...challenges. Dell’s Direct Model Dell has been following it’s unique direct build-to-order sales model for more than 20 years. Customers can plan their own configuration and place orders directly with company via the phone or a web site. Over the years Dell supply chain efficiencies and direct sales gave it a competitive advantage. Dell has also leveraged JIT principle to make its manufacturing process success. Dell’s approach to JIT is different in that they leverage their suppliers to achieve the JIT goal. They are also unique in that Dell is able to provide exceptionally short lead times to their customers by forcing their suppliers to carry inventory instead of carrying it themselves and then demanding (and receiving) short lead time on components so that products can be simply assembled by Dell quickly and then shipped to the customers. Characteristics of direct model * Eliminate costs and risks of carrying large finished goods inventories * High velocity * Low-cost distribution * Direct customer relationship * Build-to-order * Just-in-time manufacturing * Products and Services aimed at specific market segments * Reduced channel costs: from 13.5%-15.5% to 2% of product revenue * Latest Technology was introduced faster than indirect channels * Dell can use IT to directly control its value chain, set quality measures and monitor in real time how material is flowing throughout the chain * Managing Information to ...
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...The Dell practice of selling customizable computers online direct to consumers worked exceptionally well because it catered to a niche market of higher end consumers. These customers sought to design their own machines with customizable options, rather than having to make adjustments post purchase on their own. The text, Supply Chain Management, by authors Chopra and Meindl (2012), illustrates the company’s success in this arena stating Dell experienced, “more than a decade of tremendous success selling its PCs only online” (p. 89). As part of this business model, Dell was able to avoid excess inventory by using a LEAN principle of ‘Just in Time’ manufacturing, assembling each PC only after an order was placed. This dispensed with costly inventory build-up and allowed Dell to manage their bottom-line. The decision to sell through retail outlets, later made by Dell, proved to be the right decision for the company. As the text outlines, lower end solutions with standard parts have proven to fill this gap for in store retail purchasing. Dell was missing out on this market segment by focusing only on the customer computer manufacturing market via online sales. Authors Chopra and Meindl present their support of this statement when they wrote, “Selling standardized models through distributors and retail stores allows the supply chain to save on transportation costs, which are a higher fraction of cost for these low-cost configurations” (p. 92). What is also an intriguing insight...
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...dialogue Dell’s supply chain transformation Historically regarded as one of the great innovators in supply chain management, Dell has undertaken a deep transformation of its supply chain that includes shifts from a regional to global structure and from the famed direct-only model to multiple channels. Annette Clayton, vice president, global operations and supply chain, talks to Turloch Mooney about the new supply chain model that has been three years in the making Key objectives of the new model – – – – Move from a one-size-fits-all model to a segmented supply chain portfolio Create globally, standard yet flexible processes that leverage partnerships Align to customer priorities around speed, choice, and cost Create infrastructure that is responsive to the changing needs of the business Overview of changes taking place Would you tell us how long the transformation will take to implement in full, and how you will measure its success? The overall transformation has been a three-plus year process. We are already seeing the benefits of the transformation. The process redesign is about creating a culture and is really never done. We continue to work to create a Lean culture. Ultimately it boils down to delighting customers as shown by the corporate Net Promoter Score. There are a variety of more detailed measures that track our ability to predictably deliver global supply chain capabilities at targeted total landed cost levels – – – Regional Global structure Direct only...
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...Dell’s Supply Chain Management The term supply chain management (SCM) was initially used in wholesaling and retailing to denote the integration of logistics and physical distribution functions with the goal of reducing delivery lead times. Manufacturers and service providers have used the same term to describe integration and partnership efforts with first- and second- tier suppliers to reduce cost and improve quality and delivery timing. Terms such as integrated purchasing strategy, integrated logistics, supplier integration, value chain management, supply base management, strategic supplier alliances, lean production, Just-In-Time (JIT) logistics, and supply chain synchronization have been used in the literature to address certain elements or stages of this new management philosophy (1998; 1994). Conceptually, SCM includes all value-adding activities from the extraction of raw materials through the transformation processes and through delivery to the end user. SCM spans organizational boundaries and treats the organizations within the value chain as a unified virtual business entity (1991; 1995). (1995) further expanded SCM to include recycling or reuse activities. In general, SCM seeks improved performance through elimination of waste and better use of internal and external supplier capabilities and technologies (1996). The retailing industry has focused on different aspects of SCM, namely, location, transportation, and logistics...
