...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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...STUDY ANALYSIS REPORT ON SUPPLY CHAIN MANAGEMENT OF DELL COMPUTER CORPORATION Submitted By: Asmita Baz ACKNOWLEDGEMENT On the successful completion of the project, first and foremost I thank God, the Almighty without whose blessings the project would not have been a success. I take this opportunity to express my sincere gratitude towards Mr. Subrata Kar (faculty of SCM,Globsyn Business School) under whose guidance I completed this project report. I wholeheartedly thank him for giving his valuable time & attention & for providing me a systematic way for completing our project report in time. THANK YOU. CONTENTS Index | Page No. | Introduction | 4 | Supply Chain | 8 | Channel Strategy | 10 | Market Perspective | 11 | Cycle of Order | 12 | Information | 13 | Conclusion | 14 | INTRODUCTION DELL Computers, a leading PC supplier to corporate and government customers, today is now among the first companies to provide its customers with the next level of industry-standard Pentium processor power, while many vendors are still struggling to broaden their processor-based product lines. Dell's unique ability to take a market strategy position during important technology transitions because of its build-to-order manufacturing process. This build-to-order approach allows the company to maintain low inventory levels and integrate emerging technologies into systems. Today's customers are reducing their supplier bases, providing the opportunity...
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... Dell Inc. Competitive forces The Competitive forces has five forces which are threat of new competition; threat of substitute products or services; bargaining power of customers or buyers; bargaining power of supplier; and intensity of competitive rivalry. I. Threat of new competition: In the other word, it is the threat of new entrants. For the threat of new entrants, based on the Porter's five forces, a model for industry analysis, " Barriers to entry are more than the normal equilibrium adjustments that markets typically make." (Porter's Five Forces). If a company wants to enter a new market, it should consider about the following factors in the industry which are Government policy, economies of scale, capital requirements, brand identity, absolute cost advantages and Industry profitability etc. II. Threat of substitute products or services: According to Wikipedia, " The existence of products outside of the realm of the common product boundaries increases the propensity of customers to switch to alternatives. Note that this should not be confused with competitors' similar products but entirely different ones instead." (Porter five forces analysis, 2009). Many factors such as switching costs, buyer inclination to substitute, price performance, and trade- off of substitutes should be considered by a company. III. bargaining power of customers or buyers: based on Wikipedia"The bargaining power of customers is also described as the market of outputs: the ability...
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...------------------------------------------------- A Case study of Dell supply chain management Liu Xingrui 920514-7482 tml10xlu@student.hig.se Xiao Ziye 920801-6619 tml10zxo@student.hig.se Peng Yunyi 930204-9128 tml10ypg@student.hig.se Liu Siqi 921026-9628 tml10slu@student.hig.se Date Summary Dell’s supply chain is typical paragon among the computer manufacturing industry. The advantage of supply chain lead to a rather strong marketing performance for dell than it ever had been. This paper takes an overview of Dell’s supply chain and strategies used in supply development. Generally, three sections are involved in the analyses which are build-to-customer strategy, direct sale model and IT system. Build-to-customer strategy’s purpose is to give quick responsiveness from supplier to end of users to apply the customer diversification demands. Meanwhile combine with stronger IT system, information is highly sharing without enormous unnecessary intermediaries. Under the great execution of direct to sale model, JIT standard inventory control is obtained and supply efficiency is approved to handle the delivery time limit set Dell. SWOT analyze as the power tool to distinguish a company current situation. The result distinctively shows that despite the advantage of cost, there are still many opportunities as untapped market for Dell to exploit. But no matter how unpredictable the future would be. Right now the consequence is obviously that Dell’s supply chain is very successful and providing...
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...Supply chain management is the vital business function that coordinates all of the network links. Supply-chain management is the management of the activities that procure raw materials, transform them into intermediate goods and final products, and deliver the products to customers through a distribution system these activities are the components of a supply chain. The supply chain function’s role is to help identify the products and services that can best be obtained externally to improve performances to develop, evaluate, and determine the best supplier, price, and delivery for them. The wholesaling and the retailing industries incorporate a logistic focus within their strategic decisions; this is because it will enable them to control the movement of goods from the supplier to end customers without waste. This helps to obtain efficiency of operations through the integration of all material acquisition, movement, and storage activities in the firm which is the objective of logistics. One of Dell’s supply chain management is by using technology to decrease storage and increase efficiency. Meaning, Dell uses their company supply and shipping networks that exemplifies the latest trend in logistics, which is, visibility. Dell makes sure that their inventories can be trace and tracked throughout their entire logistical operations. With solid visibility made possible by technology, the company could query all of its shipments by bill of lading number to figure out which shipments...
