The dissertation is aimed at examining different logistics employed by the Dell from time to time. In this regard the paper looks at the role and importance of logistics for the companies and also studies the trends of logistics in the business community.
specifically for you
for only $16.05 $11/page
The study is conducted by employing qualitative research methodology and data for the research is collected from both the primary as well as secondary sources. In order to obtain detailed information about the logistics employed by Dell Computers, an interview is conducted from a representative of the companies working at a key position in the logistics department so that authentic information about the logistics employed by the company could be gathered.
In addition to this, review of the available secondary material is also conducted so that issues related with the role and importance of logistics can be explored and a deep understanding can be attained about the topic of the dissertation. With the help of the data and information gathered from the secondary and primary sources, the dissertation presents a detailed account of the role, importance and trends in the companies regarding the employment of the logistics and also examines and analyzes the strategies and planning of Dell Computers regarding the employment of different logistics.
Globalization has drawn major impacts on the corporate sector and it has transformed the traditional ways of doing business. In the highly competitive market place of today where the customers have access to each product even located in far away part of the world, the companies have to work even harder to secure better position among their competitors. The responsibilities of the businesses have increased in the new scenario and they have to concentrate more on different aspects and activities of the business like marketing, promotional activities, good will, human resource management and supply chain management.
Globalization has also changed business and the way we conduct it. This is more implacable for marketing and for the supply chain than for any other segments. E-commerce, while not new, is now creating a new dynamic paradigm which makes process of doing business into an integrated organic connection between the customer, the retailer and the suppliers. The supply chain is now totally under the control of many retailers, because e-commerce makes it possible and necessary.
Marketing is becoming more integrated into all the processes of the company, because essentially, the company’s business is marketing, whether it is manufacturing or services. The resulting changes in the supply chain and its management are being replicated around the world. Marketing has always been the connection between the company and the customers. Now it is also becoming the connection between the company and the suppliers, essentially creating a new dynamic supply chain which reacts to what customer’s order, what assembly teams build and which parts the suppliers will ship to the assembly points. Dell keeps little inventory, and their marketing efforts are completely focused on selling what’s already on hand.
Two things are responsible for the nature of business today: the speed at which technology changes, and the rapid development of global business. Companies need to keep up in order to stay competitive. The Internet and global marketing, with the parallel shift in manufacturing to various countries where labor costs are lower has totally changed the supply chain. Everyone at each juncture, includi8ng the customer has changed behavior as a result.
100% original paper
on any topic
done in as little as
The customer expects more and better service and rapid delivery. The retailer is pressured to accommodate those needs. The assembly centers must be able to shift gears almost instantly to accommodate the changing environment. Manufacturers must be able to adjust supplies and delivery dynamically to accommodate all of the previously mentioned.
As the internet has provided the people an opportunity that they can order a product through a website, there is a big responsibility on the shoulder of the company that they have to assure the timely delivery of the ordered product to the customers in different parts of the world. In this context there is great importance of supply chain management and the companies have to design their strategies in such an effective manner that their logistics operations can be successfully operated.
Keeping in view the important role of logistics it is very necessary that there must be proper awareness about the logistics strategies so that the businesses can design their plans in such a manner that they will not face any major loss of money of reputation due to failure in the supply of their products. Marketing has become more than simple sales and has become inexorably entwined with supply chain management. It includes customer care, supplier care in addition to taking care of internal “customers.”
Leveraging the power of the Internet, marketing departments can stay in touch with all the stakeholders, creating a dynamic marketing environment. Depending upon the product or service the company markets, e-commerce strategies can be tailored to meet the needs. It is becoming an essential electronic connection, which spans the globe. This author believes that this is beneficial for local businesses and global multinationals, as this marvelous network offers benefits to both.
In the dissertation we will examine which changes are necessary, what each of these accomplishes and how they benefit all of the stakeholders. Dell will be used as an example of how these all work, since we can directly observe the results. This is an important topic, since it is intrinsic to the global business process and Dell is one of the innovators which created this system and a prime example of how it works. This dissertation is aimed at examining the role and importance of logistics in business with the objective of identifying the key strategies that can lead a company towards success.
Taking US based company Dell as an example, the dissertation strives to highlight different aspects of logistics and its role for the business. The research study is conducted by collecting information from primary as well as secondary sources so that in depth analysis of the issue become possible and comprehensive information about the logistics employed by Dell could be collected.
Need and Significance of Study
In the highly competitive market place of today, the importance of logistics is being recognized by different experts and business professionals. It is believed that an effective supply chain management system and employment of right logistics can lead a company towards success. The importance of logistics for the business organizations demands that there must be proper examination and analysis of different strategies, planning and methods of logistics employed by different companies so that in the light of that examination, the other companies can also design or improve their future strategies to manage their supply chain in more effective manner.
In this context there is great need of such a study that can not only highlight the importance of effective employment of logistics but can also provide further understanding of the matter with the help of a credible and recognized example. Thus this dissertation is aimed at fulfilling this need and by taking the America based computer manufacturing company “Dell Computer” as an example, the paper highlights the role and importance of logistics for the businesses and presents a detailed analysis and informative account of the logistics employed by the company.
The dissertation possess great significance for the individuals as well as organizations related with different type of business because the expected outcome of the study will provide comprehensive information about the logistics; its role, importance and effective planning. This information will help in getting deep understanding of the issue and the individuals and organizations will become well informed about the role of logistics in the businesses.
The organizations can rearrange their supply chain management and logistics operations and planning in the light of the analysis and exanimation of the logistics employed by Dell Computers. Hence there is an established need and great significance of the dissertation and the topic of the research also fulfill an important research study need that is immensely felt by the experts in today’s market place.
Goals of the Study
The dissertation is aimed at studying the role and importance of logistics for the business organizations by taking Dell Computers as an example. In this regard the dissertation unfolds different aspects of employment of logistics and its importance for business. In addition to this the dissertation also strives to examine the logistics employed by the company “Dell Computers”. Thus the main goals of the research are as follow:
- To study the need and importance of logistics for the business organization
- To examine the role of logistics in the effective performance of a company as well as for the business sector
- To study the trends regarding the employment of logistics by different companies
- To examine different logistics employed by Dell
- In the light of the examination result of logistics employed by Dell, present some recommendation and suggestion for other companies for better management of their supply chain and logistics system.
The dissertation is based on a qualitative research study that is conducted by using both the primary as well as secondary resources.
Research Question /Problem Statement
The dissertation is aimed at finding the solution of the following research question/problem statement.
“To examine the logistics employed by the Dell Computers”
There are various methods of conducting a qualitative research study like case study, literature review, natural experiment, participant observation, interviews based, secondary analysis of data or the combination of these (Berg, n.p,1989). While keeping in view the objective of the research it was decided to conduct the secondary analysis of data to have deep understanding of the related issues. The secondary analysis of data is basically to reanalyze the data that is already compiled by other researchers and organizations to meet the requirements of their own study or data base (Miles, Huberman, n.p, 1994). In addition to this it was also decided to conduct an in depth interview with a personnel working at the logistics department of Dell Computers so that detailed information about the logistics employed by Dell can be collected with the help of the interview.
100% original paper
written from scratch
specifically for you?
Sources for Data Collection
The study is conducted by utilizing both the secondary as well primary resources. The secondary analysis of data or the literature review is conducted by collecting information from different secondary sources like books, journals, magazines, logistics journals, research reports, newspapers etc. Along with these secondary sources the interview of a representative of Dell is used as a primary source to conduct the research work.
Significance and Method of Interview
Yin (1994) has explained that in depth interviews are vital sources of gathering information of a research study (p24). The objective of the research was to have deep insight of the logistics employed by Dell to get complete understanding of the matter. In this regard structured questionnaire was constructed and it was sent via email to the Dell Company along with a cover latter describing the objectives and other details of the research.