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...JIT 1 Running head: Supply Chain concept-JIT Dell Supply Chain concept Just-In-Time JIT 2 Abstract JIT or Just-In-Time a process where inventory is delivered at the time it is needed. This helps an organization from keeping inventory that in time they might not be able to use. Strong communication between the organization and the supplier is crucial to make the process flow smoothly. JIT 3 Dell Supply Chain concept Just-In-Time Dell is the leader in the computer industry for Just-In-Time. The opportunities of JIT for Dell have been the elimination of its warehouses for storage of inventory, being able to deal directly with suppliers and get the finished product to the customer without delay. By using JIT, Dell has been able to eliminate the storage of inventory. Dell is able to accomplish this by not guessing what their customers want but by taking direct orders either over the phone or on-line and having the customer pay using a credit card. Having the product paid for up front helps Dell with inventory because the customer will not be able to change his or her mind. Once an order is placed Dell contacts the suppliers for the inventory that is required, then builds and ships the product to the customers within 4 days. (Pen of a Paranoid, 2009). Dell holds itself to high standard and they also hold their suppliers to a high standard. If you want to be a supplier for Dell you follow their rules. Dell is able to have their suppliers...
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...dell enterprise technology center series Implementation Study: Dell IT Scales Supply Chain Management with Oracle RAC 10g By Dave Jaffe, Ph.D. Todd Muirhead Tiong Tey Raveendra Avutu T When the expensive proprietary servers running the Dell supply chain management systems had reached their limits, the Dell IT group migrated to cost-effective, standards-based Dell ™ PowerEdge™ servers running Oracle® Real Application Clusters 10g. This architecture helped enhance database performance while providing scalability for future growth. tiple locations around the world. Using the same processes worldwide manufacturing operations, including the for disaster recovery, backup, and monitoring across all Dell operations enables Dell IT to take advantage of a cost- delivery of computers, accessories, parts, and supplies. These effective and readily supported deployment model. This systems must be designed for reliability and cost-effective scal- Database implemented this type of system for Dell operations at mul- systems handle key business functions that support efficient Dell inventory management model and fast, direct Related Categories: he Dell supply chain management (SCM) database article describes how Dell IT migrated its critical SCM appli- ability: a failure can cost thousands of dollars per minute in cations from proprietary UNIX-based servers to industry- factory downtime, and the SCM systems must be able to ...
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...Case: Dell Inc.: Improving the Flexibility of the Desktop PC Supply Chain It was June 2005, seemingly a good time for Dell Inc. Since the dot-com bubble burst in 2001, the price of the company’s stock had roughly doubled. Both the company’s revenue and net income were reaching new heights. In spite of the confidence and optimism, however, Dell’s desktop PC manufacturing division found that its manufacturing costs had continued to surge. Tom Wilson, one of the division’s directors, revealed: “The recent increase in Level 5 manufacturing is alarming to us at Dell. From Dell’s perspective, this adds cost to our overall manufacturing process. We are not able to take as much advantage as we should of the lower cost structure of our contract manufacturers. Instead, we have to rely more heavily on the 3rd-party integrators (3PIs). Not only do we get lower-quality products because we currently don’t require 3PIs to perform integration unit testing, we also have difficulty forecasting for the 3PIs how much manufacturing capacity they should have available to support Dell’s demand.” History of the PC Industry In the 1960s, the first so-called personal computers (PCs)—non-mainframe computers—such as the LINC and the PDP-8 became available. They were expensive (around $50,000) and bulky (many were about the size of a refrigerator). However, they were called “personal computers” because they were small and cheap enough for individual laboratories and research projects. These computers also...
