Dell's Supply Chain

Introduction

According to Schmidt, Kelber, Lehrend & Krasel (2006), Dell is a computer industry that deals with a variety of computer technological products. They point out that Dell’s technological products include personal desktop computers, internet servers and networking products, computer software and accessories. They observed that apart from computer technological products, the company also has a range of information technology and business services that enable it to fully capture the international market. They point out that Dell has developed various marketing strategies that have enabled it to operate in four global market systems that range from the large market enterprise to the consumer.

Clapperton (2010) points out that Dell normally surpasses a supply chain of distributors and retailers so that it directly deals with its customers. He points out that the company has devised an effective supply chain that mainly comprises three distribution stages, namely suppliers, the manufacture and users. He notes that this direct supply chain has made it possible for the company to proper device marketing techniques that can meet corresponding market demands.

According to Davis (2010), it is because of the changing market trend that comprises diverse consumer needs and intense low-cost competitors that Dell has transformed its supply chain. He points out that the company restructured its supply system with the aim of improving its product delivery, and customer’s product preferences, as well as ensuring low prices of its products. Clapperton (2010) noted that Dell had competitors. The company experienced a consumer downfall because of the upcoming low-cost competitors, such as the Apple Corporation and Hewlett-Packard. He pointed out that these competitors decreased the Dell business network with its customers and reduces its market outstanding performance creating a necessity for new strategies.

The paper discusses the supply chain used by Dell highlighting various advantages and disadvantages of it. The paper also compares the Dell’s supply chain with the regular supply chain.

Dell’s Supply Chain

According to Davis (2010), the supply chain of Dell’s products and services is normally structured on the basis of the company’s enterprise and the client’s enterprise. He points out that these two distinct categories are primarily devised to directly connect the company with its main supplies and corresponding customers. He notes that the company’s enterprise mainly includes company’s networking and products storages, while the client’s enterprise mainly deals with desktop PCs and other computer accessories. He also points out that the main objective of the Dell’s enterprise is to be engaged in effective products supplies.

Dell to Customer Supply Chain

Dell is normally engaged in a direct customer supply chain that usually enables the corporation to distribute its technological products and services. Davis (2010) points out that through information technologies, namely phones and internet services, the corporation can directly connect with its clients. According to Clapperton (2010), Dell Corporation has found this supply chain to be very effective, majorly because the process normally helps to reduce the cost of supply that may arise because of intermediate business agents.

Dell Corporation usually takes an advantage of its advanced technology to directly supply its products and services to its customers. According to Shah (2009), the Dell-customer supply chain has enabled the corporation to communicate with its customers either through direct phone calls, emails and the Internet. He notes that through advanced information technology, the corporation allows customers to order their preferred computer components. Clapperton (2010) has also pointed out that the corporation normally uses its advance information technology and subsequent Customer Relationship Management (CRM) to directly connect with its customers.

Clapperton (2010) points out that once the corporation has manufactured a generic computer component selected by a customer, the computer is then delivered to the customer via couriers. He notes that even in the process of delivery, the corporation usually takes control of the supply chain to ensure quick and safe products delivery.

Dell to Suppliers Supply Chain

According to Shah (2009), Dell to Supplier chain is not based on long-term relationships between the company and its suppliers, but it is instead based on quality servicing. He points out that the corporation normally relates to world suppliers, who can effectively maintain its highest quality of information and technologies. He notes that, similar to Dell to Customer supply chain, the corporation normally operates with its suppliers on direct basis. He points out that through Dell’s advance information technology; the corporation can engage its suppliers in a quality supplying test, which in turn enables the company to contract world class suppliers.

Advantages of Dell’s Supply Chain

Low Operating Costs

Dell’s supply chain normally reduces operating costs that may be incurred because of middlemen supplying agents. According to Shah (2009), the corporation normally deals directly with its suppliers and customers. Soral (2010) also admits that the main advantage of the supply chain is in its contribution to the reduction of operating costs because it allows the corporation to focus on customers directly. Shah (2009) also points out that the need for the reduction of operational costs is the main reason behind the implementation of the supply chain by the company’s founder Michael Dell, who implemented it for the first time. Michael Dell started it all with the direct PC selling and was later engaged in the mail order system.