A request of interview was put forward through the email and a personnel working at a key position replied to the email. The name of the interviewee and his designation is not disclosed in the dissertation due to the “agreement of anonymity”. An appointment was taken from the representative of Dell for conducting a face to face interview. The questionnaire was already sent to the interviewee so that he can get prepared to give the answers to the questions and time could be saved.
Questionnaire for the Research
An attempt was made to construct the questionnaire in such a way that there are only to the point and simple questions included so that the interviewee can easily provide detailed information about the issue. All the questions of the questionnaire were kept open ended to allow the interviewee to express his views in detail. The following questionnaire was used to conduct the in depth interview from a personnel working at a key position at the logistics department of Dell.
- How do you see the role of logistics in successful operations of businesses?
- How much importance is given to logistics in Dell?
- What is the role of logistics in the growth and development of the company?
- What are the different logistics employed by Dell?
- How do you compare different logistics employed by Dell?
- Which method do you think suits your company best?
- Which logistics method proved to be more profitable and added to the efficiency of Dell?
- Do you think there is need to make any major changes in the logistics employed by Dell? If Yes please explain the reason behind that
- What are the problems that you faced due to mismanagement of the logistics? What were the main reasons behind that
- Do you have recommendations and suggestions for other companies so that they can make their logistics operations more effective?
The dissertation is intended to examine the logistics employed by the Dell Computers with the objective of having a deep understanding of the role and importance of logistics and also to study that what are the strength and weaknesses of the logistics employed by Dell so that in the light of that suggestions can be made for other companies for better supply chain management and logistics. Thus this section is comprises of the review of the literature that revolves around the significance of logistics and information about the company Dell. The section is divided in to four parts so that the required information could be classified according to the topics.
The literature review presents information about the Dell Company so that there could be a better understanding of the working and development of the companies and then the importance and trends related to the logistics are studied in the business sector to have deep insight of the issues. After that the existing information about the logistics employed by Dell is studied so that the information gathered from the interviews can be put along the secondary information for better examination of logistics employed by the Dell.
An Introduction to Dell Computers
Dell is an American technology based company that is located in Texas US. The company is involved in the development, manufacturing, sales and support of the personal computers as well as servers, data storage devices, software, hardware, computer peripherals and different other technology related products (Lee, Louise, n.p, 2006). The company is now operating world wide and by the year 2006 there were more then 78,700 people employed by Dell in different parts of the world.
Dell became a reputable name of the industry especially during the 1980s and 1990s and is has been recognized as a leading name in the manufacturing and sales of computers and servers. It was also considered as the world leading computer brand name however the merger of Hewlett Packard with Compaq in 2002 takes the company HP on the first position and now the Dell is rated as number 2 after HP in the computer industry.
Dell was also ranked as the 25th largest company of the world in the list of 500 countries prepared by the Fortune Magazine in 2006. Moreover it was also rated at the 8th position in the list of 20 most admired companies of the world. The company now has offices in thirty-four different countries around the world and it sells its products and services to the customers in more than one hundred and seventy countries (Frigo, Needles, Powers, p45, 2006)
The company was founded by Michael Dell in 1984 when he was a student at the University of Texas at Austin. He established the company with an investment of $1000 capital. The first name of the company was PCs Limited. Michael started the operations of the company from the off campus dorm room located at the Dobie Center. The started the business with the intention to sale the IBM compatible computers after building them from the stock components.
He led his businesses with the belief that if a company sales computer direct to the customer then there is greater possibility that it will achieve better understanding of the needs and demands of the customers and they can also provide the solutions to meet the demands of the people in more effective and efficient manners (Darlin, Damon, n.p, 2006).
He then expanded his business by investing more in to it and in order to concentrate more on business he left his studies and spare most of his time to the business (Lee, Louise, n.p, 2006)
Frigo, Needles, Powers (2006) revealed that the first computer of its own design was produced by the company in 1985. The computer was given the name of “Turbo PC” and it was containing an Intel 8088 compatible processor that runs at the speed of 8MHz. The promotion and advertisement of the computer system was done in the national computer magazine and the consumers were offered the opportunity of direst purchase from the company. They were provided with the options that they can order each unit by selection from different options and the company will build the custom assembled PC as per order of the customers.
The people were also offered lower prices as compared with the prices of the retail brands and in addition to the people also get an advantage that they can go for selecting different options for the assembling of their computers. There were few more companies that were already engaged in such business however they were not as successful and the company established by Michael Dell became the first successful company of its field and in the first year of operation the company succeeded to earn the profit of more then $73 millions. As the company kept on meeting success it also expanded its network and in 1987 the first operation in UK was established by the company.
Later there were eleven more international operations were formed with in four years of the establishment of the first operation. Along with the expansion in the network of the company, its market capitalization was also grown from $30 million on to $80 million and 3.5 million shares were also offered to the public at the rate of $8.50 a share. In the year 1998 the name of the company founded by Michael Dell was changed from the “PCs Limited” to “Dell Computer Corporation”. (Frigo, Needles, Powers, p45, 2006)
Dell Computers was right on the edge of declaring bankruptcy in 1985, until the company developed the Demand Management system. It is a new kind of marketing strategy that totally reversed the direction of the company. The whole idea in a nutshell was “sell what you have” instead of “sell what you plan”. Previously, supply on hand was matched to incoming demand. That is, new parts were ordered to fulfill the ordered units, regardless of what was already in inventory.
Dell had been keeping extremely large inventories in order to build custom machines on demand. Predicting demand two months ahead in order to have the right parts on hand was a ticklish business. Wrong guesses were extremely costly. Reverse the pattern, and find a way to get people to buy systems using what is in stock, and you make more money. So Dell decided to change its marketing and applied price cuts and incentive plans to get encourage people to buy what was in stock (Dell’s Business Strategies)
The company also attempted to sale the personal computers and other technology related products indirectly through the ware house clubs and computer superstores but this attempt was not much successful that’s why the company decided to concentrate on he direst sales of the computer systems that was the successful business of the company (Darlin, Damon, n.p, 2006). The advent of internet further added to the growth and development of the company and from the year 1996 Dell started the sales of computer thought the website of the company as well. Dell was reported as the world largest seller of the computers in US when it left behind Compaq with the revenue of $25 billion. (Lee, Louise, n.p, 2006)
From the year 2002 the company expanded its business operations and also tapped in to the business of multimedia and home entertainment market by introducing the televisions, handhelds and audio digital players. Moreover the company has also introduced the Dell-brand printers for home and small-office use (Darlin, Damon, n.p, 2006).
While aligning to the expansion of the business operations on the company, it was decided to change the name of the company and in the year 2003 the annual meeting was held in which the stockholders of the company approved that the name of the company will be “Dell Inc” so that the name can identify that the company now operated beyond the manufacturing and sales of computers and expanded its manufacturing and sales business to entrainment and multimedia industry as well.
The foundation of Dell is built on the strategy of direct marketing from the beginning and to this day people can buy only directly from the company. Dell customers want the latest and are early adopters of technology. By cultivating regular feedback from customers, Dell was able to adjust and the product life cycle was trimmed to nine months. Dell used incentives and pricing strategies to minimize the drop in sales between different models of its products. The entire strategy of Dell strategy became a combination of building products to order, manipulating the market to sell what could be made with current inventory and buying components in line with demand. Dell executives moved their forecasting efforts to high end products with a longer shelf life, closing the gap (Dell’s Business Strategies)
The company ahs reached a 70% accuracy rate by using constant customer feedback. The resulting drop in inventory improved the company’s profitability. The company has also won corporate business award with its reputation for delivering quality products on time. Moreover the company took advantage of each drop in component prices as they had not paid the higher price to keep inventories. The resulting float created by selling via credit card and paying its suppliers on a schedule was another profitable advantage (Dell’s Business Strategies)
Banham (2003) explains that Dell work on the basis of its direct sales model that benefited the company as well as the consumers in so many ways for example when the company directly gets the order about the manufacturing of the system via phone or internet there is lot of time and money is saved due to which there is also reduction in the total cost and price of the manufactured system. Moreover the company also gets the tailored support needs and services for each market segments and in this way the traditional distribution channels are not employed by the company that reduced the logistics cost as well as time.
