Dell’s Supply Chain Management
The term supply chain management (SCM) was initially used in wholesaling and retailing to denote the integration of logistics and physical distribution functions with the goal of reducing delivery lead times. Manufacturers and service providers have used the same term to describe integration and partnership efforts with first- and second- tier suppliers to reduce cost and improve quality and delivery timing. Terms such as integrated purchasing strategy, integrated logistics, supplier integration, value chain management, supply base management, strategic supplier alliances, lean production, Just-In-Time (JIT) logistics, and supply chain synchronization have been used in the literature to address certain elements or stages of this new management philosophy (1998; 1994).
Conceptually, SCM includes all value-adding activities from the extraction of raw materials through the transformation processes and through delivery to the end user. SCM spans organizational boundaries and treats the organizations within the value chain as a unified virtual business entity (1991; 1995). (1995) further expanded SCM to include recycling or reuse activities. In general, SCM seeks improved performance through elimination of waste and better use of internal and external supplier capabilities and technologies (1996).
The retailing industry has focused on different aspects of SCM, namely, location, transportation, and logistics issues. Indeed, the origin of supply chain management can be traced back to efforts to better manage the transportation and logistics functions (1997; 1995; 1994; 1993; 1991; 1987). The wholesaling and retailing industries incorporate a logistics focus within their strategic decisions. In this respect, SCM is synonymous with integrated logistics systems that control the movement of goods from the suppliers to end customers without waste (1991).
Moreover, integrated logistics systems seek to manage inventories through close relationships with suppliers and transportation, distribution, and delivery services. A goal is to replace inventory with frequent communication and sophisticated information systems to provide visibility and coordination. In this way, merchandise can be replenished quickly in small lot size and arrive where and when it is needed (1994; 1993). Firms that use advanced process technology to increase flexibility and involve manufacturing managers in strategic decision making alter the role of logistics in firm success (1998). A supply chain can reduce overall inventory while maximizing customer service by efficiently redistributing stock within the supply chain using effective postponement and speculation strategies (1998; 1993; 1991).
New logistics technology gives businesses a complex way to make things easier for their customers and suppliers. Within logistics industry, Dell’s system is recognized as one that takes advantage of technology to decrease storage and increase efficiency. The computer company's supply and shipping networks exemplify the latest trend in logistics, that is, visibility. Companies with the money and foresight are making sure their inventories can be traced and tracked throughout their entire logistical operations, even if their systems are entirely outsourced. Executing a supply chain with full visibility gives companies better information to work with and a more agile system.
Dell has a better control of their operation which has reduced safety stocks and has operate faster to get cash-to-cash conversion cycles. By producing custom products at a rapid pace, the computer manufacturer receives payments from customer before it pays suppliers. Companies can do this only if there’s a short window between receiving an order and shipping it.
In addition, Dell's customers can also keep track of their order status. They can trace their computer as is moves...
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