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...LIVING IN DELL TIME It could have been the unforeseen catastrophe that rocked Dell's world. Instead, it proved to be the moment when Dell's foremost competitive weapon--an unrelenting sense of urgency and speed-ultimately proved itself. Two years ago, a 10-day labor lockout idled 10,000 union dockworkers, shut down 29 West Coast ports extending from Los Angeles to Seattle, and blocked hundreds of cargo ships from unloading the raw materials and finished goods that fuel U.S. commerce. The port closings paralyzed global supply chains, bloodied retailers and manufacturers, and ultimately cost U.S. consumers and businesses billions. Analysts expected that Dell, with its just-in-time manufacturing model, would be especially hard hit when parts failed to reach its two U.S.-based factories. Without warehouses filled with motherboards and hard drives, they figured, the world's largest PC maker would simply find itself with nothing to sell within a matter of days. And Dell knew all too well that its ultralean, high-speed business model left it vulnerable to just such an intolerable prospect. "When a labor problem or an earthquake or a SARS epidemic breaks out, we've got to react quicker than anyone else," says Dick Hunter, the company's supply-chain czar for the Americas. "There's no other choice. We know these things are going to happen; we must move fast to fix them. We just can't tolerate any kind of delay." Fortunately, the same ethos of speed and flexibility that seems to put...
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...standard supply chain cycle and deliver goods directly from the manufacturer to the customer. • turn its inventory over 60 times a year • introduced new products without having to clear out old inventory in the channel • minimize the rapid depreciation costs that mark the PC industry • operated on a negative cash conversion cycle – by receiving payment from its customers before it paid its suppliers for components • build strong, stable relationships with the large corporations and other organizations who are its core customers Issue Identification Ford continues to face increased completion from foreign competitors while operating in an industry that is experiencing significant over-capacity. In the face of the challenges presented to us, we must determine if Ford should embrace the direct business model which utilizes “virtual integration” that has driven Dell to become a clear leader in their industry. Further, if we chose to utilize “virtual integration” based on the Dell model, we will need to develop and implement significant changes in the some of our most fundamental supply chain operations. In addition, we must determine how Ford should utilize emerging information technology to transform the way we interact with supply chain members. While progress in this area will be integral should Ford choose to pursue “virtual integration”, it is also a stand-alone issue even if Ford does not choose to pursue the “virtual integration” approach to supply chain management...
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...auto industry. The director of Supply Chain Systems at Ford was put in a tough position to make recommendations with regards to the company’s supply chain strategy. There are two groups within Ford that have two different opinions on how Ford should be using emerging information technologies and ideas from high tech industries, such as Dell, to change the way it interacts with suppliers. The first group argued that Ford should adopt Dell’s business model to improve efficiency and increase profits. This group emphasizes that Ford’s virtual integration should be the blueprint for what ford should attempt. On the other end, the second group believes that Ford and Dell operate in two different industries and it is not feasible to adopt Dell’s business model. This case study will demonstrate the toot causes of the problem and will present the reason why Ford should pursue with the mixed approach. Some of the solutions in the mixed approach are based on Dell’s business model, while the rest are not. These solutions are costly and time consuming, but Ford will eventually harvest the benefits of this approach. Issue Identification Teri Takai, Director of Supply Chain Systems, is about to make critical recommendations to senior executives on Ford’s usage of emerging information technologies and ideas from high tech industries to alter the methods Ford interacted with suppliers. There are two different views on this...
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...FORD MOTOR COMPANY’S | SUPPLY CHAIN STRATEGY | | | 11/13/2012 | *The Virtual Integration Model Analysis at Ford Motor Company, to Companies like Dell* EXECUTIVE SUMMARY As director of Supply Chain Systems, I have decided to implement portions of the new supply chain strategy of Virtual Integration and strategies from companies like Dell. Although there are several key differences between the companies, Dell’s virtual integration strategy can be applied to Ford’s supply chain operation. A modification of the virtual integration system currently used by Dell could be applied to Ford’s dependent supplier base, distribution system, dealerships and divisions. Special care will need to be taken to address the unique dependency of our custom Tier 1 supplier. The management of lower tier suppliers of general or generic components would be more effectively suited by the standard procedures used by Dell. In order to adopt the Dell Model we would: · Sell direct · Mass-produce customized products · Build to order · Substitute virtual integration with suppliers for vertical integration If we at Ford could find a solution to the obstacles of virtual integration, which I will explain in detail below. It could essentially make our supply chain run smoothly with less bottlenecking, inventory, and better overall performance. Managers could overcome the complex and error-prone manual process of forecasting and procuring parts which would result in reduced...
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...To meet the demands of their 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...
