Logistics and Management: Supply Chain Strategies and Future Sustainability of Dell

This paper analyses the logistics and supply chain management of Dell company. It showcases the fundamental reasons for the company's success, how it can maintain its competitive advantage, logistics management strategies, and the concept of future sustainability.

Running Head: Logistics and Management
Logistics and Management

Logistics and Management 1
Executive summary
Logistics network serves as a global circulatory system and acts as a value adding chain
which serves different functions. A proper vision is required to position the company form
the start strategically within the framework of other existing networks. To achieve this
objective a set of strategies needs to be formulated and systematic implementation of the
same. It’s an operative process that ensures the flow of resources from organisation to
customer. In this paper logistics and supply chain management of Dell company has been
analysed. An overview on what can be the fundamental reason of the company’s success and
how it can maintain itself in the market is showcased along with the concept of future
sustainability.

Logistics and Management 2
Table of Contents
Introduction................................................................................................................................3
Fundamental reasons for the success.........................................................................................3
How can company maintain its competitive advantage?...........................................................4
Logistics Management Strategies..............................................................................................8
Concept of sustainability............................................................................................................9
Conclusion................................................................................................................................10
References................................................................................................................................12

Logistics and Management 3
Introduction
Logistics is all about getting the right quantity of the right product, to the right customer in
the right direction at the right place. Logistics management typically refers to governance of
the activities like inbound, outbound, warehousing materials, order fulfilment, materials
handling.
Supply chain or SCM refers to a practice which involves giving the customers an effective
service. It is a mixture and channelizing of all the resources and techniques available like raw
materials, production, inventory, and transportation between the participants in a chain (Rai
and Chunrao, 2016). This process helps in making the business sustainable taking into
consideration the aspects from supplier to customer.
Dell is a computer technology company that develops sells, repairs and gives assistance on
computer and computer related products. It is believed that supply chain management is
becoming a core component in deciding the success and the competitive edge over other
competitors in the market.
In this paper, which kind of processes of supply chain are utilised by Dell will be taken into
account. A critical analysis of supply chain of DELL, aspects of management and relevant
integrated strategies and future sustainability is done.
Fundamental reasons for the success
Its model is completely unique when compared to its competitors who fail to attain a
particular level. It simply avoids retail channels and sells directly to its customers. Therefore
it creates a static relationship between specific customers thereby making the reach easier
(Fossati, et. al, 2016).

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The company uses build to order strategy. As the customer places the order the
manufacturing unit receives all the eye to eye details of the configuration. That’s when the
assembly of the PC initiates. After all the components are assembled the assembly will be
delivered to the customer using 3PL mechanism.
Due to these characteristics and facets Dell has an edge over other similar line of companies.
 The cost of inventory is minimal (Ferrara, et. al, 2016). Keeping costs attainable is
one of the challenging tasks. At times variable costs fluctuate too much and fixed
costs are necessary to pay. This bridge creates havoc therefore, Dell Company insisted
on incurring low costs or at least minimising them.
 Customer pays before the Dell company pays to its suppliers. This creates high
velocity among the suppliers to manufacture products in bulk and make them
available to customers as soon as possible.
 The direct relationship is the key for the existence of the business. It serves as a
common portal of interaction where the specific needs are taken into consideration
and alternatives can be decided as per the requirements and range of the customers
(Buganza, et. al, 2015).
 Michael Dell grew his business exponentially from its legendary start from University
of Texas because of one simplistic idea he figured out before anyone else could
(Khadrouf, Talea and Bakali, 2017). The idea was to provide better quality products
to customers at comparatively lower price by removing the middle man and selling to
the customers directly.

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How can company maintain its competitive advantage?
An efficient supply chain management system makes Dell earn superior profits in the
industry (Inc, 2018). The knowledge it possesses, the bucket of information it communicates,
web technologies, e-commerce and a lot more.
A sound under the wire inventory methodology which functions only for 6 days is one of the
reasons for competitive advantage over others. The profits and volume increases and side by
side the cost to labour decreases (Poponi, Braccini and Ruggieri, 2017). Thereafter the
inventory will not lie inside the warehouse ideally.
Dell can utilise its cash flow in more potential areas as the people are not hired to look up to
the activities like warehousing, keeping a track of inventory and holding on to obsolete
technology (Sakas, Vlachos and Nasiopoulos, 2014). The manpower cost is saved and
thereby better investments can be purchased to generate more revenue.
Dell focuses on customers directly and helps in reducing the distribution channels and
allocating better savings and services to every individual customer. The elimination of
distribution channels provides better understanding of each customer typically.
The customer friendly website itself is a reason with which the orders can be placed easily.
For large corporations, governmental organisations and institutions navigation is simple and
range of alternatives is available.
To form better relationships with the suppliers and to carry on a smooth customer order
processing in internet plays an important role. Proactive production planning programs
ensures the right quantity of components needed. Early implementation of the internet is the
effect of the robust success. The interaction with the customers without an intermediary is a
pivotal operator in elevating the sales of the year 2000 (Sayre, 2014).

