Facilities • Location: Regional approach, suppliers’ facilities built next to door • Capacity: Lowest raw material shipping time, perform intended functions, little excess capacity will be more efficient per unit; high-utilization facility difficult to respond to demand fluctuations , customer could conveniently send orders via internet and telephone. Summary: Dell’s facilities strategy reduce inbound shipping time, and the logistics cost, and increase service level. Inventories • Safety Inventory: on-site inventories to copy with the next few hours of orders • Seasonal Inventory: Level of Product Availability(time): High Level and just-in-time Delivery 4 days across the entire operation Summary: Dell’s low inventories strategy minimizes inventory and overstock, therefore it could meet customer high variety by quickly transferring to latest products. Transportation • Leave it to the Suppliers • Design of Transportation Network: Air Networks mostly in Asian Market: Shanghai, Taiwan, Singapore, Hong Kong • Choice of Transportation Mode: Summary: Dell’s transportation strategy could minimize the production lead time, and also could provide high service level by shipping products directly to customers’ home.
Information • Push Versus Pull • Coordination and Information Sharing • Forecasting and Aggregate Planning: how to make and to what extent to rely on • Enabling Technologies: EDI, Internet, Extranet, B2Bi Summary: Shared Information strategies could realize supply continuity. Thereby it could meet the high customization and product availability. Sourcing • In-house or Outsource • Supplier Selection: 50 suppliers • Procurement: Consolidated supply, 80% of procurements to ensure low transaction costs Summary: Stringent supplier selection criterion could increase product availability, and reduce supply uncertainty.
Pricing& Customer Service • Pricing – Eliminating the by distributors and retails as well as the added value; – Pricing is not Dell’s main strategy, but Dell provides a reasonable price with good quality. • Customer Service – Customer orders conveniently via phone and internet; – Shipping the products to customers’ home; – Service Center is dedicated in Dell’s brands. Summary: Dell’s strategies in pricing and customer service could provide products with high service level and reasonable price. Responsive Supply Chain ………
Supply chain responsiveness includes a supply chain’s ability to do the following (Chopra & Meindl, 2010): • Respond to wide ranges of quantities demanded • Meet short lead times • Handle a large variety of products • Build highly innovative products • Meet a high service level • Handle supply uncertainty Conclusion: Dell realize a supply chain with high variety, service level, and flexible to hand supply uncertainty, Dell supply chain is high responsive. The responsiveness spectrum Somewhat Somewhat efficient responsive Dell: Highly responsive Highly efficient Why it works well . Facilities 2. Inventory Service level: high customization, etc 3. Transportation Variety: high variety 4. Information Quality: Reasonable quality 5. Sourcing Price: Reasonable price Lead time: approximately one week 6. Pricing 7. Customer service Strategic Fit Why it works well High implied Uncertainty VS. Responsive SC Strategic Fit–Intercompany Interfunctional Scope • • • Dell SC considered different functions inside the company; Dell SC considered different stages; The intercompany interfunctional scope could obtain the maximize profitability. Suppliers Dell Customer
Intercompany Interfunctional Scope Competitive Strategy high [variety, customization, service level], reasonable [price, quality, lead time]. Supply Chain Strategy Build facilities next to Dell plant floor; Managing manufacturing per Dell MRP forecast; Ensuring freights were last loaded in order to be unloaded first. Build to order; Lowest inventory; No distributors and retailers; Shipping to customer home, etc. Online sales; Sharing MRP forecast, order flow, Inventory with suppliers, etc Direct contacting with customer Ordering computers on line; Customizing the computers.
Information Strategy M&S Strategy F&A strategy Tight cash flow Limitations of Direct Model • Time: – Relative long lead time for customers(one week); • Cost: – Suppliers’ next to door facilities increase suppliers’ cost; – High delivery cost, especially for rural areas; • Service Level: – Complex and time-consuming after sale service; – Low inventories may impact in production continuity; – Lack of first hand experience before buying; • Variety – Limited diversity due to Dell’s commitment to Intel; • Innovation – Less innovative, relying on suppliers’ intellectual property.
Challenges in Emerging Markets • Printers and TVs markets – Difficulties to make outsourcing printers work seamlessly with dell’s products; – Less innovative; – Competitors start to sell online; • New geographic markets – More expensive than other competitors in low-end products; – Customers dislike to buy on the phone or internet; – Expensive cost in delivery, service and support in rural areas; – Limited diversity and higher cost due to Dell’s commitment to Intel; – inability to serve all market needs due to limited vendors; – Requirement for better information and communication technology.
Proposals for Dell • Printers and TVs markets – More innovative; – More TVs displaying in public places to raise customer awareness; – More development in high-end products; • New geographic markets – More product availability and diversity in low price products; – Long term cooperation with dedicated logistic companies or huge wholesalers to reduce the delivery cost (e. g. Amazon); – More localized channels to place and pay orders; – Setup franchisee to provide customer service and support. The End. Thank you!