SUPPLY CHAIN STRATEGY1 Executive Summary Dell Company was recognized in 1984 and in today era, it positions among the global largest computer system corporates. Dell has achieved a huge growth by the means of personal sealing. Dell has cultivated the way of selling personal computer system straight forward to the customer according to their needs and want. Dell has also adopted various approaches to deal effectively in this competitive world. Dell computers include Dell Dimension and OptiPlex desktop computers, Latitude notebook computers, and PowerEdge network servers. Various types of the supply chain have been adopted by the dell company to cope up the competition with its competitors. Various problems were there in the path of the success of the organization but by the adoption of various approaches they are successful in taking the tagline of a successful company in the computer system market. Through Dell, the company has to bring further change as the competition is growing day by day. Table of Contents
SUPPLY CHAIN STRATEGY2 Introduction................................................................................................................................3 Issues in the company................................................................................................................4 Long-term demand sensing to continually refine its portfolio...............................................4 Logistic management and Distribution model.......................................................................5 Direct sales model..............................................................................................................5 Built To Order....................................................................................................................5 Suppliers Integration..........................................................................................................6 Dell strategy (Dell strategy CTO supply chain strategy).......................................................7 Supply chain strategies of Dell companies............................................................................7 Modification of supply chain strategies.................................................................................9 Risk and Risk management tactics.......................................................................................10 Recommendation..................................................................................................................11 Conclusion................................................................................................................................12 Bibliography.............................................................................................................................13
SUPPLY CHAIN STRATEGY3 Introduction Logistics and supply administration has become the one of the most core problem for the organization. Supply chain management combines all the factors such as manufactures, supplier, transport, whole sellers, retailers, customers and all other main components of the person whom link above. One of the main objectives is to fulfill customers need and adding value to the products offered to the customers. Dell realizes the same from starting onwards should it stated putting excessive concentrate on its logistics, supply chain management, and direct chain strategies and eliminate indirect supply for the products and result from the same was that it become one of the most popular portable computers organization in the world(Li, 2014). Dell was originated by a student when he was a student at the University of Texan, Mr. Michael Dell. Dell was established on November 4, 1984, in Auxin Texas. From the starting onwards, Dell accepted its key supply chain strategy of direct sale, firstly the take orders on the phone calls according to customers’ needs and conditions(KelloggInsight, 2007). Then afterwards they tried to use the retail-selling channel but the result was not up to level. So they shifted back to their direct model and grew quickly. Michael Dell's exclusive supply chain strategies and the fruitful method of using them in rehearsal plays an important role in the success of Dell's company Dell wad challenging against giants like IBM, HP, Apple, including 96000 employers all over the global. The company also deal in HD TVs, Mp3 and other electronic devices made by no. of the other manufacturers. Dell is well known for its exclusive and advanced logistics and supply chain management(Holzner, 2006).
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SUPPLY CHAIN STRATEGY4 In this report, will study the process of their Logistic management and supply chain management, Dell strategies, results of such strategies, steps of the company for the improvement in their work. Issues in the company Long-term demand sensing to continually refine its portfolio Although dell direct model provides help in taking wide customer insights, over 2 million customers visits per year the company is not able to, assume where the market was headed, an defining a three-year outlook of customers require an support global customers group. Dell supply chain strategies help in the reduction of the cost but it also add the cost of maintenance because of using supplementary of the generalized technology, more dedicated labors work needs which results in increasing the cost of maintenance which acts as an issue for the company(Fenton, 2018). Dell uses direct model supply which can result in a tricky for the home user customers since some of the customers cannot effortlessly customize PCs rendering to the third specification, it can take the days and months to complete it and at the same time, they cannot visit the retailer for their solution. One of the issues in the company was associated with the company was the faulty Laptop batteries, which attract negative publicity from the market and gave a negative tagline to the dell companies. Due which it recall of 4 million laptop batteries in 2006.
