What problems did Dell face? (5 points.

)
When Dell entered the retail market in 2008 they had the realization that the supply chain they were
using for online sales was no longer going to be effective in the new market.
What was Dell’s solution to the problems? (5 points.)
They decided they needed to transform their supply chain to serve new customers in the newly formed
channels with different products. To do this Dell created multiple supply chains the were designed and
dedicated to a different segment of their industry.
What does the authors mean by demand uncertainty and customer relationships? (10 points.)
Demand uncertainty and customer relationships are dimensions to determine the various customer
segments each of which requires a different supply chain strategy. When demand uncertainty is high
and customer relationships are loose needs to have a different strategy than when demand uncertainty
is low and the relationship is tight.
Demand uncertainty is not knowing whether or not there will be someone wanting a specific product.
For example when demand uncertainty is high Dell focuses on customization. This is how their online
market is set up, where each PC is designed to fit a customer’s specific needs based on realized
demand.. The product is only configured once the order has been placed. Low demand uncertainty
means there is a reasonable expectation that products will be demanded in the future making
forecasting more accurate. When demand uncertainty is low, for example in the retail market, Dell
focuses on lowering costs through mass productions. They can utilize economies of scale because
forecasting is more accurate.
Customer relationships refers to the relationship between the customer and the company. When this
relationship is loose customizing the product to specific needs helps to ensure the customer truly gets
what they want. Which helps to build a relationship for future sales. When customer relationships are
tight the design and product variety are specialized for corporate customers. These are the groups that
will purchase a large amount of the same product. This will enable corporate clients, for example, to
order the same product over a long period and lower the total cost for the customer.
What would happen if Dell mismatches the supply chains with the customer segments? Discuss at least 1
mismatch scenario. (10 points.)
If Dell mismatched the supply chains with the customer segments there is potential for not enough
product to meet demand or too much product for demand.
If Dell mismatched the supply chain Build-to-Plan with the customer segment online/low-volume
configurations there would be huge costs that Dell would bear and potentially lose if the customer did
not eventually purchase the products or the products became obsolete before they were sold. Dell has
so many different configurations available the building to plan is not feasible for their online markets.
How does Dell integrate the different supply chains? (5 points.)
Dell uses synergies to reduce complexity and utilize economies of scale when integrating the different
supply chains. They do this by reviewing five different areas where synergies can be utilized:
procurement, product design, manufacturing, planning and order fulfillment.
What is the role of technology in the implementation of Dell’s new supply chains? (5 points.)
Dell needed to upgrade their legacy systems because they didn’t allow for lot orders to be processed. To
adapt for retail Dell needed a finished goods inventory system to keep track of what products they had
in different retail locations. The legacy systems couldn’t accommodate these new requirements so the
systems were updated to support multiple channels.
Besides the “four-supply-chains” strategy, what other supply chain strategies does Dell use, and why
does Dell use them? Discuss at least 1 other strategy. (5 points.)
Dell also utilized synergies in their supply chain segments, which are procurement, product design,
manufacturing, planning and order fulfillment. Dell uses them to reduce the complexity and take
advantage of economies of scale. Synergies in procurement take the volume of needed inputs across the
various segments and ordering them together from suppliers to reduce purchasing costs.
At the end, the authors remark that many other companies could also face supply chain mismatch
problem that Dell had earlier. Please think of another company (any company), and describe potential
supply chain mismatch problems they may have, and discuss what they could do to solve them. (15
points)
IKEA has the potential to have supply chain mismatch problems. For example their store locations and
their online sales are for each store individually. If I’m in Grand Rapids, MI and I order something from
IKEA, it ships from the store in Canton, MI. Therefore the quantities available are based on what’s in-
store only. When COVID-19 shifted everyone to working from home, many people wanted to get a desk
to create a home office but IKEA couldn’t keep up with the demand because the stock at the store is
limited. To help solve this supply chain mismatch IKEA could build several warehouses across the US to
stock additional inventory of their best selling products. This could aid as a supplement to the in-store
inventory for the online market.