Building according to the customer demands also reduces the risk and cost of the associated products. The logistics management at Dell is governed by the quintessential model of Just in Time management. It means that the components are pulled by the suppliers at the right time and right place and after the manufacturing the products are pulled to the customers in less time (Banham, p21, 2003).
The business pattern of Dell is unique in a way that the company never builds any of the computer system until an order is placed by a customer to build one. As a result Dell possesses ultra-low inventory levels and this level is lower then that of the competitor companies almost by one tenth ratio. On the other hand the customers also feel satisfy as they trust the company that they will not only get the product from Dell within the given time and the standard, quality and attributes of the manufactured product will also meet their demands in well manners. This trust is maintained because Dell has realized that for the growth of the company at global level, it is very necessary to maintain the level of manufacturing efficiency, only then they can keep the customer satisfaction and trust.
Importance of Logistics in Business and Manufacturing Sector
The term logistics basically refers to the entire process of movement of products and material out and inside of a company. It includes all the activities that are related with the management of the inventory at rest like during the time when the products wait to be converting in to the finished goods or the time when the finished products are ready for distribution so that they can be taken to the final point of sales. It includes wide range of activities like warehouse, fright management, transportation, storage etc. The management of logistics activities is an important part of supply chain management and it is an integral part of the business activities.
The businesses all over the world especially those related with the manufacturing of products depend a lot on logistics for the successful completing of their business operations. A company can attains competitive advantage over other companies through proper management of logistics operation because efficient performance of the logistics activities assures that the products will be available to the right people at right time and in right condition.
Bovet & Frentzel (1996) explain that in the technology driven market place of today the companies are facing many challenged in form of competitive pressures and maintenance and improvement of profitability. In order to face all these challenges and come up with the solutions of all the problems it is very necessary that a company must have innovative strategies that can take the business towards the road of success and for the development of such strategies it is very necessary that the company must have control over different functions and activities of the business through proper management.
If any company failed to design innovative strategies then it can not expect to earn high rates of profitability or competitive advantage. In this context there is increased importance of different aspects of business management. Along with other functions of business management the logistics is also an important activity that must be well performed by a business so that the efficiency and high profitability of the company could be assured (Bovet & Frentzel, p96, 1999)
Davis, Drumm (1999) revealed that in the manufacturing sector the issues are becoming more complex for the companies along with the passage of time and in order to survive in the competitive market it is very important that the companies much concentrate to develop their core competencies for which the efficient management of logistics operations in very necessary. There are different types of logistics activities that are very important for the success of a business and it is very necessary that there must be awareness in the business sector regarding the role and importance of logistics for the business operations.
The concept of logistics and its efficient performance must be clearly understood by the companies so that they can efficiently manage their logistics operations. (Davis, Drumm, p41, 1999) Stock and Lambert (2001) explains that there are different logistics activities that are as follows:
- Customer service
- Traffic and transportation
- Warehousing and storage
- Plant and warehouse site selection
- Inventory management
- Order processing
- Logistics communications
- Materials handling
- Demand forecasting
- Parts and service support
- Salvage and scrap disposal Reverse
- Return goods handling
Delaney (1999) explains that the logistics play a key role in the performance of a company and the efficiency of the logistics operations has greater impact on the performance and profitability of a business. A business can attain its sustainability, competitiveness and profitability only if the logistics of the company are efficiently managed. The logistics operation must be managed properly and for this there is great pressure on a business from the customers as well as from the internal management because the business objectives could be achieved only of the logistics operations support well the manufacturing and sales process led by a company. (Delaney, p145, 1999)
Stock and Lambert (2001) explains that there are many competitive advantages that can be achieved by the companies through proper management of the logistics activities. Some of the major advantages that a company can drive through logistics management were identified by the researchers as “marketing orientation and operational efficiencies, organizational effectiveness, saving of time and price, efficient movement of the products and good to the customers, well conduct of the manufacturing process and effectual use of the proprietary assets of the organization”.
Moreover the logistics also involve useful engagement of land, labor, capital, human resource and financial assets. While keeping in view these competitive advantages it becomes very important there must be recognition of the significance of logistics management.
Companies now search for such ways that can decrease their costs and at the same time increasing the performance and profitability of the business. This desire led the companies to a point where they feel that they are very much pressurized from external as well as internal forces that they must implement such strategies that can accelerate the growth of their business and can earn then competitive advantages. In this regard the logistics possesses great importance because the businessmen know that with out efficient performance of logistics they can not expect improvement in the profitability of the business.
Thus there is very important role played by logistics in the growth and development of a business and there is also great need that this important role must be recognized by the businesses so that they can design such strategies that can effectively manage their supply chain and efficient logistics operation result in high profitability of the business (Bovet & Frentzel, p96, 1999)
Stock and Lambert (2001) revealed that there are some objectives of logistics that a company strives to achieve through the proper management of the logistics activities. In order to clarify the objectives of logistics the researchers used an equation that “logistics aimed to minimize the total cost given the customer service objective where total costs = transportation costs + warehousing costs + order processing and information costs + lot quantity costs + inventory carrying costs”.
Flood (1999) revealed that a business organization can achieve competitive advantage over the other companies of the industry when it can get well hold on the various discrete activities of the business like the designing, production process, Marketing and sales, delivery, distribution and supporting the products. These activities can be managed well if the company has an efficient system of supply chain. In the management of supply chain a business has to focus on the use of different resources so that the logistics performance can become easy and effective. The companies might perform the logistics activities at own or they can also outsource this function if they find that they will enjoy the benefits from the outsourcing of their logistics activities to the third party. (Flood, p121, 1999)
Lieb & Schwarz (2002) revealed that logistics is one of the major expenditures for businesses and all the other economic activities of a business are greatly affected by the logistics operations. It is proved from the following facts and figures that in the US business sector there is considerable amount of money spent on different logistics activities.
According to the statistics of Bank of America in the year 1999 there were an estimated $554 billion spent by the industries on the freight transportation and the businesses spent more than $332 billion on the warehousing, storage and inventory carrying costs. In addition to this the businesses spent more than $40 billion to administer, communicate, and manage the logistics process. In this way the total expenditure on logistics amounted to over $900 billion in the year 1999 in the business sector of United States.
The expenditures on the logistics activities kept on increasing and the Bank of America reported that in the year 2001 the US business logistics systems costs totaled $970 billion, the equivalent of 10% of the US gross domestic product measured in nominal dollars. The expenditures on the logistics activities are rising all over the world and according to an estimate internationally the companies spent about $3 trillion on different activities of logistics.
Along with the expenditure on the logistics activities by the business the trend of third party logistics is also getting momentum and in the year 2000 third-party logistics service providers (3PLs) generated $56.4 billion revenue in the US that was higher then the revenue generated by 3PL in 1999. The revenue for the year 2000 was $46 billion whereas in the year 2001 the estimated total contract logistics market revenues were $60.8 billion.
