Dell Supply Chain Strategy

Topics: Inventory, Manufacturing, Supply chain management Pages: 3 (768 words) Published: September 7, 2012
Dell Supply chain strategy
Dell, Inc becomes one of the largest technological company in the world because of their specific supply chain strategy. The traditional supply chain strategy includes five components - supplier, manufacturer, distributor, retailer and customer. Firstly, supplier needs to send the raw material to manufacturer. Secondly, after the production process in manufacturer, manufacturer will send the finished good to distributor. Thirdly, distributor will distribute the product to the retailer. Lastly, customer will buy the product at the retailer. Figure X: Traditional supply chain strategy

Figure X: Traditional supply chain strategy

In Figure X, there are many steps within this supply chain, it includes many inventory costs, costs of communication and the longer lead-time.
On the other hands, Dell’s supply chain strategy is different from other technological companies which use traditional supply chain strategy, they use Direct Business Model, they sell their computer directly to the customer. Due to the Pull production system and Just in time strategy, the inventory of Dell becomes very low, so they don’t need to build the warehouse and spend much money in the inventory. Dell is also manufacturer, distributor and retailer, so they can enjoy almost zero inventory cost, the transportation cost between manufacturer, distributor and retailer. In addition, they can get the demand information from customer directly so that they can avoid the forecasting error, bullwhip effect, etc. As a result, the efficiency is much higher than that of traditional supply chain strategy. Figure X1: Supply chain strategy of Dell

Figure X1: Supply chain strategy of Dell

Characteristic of Dell supply chain strategy
In Figure X1, the supply chain strategy of Dell is much simple than traditional supply chain, it has several characteristics: 1. Internet and Phone order
Dell only accepts the Internet and Phone order because they only have experience...
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