Dell Supply Chain Strategy

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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, Dell has sold all its products whether to end user consumers or to corporate customers using a direct-sales model via the internet and the telephone network. After a short break in using the retail channel from 1990 to 1994, Dell returned to its direct model and grew rapidly in the mid 1990s (Kraemer, 2000). The company, in terms of market share, pushed ahead of Compaq in 2001, but returned to second place when HP and Compaq merged in 2002. Chief Executive Officer Michael Dell abandoned the company's direct-sales-only model in an attempt to win back the PC sales lead held by Hewlett-Packard for more than two years. (www.fortune.com). He put Dell products in 20,000 stores worldwide, starting with Wal-Mart Stores Inc. and Best Buy in the U.S. Under this scope, the name of the company was changed from Dell Computer Corporation to Dell Inc in order to reflect the evolution of the company from a computer manufacturer to a company that provides a wide array of technology related services. Dells‘ product portfolio includes personal computers, servers, data storage devices, network switches, and software and computer peripherals. The company also sells HDTVs, cameras, printers, MP3 players and other electronics built by other manufacturers. Dell’s Supply Chain Strategy

Dell‘s vision is 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‖(www.dell.com) The technology giant broke into the big time by developing a business strategy and supply chain strategy that worked together. In the late 1980‘s and early 1990‘s Dell‘s business strategy was differentiation through low cost, speed of delivery, and customer service. The major channel for sales was from customers to call centers. However, the emergence of internet called for more differentiation and fundamental change. With a well understood business strategy, Dell began to formally integrate operational components (e.g., logistics, manufacturing, distribution, inventory management) and develop a supply chain strategy. This strategy focused on driving costs out of the supply chain – being the low cost provider – while at the same time supporting a business strategy emphasizing customer service. Dell's Direct Model, the company's strength, lost its gleam, with the competitors gaining better supply chain efficiencies and opting for a mixed sales model. Hence, in order to regain its leadership status, the company planned to consolidate its supply chain and manufacturing activities globally and venture into retail business. Dell‘s main strategy is to integrate the manufacturing, supply and sales into one working system. However, the risk of one component failing can deeply affect the whole system, as each component is tied together. The benefit of having one working system is that productivity will increase as communication and information will pass through the channels quicker. Some of the main features of the Dell supply chain are: Demand management: Dell has been successful in demand management with its ‗Direct model‘ supply chain. Its ability to collaborate in...
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