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...Dell’s Supply Chain Management Strategy Build-to-order model, Dell, Direct model, PC Manufacturing, SCM, Supply Chain Case Study Abstract The focus of this case study is the supply chain management practices of Dell. Dell has been following its unique ‘direct build-to-order’ sales model for more than 20 years. Customers can plan their own configuration and place orders directly with the company via the phone or its Web site. Over the years, Dell’s supply chain efficiencies and direct sales gave it a competitive advantage. Can Dell regain its market leader position from HP? In 2006 however, Dell faced several problems. Many customers complained about long delays in supplies. Recall of Sony battery cells in its laptops brought undesirable media hype to the company. Increasing discontent of customers led to a slowdown in sales. Consequently, Dell lost its market leadership to Hewlett-Packard Co. (HP). Industry analysts felt that, with Dell’s competitors also improving their supply chains and matching Dell’s direct model, the company had been losing its competitive edge. Dell will have to bear additional costs with its foray into retail distribution thereby minimizing its cost advantage. Besides, profit margins of Dell will drop further since it will have to offer incentives to compete with HP in retail stores. Though Dell spruced up its product design and range but Apple is clearly far ahead of it. Many experts feel that such new initiatives will only distract Dell from its supply...
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...Dell Computer, with close supplier relationships, encourages suppliers to focus on their individual technological capabilities to sustain leadership in their components. Research and development costs are too high and technological changes are too rapid for any one company to sustain leadership in every component. Suppliers are also pressed to drive down lead times, lot sizes, and inventories. Dell, in turn, keeps its research customer-focused and leverages that research to help itself and suppliers. Dell also constructs special Web pages for suppliers, allowing them to view orders for components they produce as well as current levels of inventory at Dell. This allows suppliers to plan based on actual end customer demand; as a result, it reduces the bullwhip effect. The intent is to work with suppliers to keep the supply chain moving rapidly, products current, and the customer order queue short. Then, with supplier collaboration, ell can offer the latest options, can build-to-order, and can achieve rapid throughput. The payoff is a competitive advantage, growing market share, and low capital investment. On the distribution side, Dell uses direct sales, primarily via the Internet, to increase revenues by offering a virtually unlimited variety of desktops, notebooks, and enterprise products. Options displayed over the Internet allow Dell to attract customers that value choice. Customers select recommended product configurations or customize them. Dell’s customers place orders...
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...this organization in? Dell Computers was founded by Michael Dell in 1984 with the aim of providing consumers with computers that meet their needs. The Dell organization is in the business of making personal computers. Dell does not make most of the parts it uses for the computers but buys them from other companies. The computers are then assembled from stock parts. The company has become synonymous with customer satisfaction since it was established in 1984. The developments made by Dell computers on the personal computer market are astonishing given the amount of time it has taken them to reach the point they have reached right now. Dell has ventured into other products like printers, however; it has been criticized for modifying its printer cartridges to only work with Dell computers. Despite this shortfall, it remains one of the most popular personal computer sellers in the world. Who are this organization’s competitors? Customers? Suppliers? New entrants to this marketplace? Dell’s competitors are fellow PC manufactures and makers in the business. These include Hp, Microsoft, Toshiba and NEC. Its suppliers are mostly from the Eastern countries including Asia-Pacific and Japan. The Eastern countries generally offer their parts at a cheaper price than most suppliers offer and therefore making it easier for Dell to compete in the market despite the fact that it does not make most of the parts it assembles into computers. Dell’s suppliers include AMD, Cypress, Parade...
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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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...18-year-old Michael Dell left college to work full-time for the company he founded as a freshman, providing hard-drive upgrades to corporate customers. In a year’s time, Dell’s venture had $6 million in annual sales. In 1985, Dell changed his strategy to begin offering built-to-order computers. That year, the company generated $70 million in sales. Five years later, revenues had climbed to $500 million, and by the end of 2000, Dell’s revenues had topped an astounding $25 billion. The meteoric rise of Dell Computers was largely due to innovations in supply chain and manufacturing, but also due to the implementation of a novel distribution strategy. By carefully analyzing and making strategic changes in the personal computer value chain, and by seizing on emerging market trends, Dell Inc. grew to dominate the PC market in less time than it takes many companies to launch their first product I. Statement of the Problem Dell has been following its unique ‘direct build-to-order’ sales model for more than 20 years. Customers can plan their own configuration and place orders directly with the company via the phone or its Web site. Over the years, Dell’s supply chain efficiencies and direct sales gave it a competitive advantage. II. Statement of Objectives * Examine and analyze Dell’s Direct model, its basic working, success and future challenges * Typical Working of Dell’s Supply Chain and future supply chain challenges * Highlights Dell’s evolving Supply Chain practices...
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