According to Willis (2011), Dell’s supply chain entails the disintermediation of middlemen of products or services distribution in the market. He points out that choosing this supply chain, the corporation has managed to avoid middlemen, who normally increase prices of products or services that in turn result in an increased operational cost. Clapperton (2010) notes that this supply chain gives the corporation a possibility of direct contact with its customers and suppliers, saving it additional costs that may have arisen during its operation because of a third party. Shah (2009) points out that the elimination of middlemen by the corporation has been made possible because of its advanced information technology. Highlighting the same, Clapperton (2010) noted that Dell’s supply chain enabled it to directly connect with its clients greatly reducing its operational costs.

Efficient Products and Services Distribution

According to Shah (2009), the effectiveness of Dell’s supply chain is mainly caused by its effective information technology and Customer Relationship Management. He points out that Dell has advanced information technology, which puts it ahead of other companies. He argues that it is because of Dell’s direct supply chain that the corporation has managed to exploit and advance its information technology, which has made it easier for the company to connect with its clients. He further points out that because of the efficiency of corporation’s technological systems, customers have found it easier to customize on their computer products or services.

According to Jaffe & Muirhead (2009), Dell uses Oracle RAC 10g information system in its supply chain that is not only reliable, but also cost-effective. They point out that it is the efficiency of the Dell information technology group that has enabled it to implement Oracle 10g as a strategy of reducing costs of managing the supply chain, especially on its UNIX operating system. They further explain that this application has been essential, since it reduces costs of proprietary Unix-based servers and increases operational efficiency. Shah (2006) also points out that Dell has increased its information technology, especially in supply chain management, which has greatly enabled it to improve the way, in which it delivers services to its customers.

Enhances Good Business Relationships

On the other hand, Klinker, Terrell & Mahfouz (2006) point out that effective customer relationship management (CRM) by Dell has enabled the achievement of an efficient supply chain. They point out that Dell’s supply chain has created efficient processes, which enable the corporation to continuously create and maintain good business relationships with its clients. They point out that CRM incorporates primary objectives of Dell to attract more customers by offering quality customer services through its technologies meant at enhancing better relationships with its customers and suppliers.

According to Klinker, Terrell & Mahfouz (2006), Dell’s market automation software and its customized web-pages promote good working relations with its clients. They point out that unlike the previous years, when consumers dealt with salespersons to buy computers CRM has enabled the direct customer supply chain through its web-based services. Jaffe & Muirhead (2009) also point out that Dell has customized on different customers. According to them, this has made it easier for corporation’s customers to have a variety of products, from which they can choose the best. They note that the corporation has customized websites for various categories of groups, including individuals, homes, offices and finally large businesses.

Klinker, Terrell & Mahfouz (2006) note that Dell Corporation continues to improve its business supply chain, especially with the implementation of the i2 system. They point out that the i2 business strategy has enabled a collective approach between the company and its planners meeting corresponding customer’s needs. They gave an example with the Hotlink automated software that has been widely used by the corporation to monitor its customers.

Transparency in Business

According to Klinker, Terrell & Mahfouz (2006), Dell’s supply chain enhances business transparency in relations between the company and its clients. They note that Dell’s Premier Pages, which indicate various purchasing data that the company deals with, has helped the company to avoid unnecessary information about its employers and enhance good business relations. They further note that this keeping of records of purchases has promoted the continued active engagement with customers, as it makes them feel more comfortable towards corporation’s undertakings. Moreover, they point out that the direct product or service supply chain between Dell and its corresponding clients enhances customer’s respect towards the company.

Disadvantages of Dell’ Supply Chain

High Costs of Supply Chain Management

Willis (2011) notes that just like any other business that strives for effective business activities, the corporation has encountered challenges related to the management of its supply chain. He points out that Dell normally spends a lot in an attempt to enhance continued business existence in the market. Klinker, Terrell & Mahfouz (2006) further explains that corporation’s high spending also results from the fact that it has spent a lot on advancing its information technology to counter various supply chain management challenges.

According to Klinker, Terrell & Mahfouz (2006), Dell Corporation spends a lot on inventing various automated software to improve its supply chain management. They note that the invention of the Oracle RAC 10g information system to manage its operating servers has cost the corporation a lot of dollars. In addition, the corporation also spends more money on its customer relationship management in an attempt to enable effective products and services supply chains. Furthermore, they note that the invention of i2 software that enables the company to partner with its planners to effectively carter for customer’s needs is costly.