Flood (1999) explains that the benefits of the logistics are far beyond the rise in the profitability and performance. It is a huge consumer of land, labor and capital, in the industrialized countries particularly the logistics accounted for the usage of more land labor and capital because in such countries investment in logistics facilities runs into many billions. Logistics is also an important component of the GDP – gross domestic product for example in the year 1996 the logistics affects the rate of inflation, interest rates, productivity, energy costs and availability, and other aspects of the economy because it was 10.5% of the GDP.
In addition to this the role of logistics can not be ignored for the development of the entire economy. It supports the movement and flow of many economic transactions and it is one of the most important activities with regard to the facilitation of the sale of practically all goods and services.
Davis, Drumm (1999) explained that there are several important factors that are responsible for building up the pressure on the companies that they have to focus more and more on the efficient management of the logistics activities. These important factors are sorted out by Davis and Drumm as followed:
- Advances in technological and quantitative techniques.
- Significant opportunities presented by e-commerce potential.
- Development of the systems approach and total cost analysis concept.
- Recognition of the role of logistics in a company’s customer service program.
- Erosion of companies’ profits because of their failure to examine functional areas where cost savings might be realized.
- Profit leverage resulting from increased logistics efficiency.
- General economic conditions since the 1950s.
- Recognition of the role of logistics in creating competitive advantage in the marketplace, particularly in the face of domestic and foreign competition,
- Saturated markets, government regulation
- Consolidation of companies thus increasing the importance of sound logistics practices and continued strategic planning as companies are reorganized and product lines are combined
- Markets, and logistics policies and practices of suppliers of consumer products, being driven by the large retailers
- Distributors stocking less with respect to industrial products, and depending more on their suppliers’ stocks than in the past
- Customer requirements for value-added services continuing to drive costs up
- Increasing interest in third-party providers that handle all or part of a company’s logistics function, particularly with increased penetration into major trade areas
- Inventories continuing to be at high levels irrespective of improved forecasting, inventory and make-to-order software available
- Gaps in logistics support left by enterprise resource planning (ERP) systems, resulting in the need for additional bolt-on systems in the near future
- Customer service activities continuing to be centralized and consolidated
- Increased focus on computer technology and distribution software. (Davis, Drumm, p41, 1999).
Burns, Warren (2001) explains that there are various activities that are part of logistics and a company can select and carry on these activities according to the requirement of the business. Among these activities an important one is traffic and transportation that is the logistics activity related with the management of the products movement. There are many activities that fall under the head of traffic and transportation like the selection of shipment method means that the company has to decide weather its product will be moved via rail, air, water, pipeline or roads or if they have to select a process that is combination of these ways.
After that the company has to make the decision about the route through which the products will be moved. In this regard the company has to choose the route first and then it has to comply with the local, provincial, national or sometimes international transportation regulations.
They also have to acquire complete information about the domestic and national as well as international shipping requirements. After making these importance decisions about the traffic the logistics managers have to concentrate towards the transportation that is also called a linkage activity on logistics. In the entire logistics process transportation is a very important part and most of the time a big share in the logistics cost is shared by the transportation cost.
Burns, Warren (2001) further explain that along with transportation and traffic management, a company has to concentrate a lot towards the warehousing an storage of their products otherwise the logistics process could not be accomplished successfully. Warehousing is a part of logistics system that is related with the storage of different products including the raw material, parts and components used in the manufacturing process, good or product in process and the finished goods.
It is very important part of logistics operation because it is the connection of the product from the point of origin to the point of consumption and during this time the management gets the information about the status and condition of the product. Warehousing is considered as an integral part of the logistics process because it provides a desired level of consumer services at low cost and establishes a link between the producer of the product and the consumer of the product.
After the warehousing and storage, the next important part of the logistics process is inventory management that is involved with the off trading of inventory level so that a high level of customer service level can be attained. In addition to these activities, order processing also possesses great importance in the logistics process. It is the system that is used by the organizations with the objective to receive the orders from the customers and then to check the status of the received orders and then to communicate with the customers about their orders. Under this process the company also has to assure the availability of the ordered product to the customer therefore this logistics activity is concerned with the inventory status checking, invoicing and account management.
Logistics Employed by Dell Computers
Dell is an established brand that is involved in the personal computers and other technological devices manufacturing and the company sales its branded computer hardware in US as well as outside US via online service (Auerbach, p76, 1999). The emergence of internet has played a major role in the business of Dell. The company uses internet as a means of extending and sales and eventually the company has become a leader in the computer hardware market.
The company uses most update tools and devices of information technology that results in successful and superior supply chain management of the company (Haag, Stephen, p86, 2004). Dell has established a value chain through which the suppliers and the company exchanges different information and interact with each Boone, James (2000)
Kraemer & Dedrick (2000) explain that the logistics system and the entire functioning of Dell business are closely linked with each other because within the business there are many logistics activities performed by the companies. The company manages its manufacturing process by different regions for example there are some plants set by the company in Austin, Texas and Nashville; these plants serve North America. In the same way the plants set up in Brazil work to complete the orders of the Brazil and South America, the plans in Malaysia serves the Asia pacific region and so on. After receiving an order from the customer the company takes to fulfill the order the time of one week after the placement of the order.
The actual assembling of the system could be as little as just seven hours that also includes the software installation and extensive system testing. This work is accomplished so quickly because of the efficient management of inbound logistics that allows the suppliers of Dell to provide the required component in just 15-30 minutes of receiving the inventory at warehouse. The suppliers are required to arrange the warehouse for the required parts near to the manufacturing plant so that they can provide the required material as soon as possible.
In this way the efficient management of the inbound logistics result in the efficient performance of the manufacturing team and the product in assembled in quick time. After the manufacturing the product is sent to the outbound logistics hub where the system is joined with the monitor and peripherals to complete the assembling of the system. After that the finished product is sent to the destination through the transportation system set by the company. This entire process of logistics is properly managed, coordinated and monitored by Dell with the help of its IT bases system that electronically links the suppliers to its own logistics hubs, shipping companies, and distributors. (Kraemer, Dedrick, p21, 2000)
Arnold, Wayne (1997) analysis the logistics system employed by Dell and discusses that the logistics system employed by Dell is a good illustration of the general logic for logistics and it is one of the most venerable example of the logistics from which the other companies have to learn a lesson. The company manages its logistics activities in such a way that the suppliers handle all the inbound logistics of the material and components that are required in the assembling of the system.
The suppliers are directed by the company that they must set up their supply hubs and the production facilities located at such distance to the manufacturing points of the company that they can reach manufacturing plan after the maximum drive of half an hour. For the management of the outbound logistics the company has set up the distribution hubs at different locations. These hubs are often operated by different logistics partners of Dell. In this way the company successfully manages its logistics system and runs its business in triumphant manner.
The effective logistics operations play a major role in the success of the company and it is believed that the company has secures competitive advantage over the other companies of the computer industry because Dell has established an effective and efficient supply chain and distribution system. The success of the company is largely contributed by the knowledgeable use of information, communication, e-commerce, e-business, internet, and web technologies by the company.
Through internet Dell remain in contact with its suppliers. Dell has provided an opportunity to the customers that they can order a customized computer system via their website and after a week of their order Dell provided the computer system at the home of the customers. This opportunity has added to the profitability and popularity of dell. At the same time the role of logistics also become very crucial in the context because to fulfill the commitment with the customers the company must provide them with their ordered product within the given time other wise their credibility will be questioned. (Banham, p21, 2003)
That’s why the company always remain in tough with the suppliers and as soon as an order is received regarding the manufacturing of a customized PC, the suppliers of the components are informed about the required components so that they can immediately respond with the cost estimated and the company can complete its manufacturing function in time. For management of logistics of the components the company has developed a state of the art “production planning program”.