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Dell has built strategic alliances with other corporations to sell their products via direct
distribution channel. Earlier in 2000 Palm Inc. entered into the agreement with the Dell to
extend their products and accessories increasing the momentum for the operating market.
Along with Palm, Xerox was second to form partnership with Dell. The benefits derived from
Dell’s e-commerce were multiplied eventually. Dell company sold superior quality printers
accompanied by computers, but consequentially it allowed the customer buying process for
printers to be captured fully.
Could this be suitable for other companies and if so explain why, if not explain why?
The strategy opted by Dell company is now augmented by a range of other sectors. For
example in case of automobile Toyota, Volkswagen Group, Harley Davidson, in fashion
sector ZARA. These companies are following the same strategy of just in time inventory
which is also known as “lean manufacturing” where product is built as and when ordered
(Chiu and Chiou, 2016).
In case of Toyota the raw materials are not procured unless and until an order is placed. With
this strategy the costs are almost minimal without worrying about the disposal of the same.
Accuracy of forecasting involves only stock up of required quantity (Kotabe and Kothari,
2016).
Similarly Harley Davidson decreased their inventory till 75 per cent, became a whip-smart
manufacturer and increased the internal productivity. The inefficiencies were solved quickly
by following the concept of less is more (West, Ford and Ibrahim, 2015). Another example is
of Walmart which was a total success after implementing the strategy of Dell. Walmart faced
a major stock issue and by the time it was a major threat to the company the Walmart entered
into the red zone. They started running out of stock quickly before the new stuff came. The
shelves were not piled up with the stocks because of the low budget. The low budget attracted

Logistics and Management 7
the problem of less number of employees which were not there to keep a track of goods often
required (Lee, et. al, 2016). Therefore it became necessary to keep a minimum level order
quantity and stock became the first priority.
However there are certain companies who failed to adopt this strategy amongst which one of
them is Sony Ericsson. It is world's leading cell-phone manufacturers. Yet this is a perfect
example of how supply chain management failed abruptly. In March 2000, a lightning bolt
triggered a fire in chips harvesting machine that made the plant below the fold for months.
This plant was solitary supplier of harvesting of chips manufactured for cell phones and the
company was so slow in reacting to the situation and then found it unable to overcome from
the drastic event (Ismai, 2010). They failed to find any alternate source. Without the chips,
the demand was gradually declining for the products and Swedish company wrecked up and
lost around about more than $2 billion. In less than two years Ericsson ceased the cell phone
production and business was completely on the verge of the exit. Henceforth Ericsson joined
hands with Sony and developed a venture. Ericsson's tale is an example of how supply chain
risk can be a surprising factor in global market share.
The basic reason for concern is that the disarrangement of supply chain can create a drastic
and profound impact on sales and market share of the manufacturer. As stakes are high, the
risk gets escalated, and costs get striped.
The costs are squeezed out of their logistic chains by transferring to just-in-time inventory
method and making supply chains more vulnerable than before. Just-in-time process has
converted the manufacturing processes into more complicated activities. This happens
because they remove all the non-essential redundancies which actually were providing a gap
or a room for marginal errors. The producers now count upon enlarging supplies globally
inclusive of both domestic and overseas. The factors like awful weather or political issue or

