Dell Corporation Supply Chain Management

Indisputably, a crucial part of success for any business is a well-structured supply chain. It might seem like a challenging task for a company to choose the right strategy that would benefit it the most, but by taking an in-depth look at other companies’ stories of success, any new business can devise accordingly smart and optimal supply chain. By knowing what changes that other firms attempted to implement to increase productivity and profits, it is possible to synthesize the best possible solution for any given issue. This paper will provide an example of a sustainable supply chain management model by analyzing one of the most successful businesses in the personal computer market, Dell Corporation.

In a certain sense, Dell has reimagined the regular supply chain by making drastic changes to its operational process. It has added a crucial, yet regularly ignored component in its supply chain: the company’s customers. Min et al. (2019) state that “Dell’s manufacturing model offered online customers a way to mix and match different components of a computer-based on Dell’s base models” (p. 45). By allowing customers to affect the process of creating their product directly, Dell became a globally trending business (Min et al., 2019). Effectively, Dell Corporation removed distributors from its supply chain, so suppliers and manufacturers interact directly with customers. While the company does sell its products through retailers, its unique build-to-order model allowed Dell to maximize generated value.

This type of collaboration has been proven to be useful for multiple reasons, and several additional factors that helped the company become a leading PC manufacturer. Not only does the company prides itself on this unique type of customization available to customers, but it also has one of the lowest delivery times (Shrum, 2018). To achieve it, the company partners with many regional businesses that provide logistics services, as well as has its manufacturing facilities in many various locations (Shrum, 2018). Dell Corporation continuously improves its supply chain at every step of the manufacturing process.

By lowering the costs of delivery and production, Dell’s supply chain has been significantly optimized. Chopra (2018) states that the value it “generates is the difference between what the value of the final product is to the customer and the costs the entire supply chain incurs in filling the customer’s request” (p. 15). Therefore, this tactic allowed the company to generate more value from each product sold. Another one of Dell’s smart moves was to transfer these benefits to its customers, lowering the prices of its products and gaining more popularity and market share.

However, Dell has encountered several challenges after its initial success due to the shifting technological tastes of its customers. Highly customized computers served as its starting point, but as the market grew, individual users saw no need for such a model. Nowadays, Dell effectively separated its manufacturing process into providing customized PCs for businesses and mass production of PC for regular users through retailers such as Walmart, Target, and other malls (Chopra, 2018). Dell Corporation has been able to remain competitive so far, but it could be problematic to upkeep both strategies at the same time.

There are still issues left for the company to overcome, mainly due to new obstacles introduced by retail sales. Currently, many personal computers that are produced by Dell are built-to-stock, not built-to-order, which diminishes the advantage the company had over other PC manufacturers. Chopra (2018) argues that “A strategy that may have been very successful in one environment can easily become a weakness in a changed setting” (p. 47). To improve its position on the market, Dell Corporation has to find a way to cut further the costs imposed by its supply chain, which was previously possible by excluding a distributor from it. One of the feasible solutions is to attract more customers to its online store, which would allow Dell to bypass the need for retailers again. However, to deal with the imposed delivery times that negatively affect customers’ experience, Dell might have to adjust its product pricing strategy.

In conclusion, the distribution strategy of Dell Corporation is unique because it involves customers as active participants. The company is one of the top vendors on the personal computers and hardware market, but to keep its position, it has to come with another innovational strategy or successfully upgrade the existing one. By following trends of the market fluctuations, Dell could gain the advantage by adjusting its global assembly lines to produce the most popular products in larger quantities.

By analyzing the initial success of this business, it is possible to synthesize several critical goals for a company that aims to achieve profitability:

  • low delivery times for its products or services;
  • ready-made solutions on its most popular goods;
  • customer’s involvement;
  • constant improvement of other parts of a supply chain.

Therefore, smart supply chain management is crucial to any business, and knowing the customer base of the company and the situation on the market is a significant part of a successful plan.

References

Chopra, S. (2018). Supply chain management: Strategy, planning, and operation (7th ed.). Pearson

Min, S., Zacharia, Z. G., & Smith, C. D. (2019). Defining supply chain management: In the past, present, and future. Journal of Business Logistics, 40(1), 44-55. Web.

Shrum, A. (2018). An overview of Dell’s supply chain strategy. Dynamic Inventory. Web.

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