Through this program the components required in the manufacturing of the computer system are forecasted and then the suppliers are informed about the requirement that allow the suppliers to provide the components on time and then Dell manufactures the customized computer system to complete the order. The on time delivery of the computer system is also very necessary and the role of efficient logistics operation has become very crucial here. (Auerbach, p76, 1999)
The business pattern of Dell is the basis for its current logistics patterns and is echoes throughout the industry of supply chain management in different ways by other large multinational global companies. The idea was to introduce more flexibility into the system, so Dell based its choice of about 100 suppliers upon quality, service and flexibility, rather than on price, and worked out deals with those suppliers that met their quality standards consistently. This allowed Dell to adjust quickly to changing market demands, and the higher quality resulted in fewer returns. Dell directly influenced the market, instead of being influenced by it. (Dell’s Business Strategies Part 1, 2007)
This shift in business model entailed a whole new method of supply chain management, in essence, making the suppliers and the shippers partners in a new paradigm. As a result of the cooperation Dell was able to broker among its suppliers, Dell had an unprecedented cycle of growth and then moved in a totally new direction. Dell suppliers made less money on each component, but the massive sales made the smaller profit per unit into a much larger overall total.
Dell began by assembling and selling the designs of other companies. However, Dell was able to induce its staff to develop new skills to fit the changing needs. Marketing managers and buyers learned to predict short term needs up to ninety days and marketing personnel developed a whole new system or marketing, including a dynamic web strategy which matches inventory to buyers, and also harvests customer feedback in real time.
Dell marketing professionals created an e-commerce model and new stakeholders were developed. These were ISP and marketing affiliates with links all over the web. Web marketing entails lower cost, higher response and dynamic feedback which deliver information on trends immediately as people shop. Dell uses partners or affiliates and pays only for the actual traffic to market its products on a pay per click-through basis. Advertising links are moved from low performing sites to higher performing sites on a moment’s notice. This new stakeholder group: the affiliates, works hard to optimize the traffic to Dell’s links to increase their own profit.
These forms of advertising are a huge stretch from the old pay in advance of sales methods. The cost for advertising has been greatly decreased as Dell has made real stakeholders out of its advertising affiliates. While the turnaround for Dell has involved many different aspects, none is more important than the sweeping changes the company made in supply chain management. None of the rest of the strategy would work with the old methods. It is this that we wish to examine closely to see how it was changed and what effects each aspect of those changes has had on the company.
Dell’s own dynamic website includes a tremendous amount of information and self help for customers, and even offers driver downloads and updates. Dell has cultivated a committed staff which developed their skills to suit the company’s needs, and they have made a highly attractive and functional website. Hyperlinks take customers to more information and, more often than not, to a purchase link quite quickly. Dell has streamlined customer support; extending the same software that its customer supports staff uses to the website where customers can access it themselves. This is almost a direct connection between the customer and the supply chain.
As orders are completed and payment is made, the parts required are deducted from current inventory and any new parts are added to the day’s orders immediately. The supplier has real time access to the needs of the retailer, and can ready the shipment accordingly.
Dell moved into doing extensive R&D itself and has created its own branded products preloaded with branded software. A new product area includes custom servers made in Dell’s three assembly factories using manufacturing teams, called “cells”, to individually custom build each new server to customer specifications. Dell’s supply chain is totally automated, and the parts used are added to the real time orders as they are used.
Dell staff even loads custom software packages according to the customer’s needs before shipment. This allows the server to be shipped to a final destination with software loaded and preconfigured to MIS department specifications. Dell calls this its “DELL plus Service.” This is a large part of Dell’s new business and is totally dependent upon a flexible supply chain. The last major change Dell made was to partner with major outlets to sell its products at their direct prices, thus giving their customers the choice of on line purchase or purchasing in a local retail outlet. Dell did this without opening one single retail outlet.
The logistics operations are manages at Dell in quite effective manner that’s why the company successfully competes with other companies. For efficient management of the logistics operations Dell used the “i2 Supply Chain Management” solution that streamlines the supply chain of Dell by providing component suppliers so that the company can meet the demand of computer order at global level. The i2 Supply Chain Management provides Dell with the real-time factory scheduling and inventory management that allows the employees to generate key reports based on accurate and timely data, pinpoint inventory on the factory floor, and to receive supplier deliveries on a true just-in-time basis. Through this system the company is able to change the manufacturing schedule after every 2 hours so that they can keep their work align with the customers orders.
The suppliers of Dell also have an access to the accurate information about the schedule of dell at timely basis due to which the suppliers become able to work with facts instead of forecasts. Ultimately the waste is reduces and the efficiency of suppliers, employees and the entire company is improved. When information is received by the suppliers about the need of any component then they are order to deliver the material at specific manufacturing point for the assembling of any system.
The company uses the Windows NT operating system and Intel-based servers for all of the i2 applications. Internet and computer based technology has a leading role to play in the logistics operations of the company and the internet based infrastructure of the company not only allow it to determine trends and forecast the demands of their products but also help them in gaining superiority among the competitor companies of the computer industry. (Haag, Stephen, p86, 2004)
The company always felt the need of improvement in the logistics arrangement of the company. In the year 2004 there were 27 improvements made by the company regarding the management of its supply chain. Dell arranged a new twelve thousand square meter warehouse in Australia that consists of a cross docking operation. In addition to this Dell also arranged for weekend order processing and a tracking system for customers to monitor the progress of their orders online. These steps allowed the company to reduce the delivery time for the computer system to the corporate and public sector customers across Australia by almost 40 percent (Haag, Stephen, p86, 2004).
There were some problems also faced by the company in the logistics operation for example in Australia the company faced the challenge of efficient supply chain management because of inbound logistics. The company products have to travel through different far destinations like Malaysia and South Asia that prolong the delivery time of the products. That’s why the company decided to reengineer the process of outbound supply chain and the system benefited the company is such a way that it become able to deliver the products with an average time of 5days; earlier this time was 14 days. The reengineering of the Dell logistics strategies is called as “BPI (Business Process Improvement)” by the personnel of Dell. This is a re-engineering technique that is a combination of Six Sigma and Lean Manufacturing. (Haag, Stephen, p86, 2004)
The importance of logistics at Dell could be understood by the fact that the entire operations of the company are dependent of the efficient supply chain management and if there will be no effective and efficient logistics operations then the company would not be able to perform its business operations in such an effective and successful manner. The founder of the company has led the base of the company on such a philosophy that needs logistics at peak efficient point.
Michael Dell has written a very interesting book which gives insight to his success, entitled “Direct from Dell”. In the book he reported at several points that the company rely a lot of the efficient supply chain management. He was very concerned with logistics, and supply chain management. In looking at a comparison of competition strategies, Dell tends to develop partnerships, as with Xerox rather than to aim at taking over its competitors as HP did with Compaq.
In this way, Dell can concentrate its energy on developing its own brand identity and take advantage of the dynamics of other companies’ developments. By using partnerships, Dell eliminates the inevitable stagnation process of mergers as two companies try to successfully blend corporate cultures. In addition to partnering with companies with complementary products, Dell also strikes deals to partner with parts suppliers.
Fields (2004) examined the logistics of Dell and commented in his book that Dell is not just a manufacturer or retailer company but it is a logistics firm. He further explained his observation that despite the fact the Dell is a manufacturing company of computer system and other devices but most of the time the profit of the company is generated as a logistics firm.
The success of Dell lies in a fact that the company uses to gain the knowledge and routines extracting surplus not from production but from the management of the product and information flows that is operated across different countries of the world where Dell is engaged in the manufacturing and assembling of PCs and other devices. The author of the book also quoted the Vice President of Dell who said that “We are not experts in the technology we buy. We are experts in the technology of supply chain integration” (Fields, p166, 2004)
Kraemer, Dedrick (2000) revealed that the success of Dell’s direct model of selling PCs to the customer is successfully management by Dell though the great support of their supply chain management. Dell possesses a distinct feature over the others that its supply chain consists of just three stages that are suppliers, manufacturer and consumer because the order is placed by the customer directly to the company and after getting required material from the suppliers, the manufacturer (Dell) assembled the system according to the received order and then it is delivered to the end user for the final consumption/use of the product.