Logistics and Management 8
social distress in foreign country could cease planes and production of vital components
(Forbes, 2018).
Logistics Management Strategies
The strategy is one of the deciding factors in determining the success of any company. It also
acts as a benchmark for other companies to reach at apex level and gain an advantage over
other competitors. Dell opted for certain strategies which led it become one of the finest
corporations in producing computer technology (Angeles and Fredericton, 2015).
Following are some strategies of Dell company:
 The heart of the success of the dell lies in integrated planning and its proper
execution. This strategy enabled the Dell company robustly improve the product
design, assembly and components, fabrication as well as direct delivery to the
customers (Ciccullo, et. al, 2015).
 Due to extensive sharing of the data, inventories saw a dramatic reduction along with
the technology becoming obsolete. This reduction led to the improvement in the
technological aspects of the process.
 Utilisation of seamless connection and communication scale has made DELL
company to reach not only to its existing customers but expand its coverage amongst
new ones. The website is easy to use and understand. The customers can easily place
the order and along with this they have a valid proof so if at a later date any
mishappenings or miscommunications occur, the data can be utilised.
 Keeping minimum number of suppliers eliminates boundaries between companies and
promotes effective integration directly between the customer and the producer, this
build a trustworthy relationship among the manufacturer’s and customers (Ferri, et. al,
2018).

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 The assets are not guarded for longer period rather they are utilised quickly as and
when they become out of order. Integrated supply chain in comparison to vertical
integration and simultaneous benefits from innovative investments, highly specialised
suppliers and focus on efficiency and effectiveness led Dell acquire a greater market
share (Driveyoursucess, 2018).
Concept of sustainability
Dell as a company is already prospering in the industry. After having analysed all the
advanced technological aspects of DELL and challenges it faced to gain a competitive
advantage, recommendations on further sustainability is exigent (Giancarli, et. al, 2016).
However, even after the current capture and immense market scope, in dynamic technological
industry, a minimal margin is left for some room for improvement.
 Due to DELL’s escalating sales it shall consider to pick the range of suppliers and
vendors, add on them to our selective channels of supply chain and logistics. The
additional suppliers would not only help in variable opportunities but also be able to
compare component costs. It is also beneficial for the suppliers as they would be
getting a platform and to join hands with the largest technology developer.
 Secondly for increasing market shares the Dell company can conduct "customer
surveys”. Although Dell is prevailing at wider scope in overseas markets, it lost some
share in domestic market. It becomes mandatory for the Dell to attract customers to its
products via advertisement in the international market (Hites, et. al, 2014). In order
execute this idea and achieve this goal; in markets it shall trail their competition
through in-depth surveys. This way the customer satisfaction will be kept on priority.
 The Research and Development should incur expenses to increase the concept of
minimal errors. The quality competition has amplified, and now it is critical for Dell

Logistics and Management 10
to stand alone in competition against the competitors the company shall outsource or
develop new technology, offer better quality products and services. Dell should
consider expanding into ancillary product markets which can augment their computer
sales.
 The online data back-up facilities are provided my Dell. The targeted revenue can be
achieved by offering these facilities to the existing customers whether business or
individual consumers. These capabilities are available on Dell’s own servers and
prove to be a beneficial project for both consumers as well as Dell. For consumers
who are engaged in businesses keeping the security of the data is of utmost
importance. Dell makes available the option of retrieval of the data so that if any
sudden calamity occurs at plant premises and damages the computers systems, they
can avail the data backed up offsite on their system (Van Leeuwen, et. al, 2017). This
way Dell can increase its income by charging for extra services as the data is kept at
different location.
 Aggrandize the customer support services for better management and communication
which ultimately is a factor for Dell's success. Dell should keep well-trained customer
executives available verbally as well as digitally for customer support. Few of the
surveys were conducted and it was reflected that Dell should improve its customer
support system to avoid any further glitch. Further a team shall be formulated to
discuss the drawbacks and how to rectify the same (Ghaffarzadegan, et. al, 2018). A
proper cost-benefit analysis should be conducted to determine the level of investment
required in the relevant. Appoint the people who can evaluate technical questions at
their level & assist customers with relevant solutions.

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Conclusion
It can be concluded that in this dynamic environment the supply chain is an essential
component for all the sectors to enable their businesses extend at different levels. To
channelize all the resources in the right direction is what makes a manufacturing unit strong.
The paper compared the strategies and objectives of Dell which can be followed by
companies and are not useful for small scale businesses as they lack economies of scale,
product of the volumes and purchasing power. Moreover a complete review of logical
activities its future direction and development and its cooperation with the customers is done.
The dell’s success story is surely a benchmark for other similar as well as dissimilar
companies which can adopt its objectives, goals and strategies to crown their market share.
The customer’s integration along with the usage of technology and techniques can best serve
the domestic as well as international market. Thus due to the reforms in business patterns
companies have to consider the application and importance of supply chain management and
logistics management and their experiences.

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