Case Study - Dell Value Chain
How has Dell used its direct sales and build-to-order model to develop an exceptional supply chain?
The many challenges in order to improve the supply chains usually come with the unidentified. Many companies produce products they think their consumer will want. After that, they ship their products to retail stores. Then, these stores try to sell the products to the customers. Here, the supply chains slows down as they are figuring out what to build next. Then, these companies deal with their suppliers to get the materials for the products. Here, the supply chain slow down more and even slower as they wait for the product to get sold and get paid.
Dell's assembly plant in the US
Dell has used its direct sales and …show more content…
Since Dell is handing all aspects of the computer building process directly and sending it to the customer, they have to pay for the cost of shipping. Other companies mass produce the computer and send them in bulk. Dell is at a disadvantage because they are sending individual or very small orders directly to many consumers.
Website for Dell's partners as one way of direct communication
The other issue of the direct sales model is that you have to shoulder all the related support costs, from handling information requests before the sale to taking and tracking orders to handling service inquiries after the sale. You do not have the ability to pass any of those costs onto retailers because you are handling every aspect of the transaction.
Summing up, the direct sales model provides a cost advantage on the production side, but brings a cost disadvantage on the support side.
How does Dell compete with a retailer who already has a stock?
In this day and age of the internet there seems to be a constant battle between the internet sales model and the brick and mortar businesses. Each has their advantage and disadvantages and whoever is the most competitive and strategic will win.
Since many consumers like to see and feel a product before purchasing Dell had to create a different way to compete. The most obvious is the price issue. Since Dell doesn’t have to pay for the brick and mortar buildings, they can sell at a lower price because of