This is an uncommon but successful sales model in the computer industry and there are several advantages enjoyed by the company due to this model for example Dell can properly identify the market segment with the help of this model. Moreover its can also analyze the requirements and profitability of each segment and then the company can also develop more accurate demand forecasts
Agrawal and Pak (2001) cite Dell and Wal-Mart as examples of the companies that can be called as innovators in supply chain management, in particular because they share information with their suppliers. They revealed that these companies drive a competitive advantage from their exclusive collaborations and from the proprietary sharing of information with their suppliers and they manage their business in an efficient manner by avoiding the business to business marketplace and exchange (Agarwal Pak, p22, 2002)
Hoover et al explains that the there is great need of innovations in the business sector and Dell has successfully secured development for e-commerce and a solution for companies reaching their largest controllable physical size. Dell has developed the system to order receiving from the customers directly that led to low prices of the computer system. Dell is amongst the best computer manufacturing companies of the world not because they produce strongest brand but their position is largely contributed by the fact that they have established a build-to-order mail-order service as a new, cost-effective distribution channel for PCs. This service has provided excellent opportunities to the customers all around the world and at the same time Dell has secured good reputation at global level (Hoover, Tyreman, Westh, p38, 1996)
Lowson (2002) explains that Dell is an example of a company that is very efficient in using the postponement strategies to optimize the supply chain. There are three possibilities where the postponements might occur including the time delays, place delays and form delays but Dell has built its logistics system in such an effective way they all of these three types of delays are covered by the strategies of the company. He describes facets of strategic operations management and looks in detail at the innovative strategies that optimize the supply chain and logistics and also at strategic management of these operations which impact the bottom line or a company’s brand either negatively or positively. (Lowson, p299, 2002)
There is considerably more literature on these subjects and it is obvious now that the changes induced by Dell, and other companies, to the supply chain and logistics are far reaching. They impact more than just Dell and its suppliers, partners and customers. It influences other companies and even changes the dynamics of how people shop. It appeared from the review of the literature that Dell made simple changes in its logistics and took control of its supply chain, it is apparent that the changes were neither simple nor just a matter of controlling the supply chain. Dell has redesigned its business model and much of the world is following suit, because this paradigm fits the global market place.
Dell’s logistics changes have included such things as requiring suppliers to have manufacturing or distribution points within a twenty minute drive of Dell’s assembly plants. RFID tags are being implemented, along with extensible markup language to insure effective communication of data and knowledge along the supply chain where it is needed on a real time basis. The ordering process has been entirely automated, and is dynamically updated every time a part is used or a computer is sold. The whole supply chain has become an integral part of an extensive organic value chain which reaches every corner of the business. Business processes are inexorably linked across the enterprise wherever they naturally overlap.
The above review of the literature has provided many information about the logistics employed by dell however there is still requirement of complete study of Dell’s logistics system before any definitive conclusions can be made. Global business is changing, and the main agents of this change are the Internet and the supply chain. Companies which leverage this immense power will ride this wave of change into a totally new way of doing business. Thus to come to a definite conclusion the primary research is also conducted and the result of the primary research will be put together with the key findings of the above literature review to examine the logistics employed by Dell.
Key Findings of Research
The dissertation is based on the objective of searching the answer of the research question with the help of secondary and primary sources. In this regard the research was directed from both the secondary as well as primary means. In this section the findings and information gathered from the secondary and primary sources are put together so that their analysis and interpretation can lead the way in finding the answer of the research question.
Findings of the Primary Research
The primary research conducted for the dissertation is the in depth interview that was conducted with the help of a structured questionnaire from a personnel working at a key position at Dell. There were just 10 questions asked from the personnel due to the busy schedule. His name is not disclosed as per agreement and the answers obtained from the interviews are as followed.
First of all it was asked from the personnel working at the logistics department of Dell that how did he see the role of logistics in successful operations of businesses. While replying to this question the personnel said that the role of logistics is very crucial for the business and there is no doubt that the effective management of supply chain and logistics is a must for getting success and in the technology driven market the role of logistics has become even more important and the companies are also concentrating more towards the management of logistics activities because there is growing awareness in the business sector about the significant role that the logistics management play for a business.
The second question was asked that how much importance is given to logistics in Dell. While answering this question the interviewee informed that there is very importance given to logistics at Dell because we receive many order from the customers through our websites and in order to successfully manage our direct sales system it is very necessary that we must provide them the product within the committed time that’s why successful logistics operation is the most leading player in the success of Dell.
The company is based on the objective of providing the customized personal computers as well as other technology based products after receiving detailed order from them and for the fulfillment of the order we give them a time of 6 days so it is very necessary that we much have an efficient supply chain management so that we can get the desired components for the manufacturing of the product on early basis and after the manufacturing we again need efficient logistics system so that the product an reach the customer within the given time. So in this way we can say that logistics is important for Dell at every stage of business right from the product manufacturing to the product sales and delivery.
The third question was asked from the interviewee that what is the role of logistics in the growth and development of the company. The personnel replied that the logistics has a very vital role to play in the success of the company because more efficiently Dell provide distribution of the computer hardware, more chances are there that the company will successfully meet its business objective and will strongly compete with other companies of the computer industry.
The fourth question was asked that what are the different logistics employed by Dell and the interviewee informed that we have developed different programs for the management of different logistics activities for example for the availability of the required components for the manufacturing of personal computers or other devices we have “production planning program” so that we can forecast the requirement of the components and then after getting an order from the customer we can quickly start the manufacturing process. In addition to this we also arrange inbound and outbound logistics in different parts of the world as per requirement of the company.
There are some countries where Dell is operating with many centers and in some countries there are few or no manufacturing center of the company and in that case we have developed a transportation system so that we can deliver the product to the customer in that country as well. Along with these there are several other logistics that are employed by the company. The company now operates at international level and it is among the top most companies of the world’s computer industry that’s why we have lot of work to complete every day and this is not possible without logistics activities performed efficiently.
The fifth question was asked that how do he compare different logistics employed by Dell. In answer to this question the personnel informed that each of the logistics has its own importance and at different stages of business we need different logistics so we can not say that which is important for us and which is not because it is an entire process that requires each step to be performed adequately.
For example if we give more importance to the supply of the material to the manufacturing unit and less importance to the warehouses or distribution system then our product will be manufactured within the time but it will not be delivered to the customer and in this way the reputation of the company will be badly affected that why we give equal importance to every logistics. We believe that each of the logistics activity and strategy is equally significant for out company and we can not operate well by neglecting any one of the logistics function or activity.
The sixth question was asked that which method of logistics suits the company best. While answering this question the interviewee informed that Dell operates on the foundation of direct sales model and we have little to do with the retailers and whole sellers but we must have good and effective communication links with our suppliers. So in the light of our need we think that internet act as an important means of communication and we are able to effectively manage our supply chain with the help of internet.
There are different logistics methods applied by the company and there are some that prove to be useless for the company so the company give up that method and switch towards another one. However there is no any singly logistics that can be sought as the most suitable logistics for Dell because the need of the company is different at different stages of business in different countries.
The seventh question was asked from the interviewee that which logistics method proved to be more profitable and added to the efficiency of Dell. The personnel of the logistics department said that luckily all the different methods of logistics employed by Dell proved to be very profitable and due to efficient logistics operation the cost of production cuts for the company and ultimately the price of the product also went down. The efficiency of the logistics employed by dell is proved from the fact that the company is now the world leading computer manufacturing company of the world and in addition to the computer manufacturing the company has also expanded its business in the multimedia and entertainment industry. This is all because of the successful operations of the company that are led by efficient management of supply chain and logistics activities.