According to Jaffe & Muirhead (2009), the corporation’s supply chain normally encounters challenges related to costs and time, especially when it recalls back its products and services. They pointed out that the evident recall of approximately 4.4 million laptop adapters in 2004 by Dell did not only pose challenges in regard to its products and service quality, but it also increased the cost of its products’ supply chain.

Risk of Customer Integration

According to Klinker, Terrell & Mahfouz (2006), Dell normally depends on its suppliers to deliver its services to customers. They note that this poses challenges for the company, especially in the case, when the supplier does not adequately fulfill customers’ demands. They also point out that since Dell Corporation in not a Production Company but a manufacturing one, the success of delivery of its products and services to customers is mainly determined by suppliers’ success. For instance, they point out that customers may apply to other business agents, if they fill that the company’s supply chain is not effective.

Klinker, Terrell & Mahfouz (2006) pointed out that at one point Dell experienced customers’ integration because of its competitors. They added that the company had to strategize its supply chain to gain poor credibility and trust from its clients.

Risks of Business Competitors

Dell’s supply chain usually faces a number of business threats from its competitors. Jaffe & Muirhead (2009) note that just like any other business, the introduction of business competitors in the market normally affects the company’s products and services supply. Clapperton (2010) notes that Dell normally encounters challenges in its supply chain because of the emergence of PC desktops supplied by such companies as Apple and Hewlett-Packard. He points out that Dell tends to lose most of its customers for the benefit its business competitors because of either low purchasing power or products’ distribution channel.

According to Klinker, Terrell & Mahfouz (2006), Dell’s supply chain strategies were engaged by the company because of the inadequacy of its previous supply chain. They note that because of the increased number of business competitors, Dell strategized on its customer relationship and supply chain management to match the trend in the market. This led to the invention of new application software that even though made it easier for the company to address the arising market trend.

Comparison of Dell’s Supply Chain with the Regular Supply Chain

According to Schmid, Kelber, Lehrend & Krasel (2006), Dell’s supply chain mainly comprises suppliers, Dell and corporation’s customers, which is different from the regular supply chain. They note that unlike the Dell’s supply chain, the regular supply chain incorporates business middlemen, such as retailers within a chain supply system. In addition, Dell’s supply chain normally enables the company to directly deal with its customers, unlike the regular supply chain, whereby the company deals indirectly with its customers.

Klinker, Terrell & Mahfouz (2006) point out that the Dell’s supply chain contains effective supply chain management, unlike the regular supply chain. They note that unlike the Dell’s supply chain, the regular supply chain is primarily based on retailer’s persuasiveness to make either a product or a service appealing to customers. They point out that the regular supply chain does not incorporate active supply chain management in processing and distributing products and services and may be less effective.

Soral (2010) notes that unlike the Dell’s supply chain, the regular supply chain does not directly connect the supplier with the customer. He points out that the invention of i2 software by Dell and Hotlink Corporation has enabled to connect customers to its supplier, the Hotlink Corporation. He notes that this has made it easier for the company to establish the market trend and offer quality products and services that satisfy customers’ demands. Willis (2011) points out that the regular supply chain is normally deprived of the companies’ engagement with the customers because of the presence of middlemen.

Willis (2011) points out that the regular supply chain normally engages different business parties, but this is quite time-consuming. He notes that the Dell’s direct supply chain is normally efficient and less time-consuming, as it directly and immediately deals with customers. He further points out that in the regular supply chain, products and services passe through various supply channels that have varying processing units that in turn consume a lot of time and money.

Conclusion

In conclusion, the paper has highlighted the Dell’s products and services supply chain. It has illustrated that the direct supply chain that the company utilizes has enabled the corporation to successfully compete in the market. It is also clear that the effectiveness of the supply chain is only possible, if the company devices strategic policies that will actively connect the company with its clients. The paper has pointed out that Dell’s customer supply management (CSM) and supply chain management (SCM) have made it possible for the company to effectively offer quality services. The effectiveness of Dell’s supply chain is far much better than the regular supply chain, whereby business middlemen are involved.