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 to increase market share and achieve high returns on investment in a highly competitive industry by implementing the direct sales as well as build-to-order model.

Dell’s Supply Chain Management:
Dell's supply chain generally consists of only three stages which are the suppliers, the manufacturer which is DELL themselves, and most importantly the end users which could be either for personal use or even business use. Dell is able to match supply and demand because their customers order computer configurations over the phone or through the internet via Dell’s website. These computer configurations are built up from components that are available. Dell’s strategy is to provide their customer’s customized, low cost, and quality computers that are delivered on time. Dell successfully implemented this strategy through their efficient manufacturing operations, better supply chain management and direct sales model. Since Dell takes orders directly from their customers, either through the phone or online through their website, Dell manage to reduce the cost of intermediaries that would otherwise add up to the total cost of PC for the customer. Time is also being saved on processing orders that other companies normally incur in their sales and distribution system. Furthermore, by dealing directly with the customer, Dell gets a clearer indication of the current market trends. This helps Dell to plan for the future besides better managing its supply chain. By implementing the direct sales and build-to-order model, Dell has a very close relationship with their customers as well as their suppliers. They are also able to get accurate and exact customer feedbacks as well as being able to have and compile database of customers making it easy to analyze the current market. The impact on the industry of Dell’s achievement is also seen in the efforts of other leading PC makers and distributors to try develop their own direct sales and/or build-to-order model.

Dell’s Competitors Value Chain

DELL’s Direct Sales Value Chain

Q2. How has Dell exploited the direct sales model to improve operations performance?

The internet has made it possible for Dell to make use of their direct sales model. Without the internet, it would be a totally different approach for Dell. The internet has made it possible for Dell to build their website where customers can make their orders from and also, through the internet, Dell has also recognized a unique e-commerce model by embracing internet in its suppliers which would, at the end of the day, make it more feasible and easier for all in the supply chain. Via the internet, Dell is able to bring products to the market faster than any competitors. Other competitors usually go through a much longer process of assembling as well as bringing/shipping stock to retail stores. This would give an advantage to Dell as they have early-to-market advantage as they are able to offer their new products and services via the internet through their website.

Via the internet, Dell makes it possible for customers to customize their pc by clicking on whatever they want to add on to their order. This is an added advantage for customers as they can...
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