Group 11: Mentor: Heidi C. Dreyer Sep-09-2012
• What’s direct model? • Dell’s position in PC market; – Dell’s competitive strategies; – Implied demand uncertainty analysis; • Dell’s supply chain capabilities; – Facilities; – Inventories; – Transportations; – Information; – Sourcing; – Pricing; – Responsive supply chain; • Strategic fit; • Limitations; • Challenge and proposals for emerging markets;
What’s Direct Model?
Several supply chain models in push/pull view
Make to stock(HC, Lenovo)
Build-to order (Direct Model)
Dell’s Position in PC market
Service level: high customization, etc
Competitive Strategy: Dell chooses the customers who prioritize
Variety: high product variety Quality: reasonable quality
Price: reasonable price Lead time: approximately one week
Implied Demand Uncertainty
Impact of customer needs on implied demand uncertainty
Conclusion: The competitive strategy in meet high variety and service level contribute to Dell’s high implied demand uncertainty.
Dell SC Capabilities
6.Pricing 7.Customer service
• Location: Regional approach, suppliers’ facilities built next to door • Capacity: Lowest raw material shipping time, perform intended functions, little excess capacity will be more efficient per unit; high-utilization facility difficult to respond to demand fluctuations ， customer could conveniently send orders via internet and telephone. Summary: Dell’s facilities strategy reduce inbound shipping time, and the logistics cost, and increase service level.
• Safety Inventory: on-site inventories to copy with the next few hours of orders • Seasonal Inventory:
• Level of Product Availability(time): High Level and just-in-time Delivery 4 days across the entire operation Summary: Dell’s low inventories strategy minimizes inventory and overstock, therefore it could meet customer high variety by quickly transferring to latest products.
• Leave it to the Suppliers
• Design of Transportation Network:
Air Networks mostly in Asian Market: Shanghai, Taiwan, Singapore, Hong Kong
• Choice of Transportation Mode:
Summary: Dell’s transportation strategy could minimize the production lead time, and also could provide high service level by shipping products directly to customers’ home.
• Push Versus Pull • Coordination and Information Sharing
• Forecasting and Aggregate Planning: how to make and to what extent to rely on • Enabling Technologies: EDI, Internet, Extranet, B2Bi
Summary: Shared Information strategies could realize supply continuity. Thereby it could meet the high customization and product availability.
• In-house or Outsource
• Supplier Selection:
Consolidated supply, 80% of procurements to ensure low transaction costs
Summary: Stringent supplier selection criterion could increase product availability, and reduce supply uncertainty.
Pricing& Customer Service
• Pricing – Eliminating the by distributors and retails as well as the added value; – Pricing is not Dell’s main strategy, but Dell provides a reasonable price with good quality. • Customer Service – Customer orders conveniently via phone and internet; – Shipping the products to customers’ home; – Service Center is dedicated in Dell’s brands. Summary: Dell’s strategies in pricing and customer service could provide products with high service level and reasonable price.
Responsive Supply Chain
.........Supply chain responsiveness includes a supply chain's ability to do the following (Chopra & Meindl, 2010): • Respond to wide ranges of quantities demanded • Meet short lead times • Handle a large variety of products • Build highly innovative products • Meet a high service level • Handle supply uncertainty...