Developing a Supply Chain Based on a Case Study

Introduction

Today, there is a great variety of different technology companies. Some are specialized in particular types of manufacturing, but most produce everything: from small details to supercomputers. Some of the companies prefer to implement mass production strategies and have quantity benefits, and others try to improve the quality. However, there are also those who invent new ways that have never been used before. A great example of such company is Dell. 

During the past 30 years, the company made great progress having undergone a transition from the hard-drive upgrades to the end-to-end services provider (Mangan & Lalwani 2016). Moreover, the core of company’s success is its supply strategy. This paper analyzes Dell’s supply chain management system, including its advantages and disadvantages, and outlines perspective directions of Dell’s future development.

The Supply Chain

Dell’s success is mostly connected with the supply chain management strategy of the company. Dell’s owner, Michael Dell developed a new distribution system. The first step of the new strategy of the company was the implementation of online orders into the process of communication between manufacturers and customers (Manataki, Chen-Burger & Rovatsos 2010). When Dell’s competitors were able to deliver the order in several days, Michael’s company sometimes managed to make a delivery in 1 hour (Davies 2014). The main stress in his supply chain strategy was put on the velocity of delivery. The second important feature of Dell’s supply strategy is its “configure-to-order” system (Mangan & Lalwani 2016). The company builds their computers only after they are ordered (Turban, Volonino & Wood 2012). It is very convenient: they receive their payments before producing the computer. Thus, the risks of the company are usually minimal.

In addition, another reason for Dell’s prosperity is its original modification of a supply chain. The company’s main suppliers set up their factories near Dell production centers, which helps them to deliver required spare parts within several minutes. Dell creates peculiar “vendor hubs” in order to receive all necessary details and create original product very fast (Christopher 2016).

One of the key features of Dell’s business model is its individual approach to customers. The company focuses mostly on corporate customers. Dell has created customized home pages for their biggest customers, where the employees of those companies are able to create the desired models of computers and choose appropriate software (Davis 2010). Such system also helps Dell to collect big data storages of information about customer’s preferences. These data complexes are one of the four key advantages of the company because that information helps to predict future trends and prepare necessary parts before the demand rises. It is also extremely important that all shipments are arranged electronically which also helps to reduce time losses (O’Brien 2014). The company also uses the “single person build” strategy whereby workers create whole desktops: it helps to increase product quality as well as job satisfaction (Mangan & Lalwani 2016). To my mind, it also brings the customers satisfaction with the product since they see the uniqueness of the product.

Furthermore, Dell’s business model becomes effective due to the absence of mediators between manufacturers and customers (Hofmann & Knébel 2016). The company communicates directly with its clients. In fact, Dell owes its success to its founder whose creative ideas and willingness to take risks and to use new and innovative techniques have ensured the company occupies a leading position in the IT sector.

Dell has a divaricate supply chain, which includes many partner stores. The company uses geographical principle to search for potential suppliers. Thus, to form a list of suppliers, logistics manager should look for reliable companies who would be able to make deliveries to customers in no more than 1 day (Supply chain n.d.). The company is already collaborating with such brands as Microsoft, Walmart, Staples, Best Buy, and others.

The company does not need any stocks. Dell orders necessary products only after the company receives the request from the customer. The method which is frequently applied by the company is the computer’s assembly near the customer’s location using details from vicinal suppliers. Dell also uses local delivery companies. The company offers their customers the 2-business days paid delivery. If a customer agrees to wait longer, the delivery will be free.

The coordinating center of Dell’s logistics system is situated in the USA, but the company uses many regional centers in France, Italy, Spain, Poland, and the United Kingdom. Thus, Dell’s logistics system may be considered to have a decentralized organization. The main instrument of the local systems integration to one holistic network, which is used by the company, is the online tracking system based on the active interaction between regional centers.  

Discussion

Considering the company’s aforementioned supplier system features, it is evident that all production resources for manufacturing processes are concentrated in the hands of suppliers, assemblers, and shipping companies. Thus, by excluding any intermediaries from the company’s logistics system, Dell becomes a peculiar mediator between customers, suppliers, and manufacturers. In fact, the company owns only its brand now. The second Dell’s function is the control of financial flows. I believe that for the effective logistics management, it is necessary to concentrate another tool of influence in its hands, such as private delivery network.

The company has become a truly prosperous after Michael Dell privatize. Thus, he concentrated all the innovation potential of the company only in his hands. In the case of the implementation of its own delivery system, the company will have another important advantage and a new way of controlling its logistics network.

Conclusion

To conclude, Dell has become one of the leaders on the IT market due to its idea of competing in velocity. The company combines an individual approach to its customers with local suppliers’ factories. The use of online order processing and payment helps the company to reduce the time of completing orders and receive money from customers before building computers. Such strategy helps Dell to create a new effective build-to-order business model, which includes both suppliers and customers.