SUPPLY CHAIN STRATEGY5 Logistic management and Distribution model Direct sales model It can be defined as a verity that Dell owes n t use any retailer or whole sellers for sealing their PCs but directly contact the customers of taking orders through their website or through their phone calls and diver orders directly to consumers. This strategy helps the dell to directly linked with the customers and know about their need i.e. what they want to from Dell computers.it also help in knowing the last taste of the customers, what they have purchased what innovation they want in present. They are directly linked with the customers to know their preferences(Ignatiuk, 2009). No addition time and cost is utilized in this as delivery is directly made to the consumers. This strategy helps in providing product development information. Dell upgrades its direct relationship with the customers and helps in becoming partners. For this, they organize the meeting with the public according to the population in which customers and various executives share their experiences with the company. Built To Order Built to order strategy is the supply chain strategy whose main emphases on constructing computers when clients place an order for it. If this strategy is associated to other PC company, it is very clear that Dell had various benefits compared to others. First of all the level of inventory is very small so it cut off the cost relating to maintaining inventory and of the warehouse as compared to others which pay the cost to maintain inventory(Dell & Fredman, 2010). Secondly, a very fast response is given to the demand change, as they do not have to hold until the stock first get finish of and can inform their customers about the innovation which has a cone in the market and if customers want then Dell will manufacture the same. Other
SUPPLY CHAIN STRATEGY6 than this advantage, dell also gets the benefit of just in time inventory, which benefits in find out the faulty component and substitute it fastly. Suppliers Integration Dell has dealers from all over the worldwide. Some of the examples of the dealers of the dell are Samsung, Motorola, etc. and all the supplier do they their suppliers accosting in the code of the behavior made by the dell. The suppliers of the dell are the main element for the success of the organization. Each year dell keeps an award programme to recognize the eight dealers who stand best in terms of quality, technology. One of the main aims of the dell is to diminish the inventory and make best use of the speed(Manataki, 2007). Therefore, for the same, it loads its suppliers to provide them, material at very quickness. In order to compact with high inventory speed, the supplier is required to maintain its stock nearby dell’s plant. At some of the plants, dell follows the system of vendor inventory system in which compounds of the dealer are kept in jeep and trucks and they are taken out as per the needs and till that supplier has to take care of the components(Manataki, 2007). Dell has a close trust relationship way its supplier in command to shift over key data. Addition to this they also offered the knowledge to the supplier by uses of the internet and informationtechnologyorthroughitswell-knownwebsiteValuechian.dell.comwhich extranets among its suppliers and dell. Through this website, suppliers can come to know about the required data, the superiority of component, and if any fault came to know then the supplier can acknowledge the same and modify it. Other than this, it also gets the knowledge almost about the part transitions. Thus by this particular way dell is able to share its production and demand information with the suppliers and eliminate the effect of the bullwhip(S, et al., 2007).
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SUPPLY CHAIN STRATEGY7 Dell strategy (Dell strategy CTO supply chain strategy) Configure to order represent the capability for a user to outline the component and makeup of product at the very first moment of gathering the product, and vendor consequently applies the same component dynamically upon receipt of the orders(Wagner, 2018). A Configure to Order (CTO) structure is a combination of make to inventory and make to order operations.It is a set of mechanisms that are built to stock whereas the final products are accumulated to order. This combination model is most comfortable in an environment where the time taken for assembling the product is very negligent, while the production lead- time is very sustainable. Personal Computer (PC) built-up is a good example of such an environment(Wagner, 2018). Dell has worked as a leader in the "configure to order" method to manufacturing according to customer specification. The use of direct model help in providing the products according to their description and delivering them at their doorsteps. Supply chain strategies of Dell companies Supply chain strategies are the methods, which are associated to logistics. Corporate Strategy Business Unit strategy Functional strategy The supply chain is the vital part of organization growth. Supply chain strategies help in development according to the nature of their company(Bozarth, 2006). Many supply chains are formed according to the above-stated component but there are two principle strategies, which are used practically
SUPPLY CHAIN STRATEGY8 •Lean •Agile Lean strategy is an example of the huge success in the earliest 1930. Its main business is to add the value to the product or service and eliminate such activities, which do not add the value in the products. Some of the examples of the lean strategy are Just in time, pull-based system. Agile strategies practically concerned with dealing with the uncertainties such as market demand, terrisiom that affect the environment widely. Leagile strategy is the combination of lean and agile strategies. Michael Dell (2007) states, “As we continue to grow worldwide, it is important that we increase our ability, through the direct model and fully integrate the supply chain into global organization. This will help in assisting the better quality of the product, quality and cost which will help in identifying the products from the competitors(Simmons, 2015). Directsale It states that dell does not use the retailer channels and directly sell their PCs through their website and on calls directly to the customers, which help in eliminating the extra cost to the customers. Indirect Distribution Channel of the PC Industry Dell’s Direct Distribution Channel It is very much clear that dell through his direct sale creates an individual relationship which help in defeating competition globally.
