Effective supply chain management (SCM) ensures customers get a better value from the business. SCM entails the integration of structures and processes in the supply chain ensuring an effective and efficient flow of goods, services, and information necessary to provide the value demanded by customers (Sridharan, Caines & Patterson, 2005).
Thus SCM allows entities to “capture the synergy of intra- and inter-company integration and management” to enhance the value the entity delivers to the customer (Grieger, 2004). In the computer industry, Dell has been a standard of effective SCM. This paper assesses Dell’s SCM strategy noting the aspects that makes it an exemplary standard upon which other entities can model their SCM approaches.
Dell’s SCM strategy is based on three core aspects. Firstly, Dell follows a built-to-order approach that allows customers to decide on the features they want in the products they purchase from the entity (Kumar, 2005). Accordingly, the entity does not build products that it intends to stock; rather, it builds products that have a ready market.
Through such an approach, Dell reduces the financial cost of manufactured products (since it does not develop more PCs than required in its target market) and enhances customer satisfaction – since it integrates what customers need in the manufactured products (Kumar, 2005). In this approach, Dell thus uses information technology to ensure real-time communication that links customer orders (demand) to its production activities thus avoiding delays.
A second aspect determining Dell’s SCM strategy is the adoption of a just-in-time manufacturing system that eliminates the need to hold large amounts of inventory (Kumar, 2005). To support such an approach, Dell has established strong collaborations with its suppliers that ensure it does not lack raw materials in case of increased demand. Such collaboration, for instance, ensured that Dell was able to meet customer orders even with disruptions of the normal delivery channels following labor conflicts that led to the shutdown of various U.S. ports for 10 days in 2002 (Baltzan & Phillips, 2009, pp. 278-279). The collaboration with suppliers also enables Dell to share customer needs with suppliers thus influencing them to produce components that are in line with customer trends (Kumar, 2005).
Thirdly, Dell’s SCM strategy is enhanced by its direct-to-consumer sales strategy (Kumar, 2005). Through such a direct-to-customer approach, Dell can collect customer feedback thus make customer-specific products. By working directly with its customers, Dell can learn of their needs in a real-time manner without encountering the inconveniences that would arise by using intermediaries in the distribution channel. Direct interaction with customers allows Dell to achieve its build-to-order strategy since it enables customers to provide their orders an input effectively without having to deal with intermediaries (Kumar, 2005).
Such established direct relationships with the customers also enable Dell to provide its suppliers with up-to-date customer information thus allowing the suppliers to factor customer needs in developing the materials they provide to Dell (Kumar, 2005). Accordingly, Dell’s SCM strategy entails strong integration of suppliers, processes carried out in Dell and customers through effective communication throughout the supply chain as highlighted in figure 1 in the appendix. Such integration is ensured by an information technology infrastructure that allows real-time information transmission among the components of the supply chain.
Dell’s SCM strategy exemplifies an effective approach to managing the supply chain. This essay evaluates Dell’s SCM strategy to identify its core aspects. The entity’s strategy revolves around the effective transmission of information among customers, the entity and its suppliers. Through effective communication, Dell can meet its strategy to build PCs based on customers’ orders and needs rather than building the PCs to meet a specified stock level that it can sell afterward. Additionally, the effective communication between Dell and customers and collaboration between Dell and suppliers, ensure that Dell’s supply chain focuses on enhancing the value for the customer.
References
Baltzan, P. & Phillips, A. (2009). CIS500: Business driven information systems: 2009 custom edition (2nd ed.). New York, NY: McGraw-Hill Irwin.
Grieger, M. (2004). An empirical study of business processes across Internet-based electronic marketplaces: A supply-chain-management perspective. Business Process Management, 10(1), 80-100, Web.
Kumar, S. (2005). An exploratory analysis of competing for supply chains in the personal computer industry. Supply Chain Forum: An International Journal, 6(1), 16-31.
Sridharan, U. V., Caines, W. R. & Patterson, C. C. (2005). Implementation of supply chain management and its impact on the value of firms. Supply Chain Management: An International Journal, 10(4), 313-318, Web.
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