CASE STUDY

UNIT V
SUPPLY CHAIN MANAGEMENT

Dell organization was built up in November 4, 1984. It is an American multinational

data innovation company situated in Round Rock, Texas, United States, that creates, offers
and backings PCs and related items and administrations. The organization is one of the
biggest innovative enterprises on the planet, utilizing more than 103,300 individuals around
the world. The name of its founder is Michael Dell. He was the most youthful CEO to direct
an organization to a Fortune 500 positioning. It generates an income of USD 63.07 billion
yearly. The company manufactures desktop computers, notebook computers, network
servers, work stations, storage products and customization of each product with the suppliers
being Microsoft for windows, Intel for microprocessors, Nvidia for graphics chips and Sony
for the monitors.
As discussed in the case study, Dell keeps up a decent connection with the provider
(supplier) and help them to centre on the innovative capacities to support initiative segments
in the light of the fact that in the realm of quick change in the innovation, research and
development expenses are roughly significantly higher for a company to keep up monopoly
in their segment. This is the reason that suppliers are asked to keep a lot sizes and stock as
low as reasonably be expected. Dell always focuses on its customer research and use that
research to help suppliers and itself. As far as inventory details and new orders are
concerned, Dell has built a web page, where suppliers can view order details and can plan
how much and when to provide the product to dell based on actual demand of the consumer,
which will decrease the bullwhip effect on supplier end. The main motive of the dell is to
work with supplier as a team and to reduce the customer order line and to keep moving the
supply chain. At that point with the joint efforts of the whole provider`s, Dell can provide a
large variety of alternatives to their clients and can work to accomplish a quick throughput.
FIRST MOVER ADVANTAGE
If we see on the distribution side dell is mainly dependent on direct sales through internet, in
order to enhance income by offerings large varieties of desktops, notebooks and enterprises
products. All these are displayed on company’s websites and customers can directly
purchase from it. Even customers can place order from anywhere at any time. On comparing
online and retail dell computer purchase, online is cheaper because of the brick-and-mortar
model. In dell company whenever the new product is manufactured at the same time it is
introduced over the company`s website. Whereas the competing companies firstly produces
the product and then introduce the product after it reaches the retail store for selling. That is
why Dell has an advantage of introducing new product early in the market, said to be first
mover advantage.
DELL OFFERS A BETTER MATCH TO DEMAND AND SUPPLY
Dell company has designed its manufacturing and assembling process in such a way that
product is manufactured in a couple of minutes. In this way earlier production can be
postpone and new product can be manufactured according to the order received and once
new product is manufactured, the postpone production again starts. As it offers modularity
and tight scheduling. Whereas the other companies sell their products through retailers and
wholesalers and they find impossible to postpone production.
ENJOY CASH FLOW ADVANTAGE
The best part is that due to direct sales dell company eliminates the extra cost and margins
lead by retailers and wholesalers. Point to note that dell operates at negative working capital
as it receives it payments before it pays its suppliers and enjoy cash flow advantage.
DRABACKS
On the darker part, Dell company bear a high shipping cost then selling their product to
retailers and wholesalers. In this way dell has to bear shipping cost for each product when
ordered by customers, whereas other companies bear large shipment via tucks to warehouses
and finally then to retailers which is less expensive per unit.

DISCUSSION QUESTIONS

1. How has Dell use its direct sales model and build to order model to improve its supply
chain?
2. How has Dell exploited the direct sales model to improve operations performance?
3. How does Dell Compete with a retailer who already has a stock?
4. What are the main disadvantages of Dell’s Direct Sales Model?
5. How does Dell’s supply chain deal with the Bullwhip effect?