SUPPLY CHAIN STRATEGY9 As Michael state that direct relationship heath the market help in value addition of the product as by this company know each an everything about the customer their preferences, taste and market condition can be easily identified. As Lawton stated that, this helps the dell with prosperity of marketing and product growth information. In case of the large customers the direct connection is converted into virtual combination in the light of IT and face to face interaction, clients of dell work as a partner for the dell; which state that dell in not only the vendor of their PCs but one that is three IT department also. As Michael claim that, there are two minimum services that bring dell closer to its clients, Premier Pages and Platinum Councils. Premier pages, now called Premier.Dell.com, are customized as IT department and support sites for the big clients, which help them to choose about the purchased from the dell. Premier.Dell.com signifies as a modified sale channel and dell understand about the benefit of the Premier pages and increased to 50000 from 1000. Modification of supply chain strategies The organization was first to implement a CTO model where clients have millions of configuration to modify their PCs according to the customer’s requirement. Dell unique model has shaped the company in profit making and giving the low-cost Pcs to the customers (Harsono, 2014). The one drawback we can say that this organization model takes the delivery time about 7-14 days as PCs is constructed after the order is placed according to customer requirement. In last quarter fell has exercised a marketplace share loss in order to deal with such condition, Dell has altered its main principle anddeveloped a new strategy called the “End-user computing” development plan that contracts with implying its operation, achieving new prospective customers. Dell is to develop the strategy of smart selection program where it will pre-build the highly demandable computers that customers want and deliver them within 24hrs. Dell
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SUPPLY CHAIN STRATEGY10 has complemented its dell CTO model with the new build to order model. This initiative forced on the increasing the supply of the warehouse, it results in the broad change in the supply chain landscape for the Dell. Now they more focus on the warehouse capacity rather than keeping low inventory. With the incorporating of the various models like BTO, CTO; dell can modify their SKUs for various counters and channels and achieve growth in the organization(Parvez, et al., 2018). Risk and Risk management tactics There were some of the problem s which are faced by the dell company The first problem was regarding its competitor i.e. HP. Hp overtook the dell in terms of providing a cheaper product by managing a good supply chain. This decreased cost of HP and increased efficiency of supply chain put more pressure over the dell company(Coleman, 2016). Another problem, which was face by the dell company, was the incensement of the complexity in the product due to which it was not possible for the company to do direct supply without the intermediaries. Its direct relation was only one of the defective steps of the organization, which cannot be compromised, on the first priority. One of the main aspects of the company is there customers, which can be termed in the category of; loyal. In order to remain the same trust of the customer on the company started emphasizing more on the R&D department by which the quality of its product could be enhanced without any exception. Also to minimize the risk of rising competition in the market, dell made use of the innovative technique and served its customers problems in a very technical and personalized solution.