The eighth question was asked that if he thinks that there is need to make any major changes in the logistics employed by Dell. While answering this question the interviewee informed that Dell operates on the foundation of direct sales model and we have little to do with the retailers and whole sellers but we must have good and effective communication links with our suppliers. So in the light of our need we think that internet act as an important means of communication and we are able to effectively manage our supply chain with the help of internet.
There are different logistics methods applied by the company and there are some that prove to be useless for the company so the company give up that method and switch towards another one. However there is no any singly logistics that can be sought as the most suitable logistics for Dell because the need of the company is different at different stages of business in different countries.
The ninth question was asked from the interviewee that what are the problems that Dell has faced due to mismanagement of the logistics and what were the main reasons behind those problems. The personnel of the logistics department said that our system is built in such a way that there is high level of risk involved in the logistics system of the company. The company relies on the suppliers that as soon as they will provide the required components, the company will start the manufacturing of the system according to the order.
Sometimes there is also involvement of third party in the supply of the components and the delay in the supply might result in the short term performance of Dell. However the management is aware that we require a high quality of supplier’s service that’s why we establish links with such suppliers that have good record and reputation because the right functioning of suppliers has great impact on the overall performance of the company.
However there are no many problems faced by the company because luckily all the different methods of logistics employed by Dell proved to be very profitable and due to efficient logistics operation the cost of production cuts for the company and ultimately the price of the product also went down. The efficiency of the logistics employed by dell is proved from the fact that the company is now the world leading computer manufacturing company of the world and in addition to the computer manufacturing the company has also expanded its business in the multimedia and entertainment industry. This is all because of the successful operations of the company that are led by efficient management of supply chain and logistics activities.
The tenth and the last question asked from the interviewee that if he have any recommendations and suggestions for other companies so that they can make their logistics operations more effective.
He said that the companies must develop more awareness within the external environment of the company regarding the significant role of the logistics for the businesses. If the companies will not recognize the importance of logistics then they can not perform their business activities effectively so they must know that the communication link with the retailers, distributors, suppliers and whole sellers are very crucial for a business. If a company go for outsourcing of the logistics operations then it is very necessary that the business must select the third party after reviewing its qualifications properly so that right third party can perform the logistics activities of the business in effective manner and the company can earn profitability and good performance.
Thus these were the answers obtained from the interview of the personnel working at a key position at Dell. The information obtained from then interviewee provides detailed account of knowledge about the role and importance of logistics specifically for Dell as well as for the entire business sector. There are many important aspects of logistics that the unfolded in the interview and the logistics employed by Dell is clearly understood after getting the information from a key employee of the company. The above information gathered from the interview will be used to support the findings of the secondary analysis of data so that after getting confirmed the information, it could be used for searching the answer of the research question and the objective of the dissertation and research study could be achieved.
Findings of the Secondary Research
The secondary research was conducted from the review of the available literature related with the topic. In this regard the books, logistics journals, magazines and research reports were reviewed so that information could be gathered about the background issues of the dissertation. It was very important to know well about the company upon which the entire dissertation is based so the history and growth of the company was studied to get familiar with the company and to understand the working pattern of the company. This information is necessary because only after understanding the working pattern of the company the role and importance of logistics could be understood for Dell.
After getting information about Dell, the secondary research further focused on the research reports that have highlighted the importance of logistics. This was done to get better understanding of the role and importance of logistics for the businesses. Finally the research reports were reviewed that contain information about the logistics employed by Dell. It was done with the objective of gathering all the information about the Dell logistics so that the examination of logistics employed by Dell becomes possible. Following are the key findings of the secondary analysis of data:
- Dell was established by Michael Dell in 1984.
- The company is based in Texas and after the expansion of the business of dell, now it operates in different parts of the world and there are many people employed by the company worldwide.
- The company was established on the basis on direct sales model and it is a distinctive feature that differentiates Dell from the other companies that Dell makes the computers according to the order of the people.
- The logistics operation of the company supports well the business of Dell.
- There is great dependency of Dell on logistics for the performance of various business activities and it is believed that the success of the company is very much contributed by effective management of supply chain and logistics.
- Dell has employed different logistics according to the requirement of the company in different countries and at different stages
- Logistics is an important requirement of Dell because to start the manufacturing process it needs the material to be delivered and after the manufacturing it needs the transportation system to deliver the product to the customers.
- The role and importance of logistics could not be neglected by any business and if any company did, then it is at a great risk of getting loss and decline in the profitability
- Efficient management of logistics accounts for better performance of a company and to increase the profitability a business must concentrate on the logistics so that they can perform their activities effectively.
- The emergence of internet and other information technology tools and devices have added to the importance of logistic and at the same time the logistics operations are well managed and facilitated due to the use of computers and internet.
Analysis and Discussion
The research study unfolded many aspects of the logistics employed by Dell and the role and importance of logistics is also very well explained in the findings of the secondary as well primary research. It is revealed from the research that the role of logistics is very important and it can be placed among different other important business activities like human resource management, financial management, marketing etc because logistics has impact on the various other activities and functions of business as well.
If the logistics is not managed properly then the other business operations can also not performed in well manner. For example if there is problem in the supply chain management then a manufacturing company can not carry on with the manufacturing process because they need raw material or other components that are supplied to the manufacturing unit through the transportation system.
The delay in the transport will cause a delay in manufacturing of the product due to unavailability of the raw material. In the same manner when a product is manufactured and it is marketed through different means of marketing then there is essential need that the product must be available in the markets so that the people can respond towards the marketing message and can purchase the product but if the distribution system of the company is not efficient then the product will not be on time available in the market and the money spend on the marketing and advertisement will be wasted as well.
In case of direct sales, the companies have to assure that the order of the customer should reach to them within the given time. This is also possibly only through an efficient logistics system. Thus it is proved that logistics has to perform a key role in the business sector and the performance, profitability and compatibility of a business relies very much on its supply chain management and logistics activities.
Along with proving the importance of logistics for the business, the research study also highlighted the logistics employed by Dell so that with the help of an example the issue can be understood more clearly. It is revealed from the research that the US based computer manufacturing company Dell relies greatly on logistics for the performance of its business activities. The role of logistics is so much crucial for dell that it is also felt by the experts that Dell secures high rate of profitability and performance through the efficient performance of logistics function and this function is as important for the company as the actual manufacturing of the computer and other technology based devices.
Keeping in view the importance of logistics Dell has developed different programs for the management of logistics and it is doing well through these programs. Dell is rated among the top computer manufacturing companies of the world that shows that the company is performing its activities in quite effective manner and this effective performance is largely contributed by the efficient performance of logistics activities. That’s why there is very much importance given to logistics at Dell and the experts at the company keep a keen eye on the logistics planning and strategies so that they can make the necessary changes in their plans and working patterns to keep them align with the changes occurring in the surrounding situation.
Thus the examination of logistics employed by Dell show that the company is managing its logistics through different programs and it also makes changes in its strategies and plans as per requirement of the situation. These are the two major strategies that are adopted by Dell in managing their logistics and these two are the strategies that have bring success to the company and due to efficient management of logistics Dell today stand as a remarkable example of company making best use of technology in logistics to enhance the performance and profitability of the business.
Answering the Research Question
The dissertation was based on the objective of finding out the answer of the research question that was “To examine the logistics employed by the Dell Computers”. After conducting the secondary and primary research and drawing the findings and interpretation from the research results, the dissertation finally presents the answer of the research question.
