Logistics and Supply Chain Management: Dell Case Study Report

This report provides a comprehensive analysis of Dell's supply chain strategy, focusing on how the company has achieved a competitive advantage in the computer hardware and software industry. The report examines Dell's configure-to-order (CTO) model, which allows customers to customize their computers, and its direct sales system, which minimizes inventory costs. It highlights the fundamental reasons for Dell's success, including its ability to offer customized products and build strong customer relationships. The report also identifies key issues faced by Dell, such as high shipping costs, complex operations, and product quality concerns. Furthermore, it explores various logistics management strategies, including improving service quality, enhancing the customization model, expanding source relationships, and increasing international operations, to address these challenges and sustain future growth. The report concludes with recommendations for Dell to effectively implement these strategies and maintain its market position.

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Logistics and Supply Chain Management

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Executive Summary
The aim of this report is to evaluate the supply chain strategy of Dell in order to understand
the key factors that provide a competitive advantage to the company. Dell effectively
controls its supply chain, and it offers configure-to-order services to its customer which
allows them to customise their personal computers through the website of the company.
Specific issues faced by Dell in its supply chain include high shipping costs, complex
operations and low quality of products. In order to address these issues, different logistics
management strategies are given in this report such as enlarging source relationship,
designing and delivering superior and efficient quality products, improving the
customisation model and expanding aboard. Lastly, a conclusion is drawn based on the
above analysis and recommendations are given for Dell to effectively implement logistics
management strategies in the organisation.

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Table of Contents
Introduction...............................................................................................................................3
Fundament reasons for Dell’s success.......................................................................................4
Issues in the case........................................................................................................................5
Logistics management strategies...............................................................................................6
Conclusion..................................................................................................................................8
Recommendations.....................................................................................................................8
References..................................................................................................................................9

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Introduction
In today’s competitive business world, corporations are struggling to stay relevant in the
market by focusing on generating a competitive advantage in the industry that enables
them to stay agile to address the changes in the market conditions. Effective control over
the supply chain operations provides a competitive advantage to companies which enable
them to reduce their operating costs and improve the quality of their products (Barney,
2012). In this report, the case study of Dell will be evaluated in order to understand how the
company has generated a competitive advantage in the industry through its effective
control over the supply chain operations. The objective of this report is to understand the
fundament reasons due to which Dell has generated a competitive advantage in the industry
which is the key to the success of the enterprise. This report will evaluate the key factors
that lead to the effectiveness of the supply chain of Dell by evaluating the case study and
understand the key issues which are presented in the case. This report will also evaluate
logistics management strategies which assist the company in addressing these issues to
make sure that the company is able to sustain its growth in the market.

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Fundament reasons for Dell’s success
Dell is an American multinational corporation that operates in computer hardware and
computer software industry; it is one of the largest technological corporations across the
globe which has hired over 145,000 people worldwide to manage its operations (Forbes,
2019). The product range of the company includes personal computers, software, HDTVs,
servers, network switches, data storage devices, printers, cameras and other electronic
devices. The company has created a positive brand image in the market due to innovations
in supply chain management which enable it to offer the service of ‘configure-to-order’
(CTO) or ‘build-to-order’ (Mangan, Lalwani and Lalwani, 2016). This approach enables
customers to configure the specifications of their personal computers through the
manufacturing process. Previously, the company was a pure hardware vendor; however, it
entered into the IT services market in 2009. The company has been very successful when it
comes to cutting cost in their operations and delivering exactly what the customer wants
which assisted them in building strong relationship with their customers. The company has
achieved this success due to its direct sales system which enables them to minimise
inventory cost and increase inventory velocity. Through its supply chain, the company is
able to offer the option to its customers to select each and every part of their personal
computer and the company also deliver the product with efficiency (Mansouri, Gallear and
Askariazad, 2012). Due to these factors, the company has built a strong market reputation
which enables it to gain a competitive advantage over its competitors.
The company is able to bring products to its customers faster than compared to
competitors, and it also focuses on direct sales through the internet rather than offering
assembled computers that are ready to purchase. Due to the use of the internet, the
company has been able to quickly respond to its customers and give them the option to
customise their products which attracts them to the company (Martin et al., 2014). The
supply chain of the company enables the customers to click and assemble their product
piece by piece while limiting under their budget which enable them to choose Dell over its
competitors. Therefore, the implementation of real distribution strategy enables Dell to sell
and deliver its products which enable the company to invest in customer relationship
management. It assisted the company in creating a loyal customer base (Hofmann, Beck and

