Dell Supply Chain Strategy
The Personal Computer industry has revolutionized the way of life. Technological forces have the most significant influence on the computer hardware industry. The extremely short product life cycle for computers, influenced by the upgrade cycle, has both positive and negative effects on companies within the industry. It challenges companies to maintain superior inventory management and supplier relationships: areas where Dell excels. Technological change also drives waves of additional computer purchases within a mature market.
Dell, Inc was the first major company to really seize the opportunity of selling via internet. It was founded in 1984 by Michael Dell. Traditionally, …show more content…
The company developed a strategy each on: centralized purchasing; making it a global function; and relocating its suppliers to vicinities of the manufacturing unit to ensure just enough on-site inventory, which could signal the next two hours of order.
Financial fundamentals: Dell aims at long term profitability. The company maintains a high operating margin; keeps track of this margin by evaluating weekly updates of days of inventory, receivables, and payables to achieve a negative cash-conversion cycle and average selling price. All managers at Dell are expected to know and present the detailed performance report of the company. They manage, check, analyze, and report operational numbers, 24 hours a day and 7 days a week.
Supply chain and Process Map
Dell sells directly to all its customers, the direct model refers to the fact that the company does not use the retails channel, but sells its PCs directly to customers through its website, Dell.com. By doing so, the intermediary steps that may add time and cost are eliminated, and the company is directly linked to its customers. While satisfying the customer orders, Dell orients its supply chain towards build-to-order manufacturing, mass customization, just-in-time components inventories, and detailed data and information sharing with both supply partners and customers.
In 2007, the technology giant embarked on a significant shift from its original plan of direct sales by offering selected products through indirect