Dell IT Supply Chain Strategies

This article discusses Dell's IT supply chain strategies and their impact on the electronic supply chain management. It explores how Dell adopts agility in its supply chain, allowing for customization and timely response to customer needs. The article also highlights the role of information technology in improving supply chain performance and innovation.

1Dell IT supply chain
Running head: DELL IT SUPPLY CHAIN
Dell IT supply chain strategies
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2Dell IT supply chain
Abstract
Information technology (IT) represents a very important aspect that significantly impacts
the electronic supply chain management (SCM) (Harsono, 2014).
Dell adopts the agility strategy in its supply chain, it keeps materials undifferentiated
until the customer reveals his desire for the product. Customers are allowed to place their orders
and customize their PCs electronically. Then, Dell forwards the order to the designated facility to
produce it. Agility enables suppliers to adjust their schedule of production and plans for the
needed components in the production process. The matter that enabled Dell to timely respond to
the customers changing needs (Qrunfleh & Tarafdar, 2013).

3Dell IT supply chain

4Dell IT supply chain
Contents
Introduction......................................................................................................................................4
First: Dell data /IT system set up.....................................................................................................5
Second: data's relationship to innovation........................................................................................7
Third: IT impact on performance....................................................................................................9
Conclusions....................................................................................................................................10
References......................................................................................................................................12

5Dell IT supply chain
Introduction
The IT has revolutionized the contemporary SCM, the matter that made it faster, better
and cheaper. The suppliers of Dell have a significant role in keeping information flow,
production and distribution. The supply chain includes organizations and processes to ensure
product delivery to the end customer. Incorporating web-based software in the supply chain (e-
supply chain) involves a between internet, web-based, extranet, and other information systems
that created a network or supply web. Information sharing increases the efficiency of the supply
chain by reducing inventory and facilitating production. Dell applies SCM that includes
integrated computer systems, collaborative programs-management tools, powerful information
system, enterprise resource planning system (ERPs) and third-party logistics (3PLs), like FedEx
and UPS as shown in figure (1) (Harsono, 2014).
Figure 1: Dell supply chain

6Dell IT supply chain
First: Dell data /IT system set up
Effective supply chain management involves not the only sooth flow of information,
material and money, but it extends to include service businesses, like 3PL that require a high
level of creativity and specialized knowledge. According to Kosasi, Harsono, & Kuway (2013),
the supply chain consists of three major parts:
- The upstream supply chain: It includes the activities related to the first-tier suppliers and their
connection who represent the second-tier. The major activity in the upstream supply chain is e-
procurement.
- The internal supply chain: It includes the in-house processes of transforming the materials
received from the suppliers into the organization’s products and services.
- The downstream supply chain: It involves all of the activities adopted to deliver the products to
the final customers. It is directed to warehousing, distribution, transportation and after-sales
services.
The e-supply chains best function in automating the information and financial flows
within the chain. Information sharing increases supply chain efficiency. Dell adopts effective
SCM processes that include integrated computer systems that function together to provide
production schedules and allow demand forecasts among the supply chain parts. Also, it includes
collaborative programs-management tools to enable the manufacturers and suppliers in
synchronizing activities and respond to changes in real time. The processes involved in SCM are
customer relationship management (CRM), suppliers' relationship management (SRM), customer
service management (CSM), demand management, order fulfillment, manufacturing flow
management, product development and commercialization and return management. Figures (2)

7Dell IT supply chain
and (3) show Dell internal and external supply chains. Supply chains should be managed in an
integrated manner through managing information, relationships and material flow across the
supply chain activities and the organizational departments to reduce costs and facilitate the flow.
Dell, Inc. is one of the top five computer makers in the globe, it had witnessed a price war with
Compaq and ran into huge losses in 1994 (Kosasi, Harsono, & Kuway, 2013).
Figure 2: Real-time information sharing within and inter-organization
Figure 3: Integrated e-SCM and e-commerce marketing and e-procurement

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Dell could adapt to the environment and stop its losses by adopting robust demand
management strategies. These strategies enabled flexibility and agility of the supply chain to
shift demand across products. It enabled the company to adopt a responsive pricing strategy and
create profits by shifting demand across products. For example, when Dell faced troubles of the
supply of computer parts from Taiwan, it could offer special prices to attract online customers to
by PCs from other countries. The second strategy is demand postponement enhance supply chain
resiliency and efficiency. It can offer price discounts to its retailers to bear delays in shipments
(Sodhi & Tang, 2012).
Dell manages the demand for its products by adjusting prices that create adaptable supply
chain structures to cope with a dynamic environment and changes in demand. Dell ensures data
availability and integrity while meeting backups and other constraints. It manages the process of
removing redundant data from work stream to reduce the storage footprint, allow data to remain
on the hard disk and online for a longer time and reduce management complexity (Sodhi &
Tang, 2012).
Second: data's relationship to innovation
The online user innovation communities (OUICs) are allowed to post comments and vote
for new ideas to be implemented. Organizations select ideas from OUICs to enhance their
innovation processes and develop new products and services. Dell’s OUIC 'IdeaStorm' involved
introducing new innovative ideas and ask the customers to comment on them. Some users left
comments to extend the idea, the result was to remove the ugly rubber nubs from the laptops.
Then, following the launch of the improved inspiring laptop, Dell announced the introduction of
the innovative product in IdeaStorm to inform its customers (Dong & Wu, 2015).

