexities are not needed. Dell have recognised that not all segments of the market want a customisable computer, and are happy to purchase a limited configuration with slower delivery time. This will be especially true in emerging markets, where Dell believes customers will be looking to buy cheaper personal computers with fixed configurations. One of the major changes to their sales approach will see them entering the retail market, which they have already started to do. However, Michael Cannon did confirm that the direct model will remain important to Dell (SCN, 2008).
The biggest area of expansion for Dell is the consumer market. In order to develop more sales in this market Dell needs to focus more advertising on the needs and wants of the consumer. Currently Dell promotes its direct model, which is a key factor Dell needs to create a better position for itself in the consumer market. With all of the PCs in the market being more or less equal, Dell needs to focus on what differentiates its products from the competition, namely service and support.
Moreover, by directly dealing with the customer Dell got a clearer indication of market trends. This helped Dell to plan for the future besides better managing its supply chain. Another advantage Dell got by directly dealing with the customer was that it was able to get the customers’ requirements regarding the software to be loaded. By eliminating the need of a PC support engineer to load software, the customers gained both in time and cost. (Jhonson, 2013)
Dell has realized, however, that maintaining its manufacturing efficiency (and corresponding customer satisfaction) will become more complicated as the company continues to grow its global business. The reason? Dell’s streamlined manufacturing processes and its enviably low inventory levels are increasingly dependent on the company’s ability to accurately forecast customer demand and schedule its manufacturing processes accordingly. In other words, as Dell grows, so does the complexity of its manufacturing process and the need to have the right components on-hand at any given moment to satisfy immediate customer requirements. Until now, the company 's supplier-management processes have relied primarily on manual mechanisms, including shared spreadsheets, voicemail and faxed messages. It was clear to Dell’s leadership that, under continued global expansion, such mechanisms would eventually reach their breaking point. To avoid this eventuality, they needed to partner with an innovative leader with deep, global experience in business process and system design – a partner that could help create and implement the necessary technical architecture and integration and also provide deep project management skills. That partner was Accenture. Accenture 's RoleIn today’s fast-paced world of business, the winners are those who can best predict their customers’ buying behaviors and immediately adjust to
The PC industry has seen many changes in the past decade, such that there was a time when Dell was considered as one of the beloved brands of the internet era and now due to competitive and consumer behavioural changes, sales is not as prominent as it once was.
DELL Computers, a leading PC supplier to corporate and government customers, today is now among the first companies to provide its customers with the next level of industry-standard Pentium processor power, while many vendors are still struggling to broaden their processor-based product lines. Dell 's unique ability to take a market strategy position during important technology transitions because of its build-to-order manufacturing process. This build-to-order approach allows the company to maintain low inventory levels and integrate emerging technologies into systems. Today 's customers are reducing their supplier bases, providing the opportunity for the most capable suppliers to seize huge market share gains as Dell needs to redefine
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
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
Dell has been in the market with a strategy ‘to strive to provide the best possible customer experience by offering superior value; high quality, relevant technology, customized systems; superior service and support and differentiated products and services that are easy to buy and use’