SUPPLY CHAIN STRATEGY11 Another measure which is adopted by the dell company to mitigate the risk connected with the function of the complexity of the product stated that there should be the molding their supply chain in such a way it is categorized with the product without any problem and sort out the complexities connected with the product(Geckeler, 2010). Recommendation There are many suggestions, which can be provided to the dell company such as Dell can look forward to the merger with other companies. Dell should also focus on other countries, which can help in boosting their revenue. The company should also focus on the retail store indirect sale. Although they have entered in the indirect sale, they have to expand their indirect sale in order to achieve huge success (Geckeler, 2010). They should improve their product line. Dell launched dell steak but rather than this, they should launch something like a tablet, which can help mobile phone capabilities. They should modify the laptop style and frame according to the student state of mind as if there is an excessive demand for products if dell invites the students. Dell is very slow in adopting new technologies as related to its competitors.
SUPPLY CHAIN STRATEGY12 Conclusion According to the above analysis following decision can be made, Dell come under the category of the secondary sector industries that do not manufacture the products but fits the products according to the customer needs. With its 3 effective supply chain strategies, dell took the tagline of the most successful PC maker corporate in today’s market. Many time dell also0 face recession but they tried to recover from that situation but we have to keep in mind that dell is the only company which faces the problem of recession. Although Dell has a cost advantage it has to look in other activities also just to boost up its revenue.
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SUPPLY CHAIN STRATEGY13 Bibliography Bozarth, 2006.Introduction to Operations and Supply Chain Management.London: Pearson Education India. Coleman, L., 2016.Risk Strategies: Dialling Up Optimum Firm Risk.reprint ed. Boca Raton, Florida, United States: CRC Press. Dell, M. & Fredman, C., 2010.Direct From Dell: Strategies that Revolutionized an Industry. reprint ed. New York, New York, United States: Harper Collin. Fenton, T., 2018.5 Issues I'd Like to See Addressed at Dell Technologies World.[Online] Availableat:5IssuesI'dLiketoSeeAddressedatDellTechnologiesWorld [Accessed 16 April 2019]. Geckeler, J., 2010.Strategic Management – Case Study: Dell Inc.: A Strategy Case Study in the Computer Industry.unabridged ed. s.l.:GRIN Verlag. Harsono,A.,2014.HowDellHarnessedITtoEnhanceSupplyChainManagement. International Journal of Innovative Science, Engineering & Technology,1(8). Holzner, 2006.How Dell Does It.New York, New York, United States: Tata McGraw-Hill Education,. Ignatiuk, A., 2009.Analysis of Dell's Business Strategy.s.l.:GRIN Verlag. KelloggInsight,2007.NewChannelStrategyforDell.[Online] Availableat: https://insight.kellogg.northwestern.edu/article/a_new_channel_strategy_for_dell [Accessed 17 April 2019].
SUPPLY CHAIN STRATEGY14 Li, X., 2014. perations Management of Logistics and Supply Chain: Issues and Directions. Discrete Dynamics in Nature and Society,p. 7. Manataki, A., 2007.A Knowledge-Based Analysis and Modelling of Dell’s Supply Chain Strategies.[Online] Availableat:https://www.inf.ed.ac.uk/publications/thesis/online/IM070456.pdf [Accessed 17 April 2019]. Parvez, M., Ullah, N. & Sabuj, M. A., 2018. Profit Maximization of DELL Inc. through Build-to-Order Supply Chain for Laptop Manufacturing. 8(6). S, D. H., Shamshuddin, S. & Baba, D. S. K., 2007.Essentials of Logistics and Supply Chain Management.s.l.:Lulu.com. Simmons, H., 2015.Reinventing Dell: The Innovation Imperative.Tornto ed. illustrated: Murmurous Publishing. Wagner, M., 2018.Dell CTO Expounds 'Insane' Theory About Enterprise Complexity. [Online] Available at:https://www.lightreading.com/enterprise-cloud/infrastructure-and-platform/dell- cto-expounds-insane-theory-about-enterprise-complexity/d/d-id/741522 [Accessed 17 April 2019].