Dell Supply Chain Management Case Study

Case Study: Supply Chain Management at Dell, Dell's Direct Model

Dell Inc. pioneered the Direct Model of selling PCs directly to the consumers. How it enabled Dell to manage its supply chain efficiently is discussed in this case study.

Dell Computer Corporation a leading direct computer systems company was founded in 1984. Dell sells its computer systems directly to end customers, bypassing distributors and retailers (resellers). Dell's supply chain consists of only three stages— the suppliers, the manufacturer (Dell), and end users.

Dell’s direct contact with customers allows it to:

• properly identify market segments,
  
• analyze the requirements and profitability of each segment, and
  
• develop more accurate demand forecasts.
  

Dell matches supply and demand because its customers order computer configurations over the phone or online (Internet). These computer configurations are built up from components that are available. Dell’s strategy is to provide customised, low cost, and quality computers that are delivered on time. Dell successfully implemented this strategy through its efficient manufacturing operations, better supply chain management and direct sales model. Dell takes orders directly from its customers; either on phone or online. Thus, Dell reduces the cost of intermediaries that would otherwise add up to the total cost of PC for the customer. Dell also saves time on processing orders that other companies normally incur in their sales and distribution system. Moreover, by directly dealing with the customer Dell gets a clearer indication of market trends. This helps Dell to plan for future besides better managing its supply chain.

Another advantage Dell gets by directly dealing with the customer is that it is able to get the customers requirements regarding software to be loaded. Dell loads the ordered software in its plant itself before dispatching it. By eliminating the need of a PC support engineer to load software, the customers gain both in time and cost. They can use the PC’s the moment they arrive. More soon....

Case Study Keywords: Supply Chain Management, SCM, Supply Chain Case Study, Direct Model, PC Retailing, Dell Computer Corporation, Michael Dell, Founder and CEO

Click to download full text of this Case Study in PDF format: Dell's Supply Chain Management Strategy

Walmart Case Study on Supply Chain Management (SCM)

Case Study : Walmart's Supply Chain Management (SCM) Practices

Supply chain management (SCM) is important for companies that deliver goods or services. Transitioning from a single company to the whole supply chain implies the need for reorganization and reengineering, strategic management or organizational theories have not yet been incorporated in supply chain management. A competitive business environment has made Walmart focus on innovative processes and systems to overhaul its supply chains and make them more efficient. Increasingly, Walmart is integrating its supply chains with major customers. Wal-Mart is an innovator in SCM, which has helped it to provide low-cost merchandise to its customers and undercut its competitors.

Stalk et al. (1992) reported:
“In 1979 Kmart was one of the leading companies in the retail industry… At that time, Wal-Mart was a small niche retailer in the South with only 229 stores and average revenues about half those of Kmart stores… Today Wal-Mart is the largest and highest profit retailer in the world. How did Wal-Mart do it? The starting point was a relentless focus on satisfying customer needs; Wal-Mart’s goal was simply to provide customers with access to goods when and where they want them and to develop cost structures that enable competitive pricing. The key to achieving this goal was to make the way the company replenishes inventory the centerpiece of its strategy. This was done by using a logistics technique known as cross-docking. In this strategy, goods are continuously delivered to Wal-Mart’s warehouses from where they are dispatched to stores without ever sitting in inventory. This strategy reduced Wal-Mart’s cost of sales significantly and made it possible to offer everyday low prices to their customers."

Stalk, G., Evans, P., and Shulman, L.E. (1992). Competing on Capabilities: The New Rule of Corporate Strategy. Harvard Business Review, March-April, 1992, 57-69.

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Keywords: Case Study, Walmart, Wal-mart, Supply Chain Management (SCM) Practices, SCM, Supply Chain, Strategy and Organization in Supply Chains

Download Case Study: Walmart in Japan (pdf format)

Will Wal-Mart be able to sustain its supply chain advantage : Download Case Study on Wal-Mart's Supply Chain Practices in PDF format.

Company Supply Chain - Weakest Link?

The Supply Chain is a competitive differentiator for organizations and managers. Chief executive officers (CEOs) who neglect it put their organizations in jeopardy.

Identification of key areas where supply chain managers can influence their supply chains is critical in assessing the influence they currently exert. Outsourcing of core business functions like distribution or manufacturing could lead to serious problems for a company. Good Supply Chain Management (SCM) begins with finding the right people to lead a company's supply chain operation, right from the most senior on down the ranks. Managers must participate in recruiting a top-notch supply chain team that will use customer-focused metrics and best-practice benchmarking to bring about cross-functional alignment and achieve efficiencies, which the top management should personally review.

Two serious threats to the supply chain are product complexity and obsolete inventory. It is important to eliminate such cross-functional disconnects. A long term approach should also include business planning, promotional programs, and customer-contract negotiations, with inherent supply chain ramifications.

Keyword: Supply chain optimization; Supply chains; Supply Chain Management, Outsourcing, Lead time