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The business model innovation approach could be successfully implemented to enable
companies to outperform their competitors. Dell differentiation strategy enables it to fulfill the
customers' needs through the introduction of innovative products based on the way they use
computers. Dell has direct access to its customers who represent about 2 billion per year. This
direct relationship enables the company to know the customer needs and timely response to
them. Dell uses various channels of communication with customers. It depends on the
employees' ideas to identify the issues of top priority that could be incorporated into design,
operations and support. Dell seeks the advice of professionals by creating an outside-in focus and
benchmarking the best practices in the industry. Dell supply chain could be broken into 4 simple
choices; differences between supply chains in every facility, the push-pull horizon location, time
from customer order until delivery and number of choices available to the customers as shown in
figure (4)
Figure 4: Dell customer information to enhance innovation

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Data sourced from customer demand enable in fulfilling their current needs and demand
forecasting. Every supply chain could be networked through the information flow among them
and create an integrated e-supply chain. Dell implemented a transformation process from having
a regional structure to global business customer, public and small customers. This process
required investment in skills and capabilities to be able to implement innovation and effectively
manage its supply chain. Among its innovative initiatives is ‘being green’, it offers the customers
free PCs recycling worldwide. It has set its target of making the package smaller and more able
to be recycled. It introduces more sustainable materials like bamboo. It has reduced the PCs and
laptops energy consumption by 25% since 2008. Dell continuous in the speed that its supply
chain can follow and adapt to the customer changing demand (Dong & Wu, 2015).
Third: IT impact on performance
Organization performance refers to the way they can achieve their market orientation and
financial targets. Therefore, improving supply chain performance is important in improving
organizational performance. The higher levels of the supply chain in terms of its responsiveness,
information exchange, inter-organizational activities and coordination are able to improve the
organization performance. According to Lao et al. (2010), as cited in Qrunfleh & Tarafdar
(2013) the higher the flexibility of the supply chain, the higher its ability to adapt to change.
The organization ability to collect a large number of ideas generated by users provides a
potential for value creation. Therefore, organizations should select and convert good ideas from
OUICs into innovative products that generate business value. Dell has proofed its ability to
gather a large number of ideas that represent an initial screening for innovation from idea
partners (Dong & Wu, 2015).

11Dell IT supply chain
Effective SCM and integrated IT are approaches developed to improve business
performance. Integrating supply chain processes with IT in operations and supply SCM enables
the organization to position itself and take advantage of the technology development. Dell has
adopted these two strategies to enhance its performance and build information partnerships with
suppliers and customers. Moreover, Dell agility contributed to its success in overcoming market
and environmental risks. It has an agile enough supply chain to avoid high-risk impact through
its ability to switch to a new stable situation. Management processes that enable rapid re-
invention of the supply chain allow high adaptability to the new customer demand, the matter
that increases the customer confidence in the organization capabilities and final products. This
leads to business stability, better performance and high profitability (Ghosh & Shah, 2015).
Dell could adapt to the environment and stop its losses by adopting robust demand
management strategies. These strategies enabled flexibility and agility of the supply chain to
shift demand across products. It enabled the company to adopt a responsive pricing strategy and
create profits by shifting demand across products. For example, when Dell faced troubles of the
supply of computer parts from Taiwan, it could offer special prices to attract online customers to
by PCs from other countries. The second strategy is demand postponement enhance supply chain
resiliency and efficiency. It can offer price discounts to its retailers to bear delays in shipments
(Sodhi & Tang, 2012).
Conclusions
Effective supply chain management involves not the only sooth flow of information,
material and money, but it extends to include service businesses, like 3PL that require a high
level of creativity and specialized knowledge. Dell could adapt to the environment and stop its
losses by adopting robust demand management strategies. Therefore, it could control the risk of

12Dell IT supply chain
changing demand. The agile strategy enabled flexibility of the supply chain to shift demand
across products.
Dell’s OUIC 'IdeaStorm' involved introducing new innovative ideas and ask the
customers to comment on them. Dell differentiation strategy enables it to fulfill the customers'
needs through the introduction of innovative products based on the way they use computers.

13Dell IT supply chain
References
Dong, J., & Wu, W. (2015). Business value of social media technologies: Evidence from online
user innovation communities. Journal of Strategic Information Systems, 24, 113–127.
Harsono, A. (2014). How Dell harnessed IT to enhance supply chain management. International
Journal of Innovative Science, Engineering & Technology, 1(8), 226-234.
Kosasi, S., Harsono, A., & Kuway, S. (2013). How Dell Inc. enahnces electronic supply chain
management and e-commerce marketing for success. International Journal of
Information Technology and Business Management, 25(1), 12-21.
Qrunfleh, S., & Tarafdar, M. (2013). Lean and agile supply chain strategies and supply chain
responsiveness: the role of strategic supplier partnership and postponement. Supply
Chain Management: An International Journal, 18(6), 571-582.
Sodhi, M., & Tang, C. (2012). Managing supply chain risk. UK: Springer.