Supply Chain Management at Dell

DELL’S VALUE CHAIN

Since Dell unfolded its integrated supply chain in early 2000, world has paid attention to the model as a new strategy that helps the company to increase its cost efficiency and the customer value. Dell’s revenues had grown up rapidly from $12 billion to $61 billion over the past 10 years.

How has Dell used its direct sales and build-to-order model to develop an exceptional supply chain?

Dell, which is an American computer company, mainly operates on direct sales to the corporate and institutional customers. With the direct sales model, Dell can collect its customer information; computer specification and location of each customer including feedbacks. After Dell sold the computers to its customers, Dell and the customers still have close relationship because the company still has to work with them as IT service and consulting. So Dell can have more communication with the customers and gain more information. Dell knows what its customers want and when they want to replace their computers and equipment through that communication. Also as technology changes very fast and some technological equipment have short lifecycle, Dell finally comes up with equipment to cope with those problems.

Since Dell can forecast the sales by communicating with its customers, to achieve build-to-order model, Dell realizes that they need to improve its operation and supply chain. The greatest challenge of build-to-order model is lead-time. Customers do not like to wait or hear an excuse of any delay. Thus to avoid dissatisfying the customers, Dell decided to create its integrated supply chain.

First of all and the most important element of the effective supply chain is information technology. High information technology effic...

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... information will be sent to the suppliers directly. So the suppliers can know exactly what the number of products they have to produce.

To achieve build-to-order model and create the efficient supply chain system, Dell and its suppliers need to invest much on information technology. Toshiba, IBM, and Samsung, which are leaders in technology industry, are some of the Dell’s partners. These companies have high IT efficiency and enough resources to support Dell’s supply chain. With expertise of those companies, Dell’s supply chain has been success. This system also provides Win-win business relationship between Dell and its partners. When Dell can implement its customer needs, the Dell computer’s orders will increase. So the revenue of Dell’s suppliers will increase as well.

REFERENCE:

http://crito.uci.edu/papers/2001/dell_ecom_case_6-13-01.pdf