Supply Chain Management and Dell

Topics: Supply chain management, Supply chain, Inventory Pages: 11 (3161 words) Published: September 22, 2013
1.Introduction
Purpose of this assignment is to analyse the case study of the Dell Inc, relating to the seven questions asked on the case study. Objective of the case study analysis is to get a deeper understanding of the Global production, outsourcing and logistics. 2.Company overview

Dell is a global information technology company that offers its customers a broad range of solutions and services delivered directly by Dell and through other distribution channels. Their focused is to provide technology solutions that are more efficient, more accessible, and easier to manage. Dell Inc. is a holding company that conducts its business worldwide through its subsidiaries. Their global corporate headquarters is located in Round Rock, Texas. In terms of the PC manufacturing market, DELL is at number 3 position (Behind HP & Lenovo) with annual revenue of USD 62,071 Million. They made a net profit of USD 3,492 Million for the year 2012, which would translate to a net profit margin of 5.6%.

Dell focuses on 4 main market target segments.

SegmentRevenue percentage
Large Enterprises30%
Public 27%
Small & medium business 24%
Consumers 19%
Table 2.1 – Dell Inc’s marketing segments

The product portfolio of Dell consists of selling Servers, Networking, Storage, Outsourced services, Project Management, Support & deployment services, Infrastructure, Cloud, Security services, Applications, Business Process services, Client devices: notebooks, workstations, tablets, smartphones, and desktop PCs For the purpose of the case study, the focus will be on the products & distribution of personal computers.

3.Case study questions

3.1.1.What are the advantages to DELL of having manufacturing sites located where they are? A company once decided to place their productions overseas, must make a decision to whether to centralize their production or to de-centralize it over different countries. A company will look at 3 areas in making this decision. •Country factors

oPolitical
oEconomical
oCultural
oFactor Costs
oLocation Externalities : Skilled labour technology
oTrade barriers
oTransport cost
oFDI rules & regulations
oExpected exchange rate stability
Technological factors
oFixed cost
oMinimum Efficient Scale
oFlexible manufacturing/Mass customization
Product Factors
oValue-to-Weight Ratio
oServes Universal needs(Hill, 2011)
Dell Inc which have a product with lower fixed cost of manufacturing, lower minimum efficient scale and with low requirement for mass customization or flexible manufacturing will opt in for decentralization. Also considering the product factors, Dell has a product which has a lower Value-to-weight ratio and a product which needs to be customized to each market, which indicates the requirement for the De-centralized strategy. Decentralize/Centralize decision will be influenced by the company’s own objectives. Dell specify their objectives as •Generating cost efficiencies,

Delivering products faster,
Better serving their customers
Building a world-class supply chain.(Annual Report, 2012) In order to cater to these objectives and support product factors and technology factors, Dellhas taken the decision to De-centralize. Once the decision to decentralize has been taken, they will go ahead with selecting the countries where they will try to exploit the country factors listed above to their advantage. Current locations where Dell has their production facilities are as follows: •Austin, Texas;

Penang, Malaysia;
Xiamen, China;
Hortolândia, Brazil;
Chennai, India;
Lodz, Poland.
Advantages exploited from each of these locations can be listed as below 3.1.1.1.Market Access – Generating cost efficiencies, Delivering products faster, Dell main objective is to deliver products faster while generating cost efficiencies. The growth countries and regions that they have highlighted are BRIC countries (Brazil, Russia, India, and China). The...
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