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Fuger, 2012). Since the internet is a key part of the business strategy of Dell, it is able to
drive its sales and production system directly through the online platform while also
ensuring that it communicates with its customers. The company also conducts an awards
program for its suppliers that also assisted the company in building strong relationships with
its customers. The company also focuses on controlling the operations of manufacturing and
developing its products through its CTO supply chain which enable the company to fulfil
customer demands (Elbert, Pontow and Benlian, 2017). Through ‘single person build’ and
use of internet the company has eliminated ‘middlemen’ which improved the quality of its
products while reducing its operations costs.
Issues in the case
Although Dell has implemented an effective CTO supply chain strategy for managing its
operations; however, there are still many areas in which the company can work in order to
ensure that it remains agile to address challenges in the rapidly changing market. One of the
key issues faced by Dell is that it relies on long term demand sensing in order to continually
refine its portfolio. Without these practices, it becomes difficult for the company to forecast
the demand of its customers or their change in demand. Another issue is that the shipping
costs of Dell configured products are considerably high which affects the sales of the
company in the foreign market (Qrunfleh and Tarafdar, 2013). The company is a global
brand, and it offers its services in different countries; however, due to high shipping costs, it
has become difficult for the company to expand its operations in developing or emerging
markets which is crucial for the company to sustain its future growth. The CTO supply chain
of the company is highly complex as well, and it has to hire a single person to handle one
order which resulted in making it difficult for the company to track its operations. Moreover,
many customers have complained that the quality of Dell products is not always high
especially its batteries (Mangan, Lalwani and Lalwani, 2016). There are a number of factors
that contribute to this issue which includes the fact that it has adopted ‘single person build’
strategy in which a single employee is responsible for building the personal computer of the
customers as per their order, and many times, they made a mistake which goes unnoticed
and it adversely affects the quality of Dell’s products.

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Logistics management strategies
There are different logistics management strategies which can assist Dell in addressing its
key challenges in the supply chain in order to ensure that the company is able to maintain
its success in the future.
 Superior and efficient Service
The market for personal computers is changing rapidly as the demand increases and
technology progresses due to which Dell should focus on designing and delivering superior
and more efficient services to its customers so that it is able to stay relevant in adverse
market condition (Zhu et al., 2014). The demand for high-quality computer products is
increasing on a global stage, and customers prefer those brands that stay true to them and
deliver the best services to them. Dell should also focus on the demand of its customers to
make sure that it is focused on designing new policies in order to improve its services. The
company should improve its customer care services to make sure that consumers are able
to share their feedback and queries with the company and they are resolved within a
reasonable timeframe (Kozlenkova et al., 2015). The company should also focus on
improving the quality of its products by controlling more aspects of its supply chain such as
battery manufacturing to increase the quality of its products.
 Improving the customisation model
The customisation model of Dell makes it unique, and it also attracts many customers
towards the company who wanted to build their own personal computer. This model is also
suitable for customers who are living in developing countries and who have a set budget to
build their own personal computer. This model enables them to carefully choose a
computer which fulfils their requirements without going overboard on their budget (Holweg
and Helo, 2014). The company should further make improvements in its customisation
model by offering new customisation option for its customers which enable them to
customise even further options in their computers. The company should improve the quality
of its products including batteries in order to make sure that its customers did not choose
the products of its competitors due to a single issue. Along with the internet, the company
should also offer the service of configuring the personal computer of its customers directly
through local stores to increase its customer base (Qrunfleh and Tarafdar, 2013). These