It is revealed from the examination of logistics employed by Dell that being a computer manufacturing company, the role of logistics is very crucial for the company and it requires the efficient performance of the logistics function at each and every stage of the business operation.
Keeping in view this requirement Dell has managed its logistics activities through different programs that arrange the logistics for the company at different stages of business operations like at the manufacturing point, sales point, delivery time etc. At every stage the inefficient performance of logistics has lead the company towards problems but it is the fruit of effective management of the supply chain that the company is operating successfully and it is also fulfilling the demands of customers from all around the globe by manufacturing customized computers for them and delivering the products at their door steps.
Recommendations and Suggestions
The dissertation has highlighted different aspects of the logistics employed by Dell and the importance of logistics for the business sector as a whole. In the light of the research findings and their analysis there are some recommendations and suggestions for the businesses regarding the effective management of their logistics operations so that they can gain profitability and good performance from the support of their logistics activities. Following are some suggestions for the businesses that are designed in the light of the secondary and primary research conducted for the dissertation.
- There must be increased awareness within the business sector regarding the significant role of logistics for the businesses.
- The business organizations must have clear picture regarding their need of logistics activities.
- After lining up the logistics requirement a business organization has to decide weather to go for performing the logistics activities internally or hiring the services of third party logistics providers
- In case of outsourcing the logistics the business organization has to be very careful in the election of right 3PL provider.
- Keeping in view the logistics requirement of the business, the company has to select a 3PL provider that can perform all the logistics activities without putting extra burden on the company.
- The business organization also has to assure the effective communication links between the company and the third party logistics provider so that in case of any problem they can deal the issue with mutual understanding and minimum time and money will be consumed.
- If a company decide to perform all the logistics activities by using the external resources of the company and not through a 3PL provider, then the responsibilities of managing the supply chain become more important for the company.
- Keeping in view the logistics requirement a company has to develop some programs so that the logistics activities can be managed well through these programs.
- Along with management of the logistics activities it is also very necessary that the company must develop an efficient monitoring system so that if there is any problem in the logistics activities, it can be traced immediately and steps can be taken rapidly to overcome these problems.
- The companies must know the effective use of computer, internet and other tools and devices of information technology so that with the help of IT they can improve their logistics operations and keep them update with the ongoing changes in the modern world.
- The monitoring of the logistics operations is also very important because there might be need of making any immediate change in the strategies and planning of the logistics function and proper monitoring enables the firms to take immediate steps as per requirement of the situation
- The companies must strive to build good communication link with the suppliers, retailers, whole sellers and distributors and for this they should take assistance from the IT tools and devices so that they can be in touch with the related people at regular intervals and can send instruction to them immediately.
The dissertation was based on the objective of examining the logistics employed by Dell. This examination was directed by the objective of understanding the role and importance o logistics for the business so that it can be understood that in the highly competitive market place, what are the strategies and planning that must be adopted by the companies for the effective management of supply chain to get competitive advantages and profitability. The objective of the research was successfully achieved and the logistics employed by Dell is examined with the help of secondary analysis of data and primary research that was the in depth interview of a key personnel working at logistics department of Dell.
Moreover the importance of the logistics is also studied and it is understood that to survive in the business scene the companies must recognize the importance of logistics and they must have to design their strategies according to the requirement of the emerging situation; only then they can expect to achieve profitability and productivity from their business. It is reveled from the research that Dell is depending very much on the logistics and for proper management of supply chain the company has make effective arrangements.
The objective of the research was successfully achieved however there were some limitations to the research as well. The first limitation as the time because the entire literatures review work could be successfully completed in the given time but the primary research demand more time. The company officials were contacted via email and they take long time in responding. Moreover getting an appointment for the interview was also a problem because they basically excuses for time shortage due to busy schedule.
Finally the interview was conducted by taking the appointment but the questionnaire was kept very short as per the desire of the interviewee so that little time will be taken in the interviews. For the future researched it is recommended that there should be more then one interview with the Personnel working at the company under study and the interview should also be prolong for which a request could be made to the interviewee. There should be more questions in the interview questionnaire so that more aspects of the topic could be unfolded with the help of the interviews.
Agrawal, Mani K., and Minsok H. Pak. 2001, Getting Smart about Supply Chain Management, the McKinsey Quarterly: 22. Web.
Arnold, Wayne (1997), Two major PC firms stand to save big in Malaysia. The Asian Wall Street Journal.
Auerbach, J. (1999). IBM and Dell to Unveil Broad Pact, p76, Wall Street Journal.
Banham, R. (2003). Does Dell stack up? The company that triumphed by selling “good enough” technology wants to challenge IBM and Hewlett-Packard. Is it good enough? p21, CFO, Magazine for Senior Financial Executives.
Burns, GE; Warren, CK & Cook, BP 2001: Industry Update: Transportation Outsourcing Survey: Emerging Trends in Logistics. JP Morgan Securities Inc. Equity Research. New York.
Bovet, DM & Frentzel, DG 1999: The Value Net: Connecting for Profitable Growth. Supply Chain Management Review: 96-104.
Boone, James (2000). Dell’s Competitive Advantage, University of Central Florida. Web.
Berg, B., Qualitative Research Methods for the Social Sciences, 1989.
Dell’s Business Strategies Part 1. Web.
Davis, HW & Drumm, WH 1999: Logistics Cost and Service 1999. CLM Annual Conference Proceedings: 41-53.
Darling, Damon (2006), “Dell Accounting Inquiry Made Formal by S.E.C.”, the New York Times, 2006-11-16. Web.
Dell’s Business Strategies Part 2. Web.
Delaney, RV 1999: Wall Street’s View of Logistics. CLM Annual Conference Proceedings: pp145-150.
Fields, Gary. 2004. Territories of Profit: Communications, Capitalist Development, and the Innovative Enterprises of G.F. Swift and Dell Computer. Stanford, CA: Stanford University Press. Web.
Flood, BP 1999: Calculate Your LVA, Quantifying the Financial Impact of Supply Chain Improvements. CLM Annual Conference Proceedings: 121-144
Frigo, Mark L, Needles, Brevard E and Marian Powers (2006), “Strategy and Integrated Financial Ratio Performance Measures: Further Evidence of the Financial Performance Scorecard and High Performance Companies”. Studies in Managerial and Financial Accounting, p45, Volume 16.
Haag, Stephen, Cummings, Maeve. McCubbrey, Donald. (2004). Strategic and Competitive Opportunities: Using IT for Competitive Advantage. In McGraw Hill Irwin (Ed.), Management Information Systems for the Information Age (pp. 86-87). Boston, MA: George Werthman.
Hoover, William E., Magnus Tyreman, Joakim Westh, and Lars Wollung, 1996 Order to Payment. The McKinsey Quarterly, no. 1: 38. Web.
Kenneth L. Kraemer, Jason Dedrick, and Sandra Yamashiro (2000), “Dell Computer: refining and extending the business model with IT,” The Information Society, p16: 5-21.
Lee, Louise (2006), “Dell Goes High-end and Hip”, Business Week. Web.
Lieb, R & Schwarz, B 2002b: The Year 2001 Survey: CEO Perspectives on the Current Status and Future Prospects of the Third Party Logistics Industry in the United States. CLM Annual Conference Proceedings.
Lowson, Robert H. 2002. Strategic Operations Management: The New Competitive Advantage. New York: Routledge.
Miles, M. & M. Huberman, Qualitative Data Analysis, Thousand Oaks, CA: Sage. , 1994.
Stock, JR & Lambert, DM 2001: Strategic Logistics Management; fourth edition. Boston: McGraw-Hill International Editions.
Yin, R. (1994), Case study research: Design and methods (2nd Ed., p24). Thousand Oaks, CA: Sage Publishing.