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...products, identify the supply chain for the distribution of these products and explain the channel service needs of customers. To what extent are store- and non-store-based distribution channels alike or different in terms of the channel functions they perform? Many computers are brought through three different supply chain methods: Although Dell is different as they sell straight to the direct customer. Store and non store based distribution are different because of the better personal service received in store. Distribution is all to do with the placement of the product, being online to product is available to a mass market therefore no matter where in the world the customer is they can order a pc. Whereas when the product is in store it is only available to those near the store, and they may have a much limited stock than what an online distributor is. 2. What are the advantages and disadvantages of the ‘Dell model’ of sales, manufacturing and distribution? Dell distinguish themselves to other computer manufacturers, as Dell sell direct to the final customer. Dell decided to do this as they believed they were providing a better service to the customer and they will grow rapport with that customer who will come directly back to them. This is an advantage as the are getting great service and Dell can rely on repeat service. Another advantage of the Dell model is that they allow customers to build to order their PCs, the disadvantage is that Dell then has to contact...
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...customers, Dell Computer’s has aggressively developed a business model to expand their coverage worldwide. The business problem facing Dell Computers is to ensure that consumer demand is being met and that their competitive advantage and value chain are being maintained. Having multiple manufacturing plants is an example how their competitive advantage is maintained and the value chain is operating successfully. Maintaining a lean production practice and providing a high level of Internet based sales in the personal and business sector are two sources of pride for Dell Computers. Knowing their customer needs and thoughts enables Dell to be on the cutting edge of product design and innovations; delivering their products quickly to their customers and at high level of mass customization. Dell Computers has established a strong relationship with all suppliers, which allows the company to maintain only the needed supplies. Having such a strong relationship with its suppliers, allows the company to focus their research budget on the best way to reach the consumer. The desktop, notebook and other production items are not produced until the order is received from the consumer. Corporations have access to a website that has been tailored specifically to their needs and that allows them complete access to all previous orders with ease. The streamlined production process also has significant accounting benefits. The materials are received as needed but the payment for the supplies is not...
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...Crafting And Executive Strategy Assignment 1 Case Study # 6 Dell Inc. In 2008 : Can it overtake Hewlett – Packard as the worldwide leaders in personal computers ? Submitted to : Prof. James Farmer Submitted By : Roshni Patel Student Number : 300686000 Question 1: Dell inc. Began with a ‘winning strategy’. At this time (2012), this strategy is not used to the extent that it was once was and the company is now not the company that it was once. Did Dell’s strategy fails, did the company fail to effectively execute the strategy or did the environment changes around Dell? Evaluate the possibilities. Answer: Dell is a global company that delivers products and services in more than 190 countries and company had given employment to over 4000 employees. The company deals in enterprise computing products, monitors, printers, software and peripherals with a focus on fully integrated improved environmental performance into business. The company had gone through many ups and downs from its inception in 1984 and has to face many challenges and competitors to stay ahead in the market. Dell founded the company with simple vision and business concept that the personal computers could be built and sold directly to consumers which would eliminate the additional cost of intermediaries between the company and consumer and thus reducing the overall cost of the PCs making it cheaper than other PCs in the market. The other advantage was that it reduces the costs and risk associated with...
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...Dell and Information Technology Dell is regarded worldwide as one of the largest and most popular computer companies in the business today, but they do much more than just make computers. Dell has exemplified the way e-business is conducted and has innovated many aspects of it to fit their own business model. Ranging from online computer sales to tailored corporate customer support, Dell has integrated several methods of e-business, which have given them a cutting edge against their competitors, especially at a rough time for the PC market. First let us look at Dell’s background a little bit. Dell is a technology company that not only sells computers, servers, and networking equipment, but IT services and consulting as well. Dell revolutionized computer sales by becoming the first company to sell products via phone and the internet instead of retail stores. While initially Dell blew away competition using this new approach, competitors have narrowed the gap. Dell currently employees over 103,000 people worldwide and is widely known for its supply chain and e-commerce strategies. Since its launch in 1996, Dell.com has been more than just a website, providing users with top level support, information, and purchasing abilities. Starting in 1996, Dell began to sell computers via their website, and in 1997 was the first company to record one million dollars in online sales. By 2000 Dell was pulling in $50 million a day in online sales. According to Dell, roughly half of the company’s...