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operations will reduce the complexity of the supply chain of the company which will
improve its control on the operations.
 Enlarging source relationship
The company can enter into an agreement with third party companies that offer cheaper
and high quality computer products to give a wide variety of customisation options to its
customers to make sure that they are able to choose what they want. Currently, the
company only allows customers to choose between Dell parts; however, the agreement will
third party companies will enable Dell to increase its customer base and it will also increase
the profits of the company since it will receive a share of profit for the sale of third party
products (Hofmann, Beck and Fuger, 2012). This will also assist customers to choose the
batteries of third party brands rather than Dell if they did not prefer its quality (Mansouri,
Gallear and Askariazad, 2012). This strategy will be beneficial for the company in foreign
markets since it will be able to build a trading relationship with local, already established
brands that customers prefer to make sure that their products are used in its computers.
 Expand abroad and develop showrooms
Dell should expand its operations on an international level in order to ensure that it enlarge
its customer base. Currently, the products of the company are available on a global scale;
however, the company has not effectively established its operations in many emerging
markets such as Indonesia, India and Thailand. The company should expand its operations in
these markets by locally manufacturing its products which will result in increasing the
efficiency of its supply chain (Tsay, 2014). By manufacturing products locally, the company
will be able to eliminate its shipping costs which are a key reason due to which many
customers in developing countries are not able to purchase its products. Therefore, it will
result in increasing the customer base of the company. Dell should also focus on
establishing brick and motor stores in some emerging markets in order to expand its
operations by building trust among customers (Mansouri, Gallear and Askariazad, 2012).
Customers are more likely to purchase its products through stores since they will receive
better customer services which will increase the profits of the company.

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Conclusion
Based on the above observations, it can be concluded that Dell has generated a competitive
advantage in the personal computer industry through its CTO supply chain that enables its
customers to configure their personal computers. Through this supply chain, the company
has reduced its costs by offering its services through the internet and removing the
middlemen which resulted in increasing its profits. The company is also able to ensure the
quality of its services since it uses ‘single person build’ strategy. However, there are specific
issues which are faced by Dell that are likely to affect its future success such as high shipping
costs, complex operations, poor quality of products and others. In order to address these
issues, the company can rely on different logistics management strategies such as designing
and delivering superior and efficient services, enlarging source relationship, improving the
customisation model and expanding aboard.
Recommendations
Following recommendations can assist Dell in addressing its key challenges relating to the
supply chain that will assist the company in maintaining its success in the future.
 The company should focus on continuously making upgrades in its CTO supply chain
so that it is able to stay relevant to the market without which it will be difficult for
customers to choose Dell above its customers.
 The company should expand its operations in foreign markets such as Indonesia,
Thailand and India where the demand of personal computers is increasing by
establishing its operations locally which will improve quality, reduce labour costs and
eliminate shipping costs.

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References
Barney, J.B. (2012) Purchasing, supply chain management and sustained competitive
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Elbert, R., Pontow, H. and Benlian, A. (2017) The role of inter-organizational information
systems in maritime transport chains. Electronic Markets, 27(2), pp.157-173.
Forbes. (2019) Dell Technologies. [Online] Available at:
https://www.forbes.com/companies/dell-technologies/#928631694f26 [Accessed
16/04/19].
Hofmann, E., Beck, P. and Fuger, E. (2012) The supply chain differentiation guide: a roadmap
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Holweg, M. and Helo, P. (2014) Defining value chain architectures: Linking strategic value
creation to operational supply chain design. International Journal of Production
Economics, 147, pp.230-238.
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Mangan, J., Lalwani, C. and Lalwani, C.L. (2016) Global logistics and supply chain
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Mansouri, S.A., Gallear, D. and Askariazad, M.H. (2012) Decision support for build-to-order
supply chain management through multiobjective optimization. International Journal of
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R., Krishnan, M., Hegde, G. and Kesanapally, C. (2014) Dell’s channel transformation:
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Qrunfleh, S. and 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), pp.571-582.
Tsay, A.A. (2014) Designing and controlling the outsourced supply chain. Foundations and
Trends® in Technology, Information and Operations Management, 7(1–2), pp.1-160.
Zhou, H., Shou, Y., Zhai, X., Li, L., Wood, C. and Wu, X. (2014) Supply chain practice and
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Economics, 147, pp.624-633.