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...Dell Inc., currently a US$60 billion company, was started by Michael Dell in 1984 when he was an undergraduate student at the University of Texas, in the United States. Within two decades, Dell, with headquarters in Round Rock, Texas, grew to become one of the world’s great computer companies, with near leading shares in the personal computer (PC) and server markets. Nearly 65 per cent of its revenue originated in North and South America; 23 per cent in Europe, the Middle East and Africa; and 12 per cent in the Asia–Pacific region. In 2003, a year in which most computer makers lost money due to slumping global demand for PCs, Dell saw its annual revenues jump by US$5 billion to US$36 billion, made US$2.8 billion in operating profit, and gained 2.3 per cent in global market share. By this time Dell had gained, and held for five years, the position of market-share leader. However, during the mid to late 2000s, Dell’s position in the global PC market began to change. In 2005 it lost its market-share lead to one of its main rivals, Hewlett-Packard. By 2008–9, Dell’s second-place PC ranking came under threat from the Taiwanese computer maker Acer. In 2003, Acer had ranked seventh in PC sales around the world, but by 2008–9 Acer’s share of the global market had risen to 11.8 per cent, just behind Dell with 13.7 per cent and HP still on top with 19.6 per cent. The hallmarks of Dell’s early success in the PC market were direct selling and build-to-order manufacturing, underpinned by...
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...Major Case Assignment Case: Dell 2009 Concordia University John Molson School of Business July 22, 2010 INTRODUCTION Situation Synopsis After almost 20 years of unprecedented growth and industry leadership, Dell has started losing market share to its competitors: HP, Apple, Acer and Lenovo. Furthermore, its stock price has plummeted from its record 1998 high of US$139.88 to almost US$20.00 in July 2008. Due to poor performance, the founder of the company Michael S. Dell has returned to the company as CEO and has devised a plan to bring back Dell as a market leader in this industry and to improve its stock price. Company’s Current Strategy Vision: To be the world’s leading supplier of computer systems Mission: To enable millions of businesses and consumers to get online for the first time Objectives: Improving Dell’s stock price Corporate/Business Strategy: • Outsource full system manufacturing facilities in China for retail business. • Split product design departments into commercial and consumer teams. • Listening & reaching customers, expanding and customizing their product and service portfolio • Low cost structure - drive costs out of the company’s supply chain and expand into foreign markets • Grow company in consumer, enterprise and emerging markets 1. EXTERNAL ANALYSIS 1.1. General External Environment Demographic: Global commercial and consumer markets; Wide range of income distribution among customers from individual...
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...Dell Theory of Conflict Prevention I feel that Globalization has been able to help the world tremendously. Globalization has also brought the whole world together in the sense that people can now integrate and engage in different activities throughout the world. Barriers that existed between communities and societies have been gradually broken by globalization. Today, people can engage in business activities throughout the world without problems of business contact because of technological innovations that have contributed to globalization. In the book The World is Flat, Thomas Friedman argues in support of the Dell Theory of Conflict Prevention. On the other hand, William Duiker is not sure about the trend that globalization sets. He argues that globalization may be caused by a simultaneous trend towards fragmentation. In the Dell Theory of Conflict, Friedman states that the world has an economic interdependence that has a possibility of war. However, he says that when two countries or states engage in business together, they are less likely to go into war when they are equal parts of the same global supply chain. He clearly states that the two countries are unlikely to go to war because they have invested heavily in the business. Therefore, according to Friedman, the success of the business between the two countries involved depends on the supply chain. William Duiker in his book, Contemporary World History links social, cultural, economic and political history of the...
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...adapt to the ever changing business environment and market conditions. With the emergence of new information technologies and ideas from new high-tech industries, it must evaluate how these tools can be utilized to further the business. Recently, virtual integration has been proven very successful to companies like Dell and Cisco. However, this approach is best suited for companies that have very few layers of suppliers as well as more centralized production. The Ford motor company cannot simply change their entire supply chain to fit this model. That being said, some of these theories and practices can still be incorporated into Ford’s current supply chain. These must be calculated changes, involving various departments within Ford’s organization, collaborating with their most valued and dynamic suppliers. With Ford already moving somewhat toward this direction with suppliers who provide complete subsystems for their automobiles, further changes in these areas should prove feasible with limited risk. Issues • Determining whether or not to incorporate the virtual integration model used by other recently successful firms such as Cisco and Dell • Uncertainty on how to utilize emerging information technologies to interact with suppliers • Many tiers of suppliers, all with different levels of sophistication • Fierce global competition • Pressure from shareholders to increase value of company • Pressure from management to improve customer responsiveness •...
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