Dell Supply Value Chain Management - Essay Example

Dell Supply Chain Management affiliation Question How has Dell used its direct sales and build-to-order model to develop an exceptional supply chain? Dell supply chain is todays a model of technology-based producers because of its purposive approach to handling supply and related issues. To meet the growing competition, Dell Chain has established a direct sales approach. In this approach, the company uses a number of platforms to ensure that they reach the customers directly and avoid wholesalers and retailers. The concept is to bridge the business and its clients globally and break away from the traditional supply chain. The company has employed its direct sales to build an excellent supply chain by using special web pages for suppliers. It has allowed its suppliers to view their orders and the current of inventory at the company. This allows for planning and providing components that are only needed. Besides, the strategy helps the company avoid excessive costs of market promotion. While it has remained a policy of reducing operational costs, this has enabled the company to establish to order model. Additionally, the company continues to expand its model through allowing consumers to seek queries and make purchases on the web platform. Although this comes with an additional transportation cost, it has over time proved relatively cheaper. In the current market where forces of demand and ever-changing customer specification, the company has shifted to internet sales and direct engagement of the prospective clients. Through virtual space, the company has continued to expand its sales and attract specific clients who value choice. Moreover, the company has expanded this chain through the creation of tracking system. The web pages have been customized. This allows bigger suppliers and larger customers to keep monitoring their purchases and make new orders. Notably, by investing in web pages and internet supply chain, it has created a unique customer base in addition to its traditional consumers. Blending to order supply chain help in reducing long chains that are often costly, inconvenient and ineffective. The web-based chain remains a critical-order supply chain. Question 2. How has Dell exploited the direct sales model to improve operations performance? 
 To measure process performance, three elements are of great importance. The priority is responsiveness to customer’s demands and changing the competitive environment. The company has improved its operations efficiency by customizing its web pages; this has allowed large businesses to view existing inventory and make orders based on informed point of view (Kumar & Craig, 2007). In addition, the company has adopted customer order tracking system that enables it to assemble its products upon receiving an order from a customer. This is done by ensuring a product that is introduced a model ready, this is in contrast with most of its competitors who fill products and its distribution channel before a product reaches the customer. Cash flow adjustment plays a crucial role in a supply chain system. It determines the ability of a business to continue producing or not. Ineffective cash flow system can lead to an acute shortage of money especially when there is an imbalance of cash flow. To streamline its payment system, Dell collects its payment in a few days after a product is sold, while it pays its suppliers using traditional billing schedule. This allows the business to operate with negative capital because of its operation that allows receive payment before paying suppliers. Operational performance is at its best when a company has the cash to run its operations while pursuing more prospective customers. While traditional billing takes sixty days, Dell can increase cash turnover and create more profits. It is, therefore, evident that direct sales increase cash turnover ensures continuity of production even in the negative capital and subsequent creates an opportunity for more profits. Certainly, this is a competitive advantage to the company. Question3. What are the main disadvantages of Dells direct sales model? 
 One of the greatest undoing’s of direct selling model is the relative increase in shipping cost. While this could be a competitive advantage, it also comes with additional cost. Compared to making sales through distributors such as wholesalers and retailers, direct sales is considerably expensive. Secondly, some customers have small orders or handful products. Because it is within its policy to send these products directly to the buyers, the company bears a high cost in circumstances where economies of scale are impossible. More specifically, there has been an average of 2-3% in terms of transportation costs (Lee, 2000). However, the overall cost has been found to be relatively small. Dell was able to be the first company to make $1 million through an online platform. Additionally, delivering goods to consumers poses logistic challenges. Being an international firm, Dell ability to respond to its customers across uniformly is limited. The quality of services extended to various buyers at different locations and with different volume of purchases differs considerably. However, the company is continuously addressing these issues through building the collaborative supply chain, production system and innovation to address such inequality. More effort is now focused on sustaining right business image to the consumers. Question 4. How does Dell compete with a retailer who already has a stock? 

 Dell has adopted pricing to build its competitive advantage over small retailers who often have a little stock. Notably, Dell products are cheaper because of direct sales that avoid wholesaling and warehousing charges. Also, since the company has adopted delivery services to the customers, small retail shops find their prices higher than those from Dell. After sale services including delivery of purchased items and internet based marketing and inquires makes the company product more appealing than those from a retail shop. Besides, the company enjoys an early-to-market advantage. This means their product reaches the market within a short time unlike in the retail distribution system where a product has a life cycle of months. Besides, with a massive online display of products and ordering, the company has cut the long chain of supply. Despite being a producer, the company is viewed as a bigger retail that has the ability to offer a cheaper price, deliver product to the customers and still provide a technological advantage. Unlike retailers, the company has the capacity to produce based on demand and direct suppliers choice of product through the web page. Remaining competitive even more than the small retailers, the products can be accessed from anywhere the globe and have the purchases and payment transacted within days. This an exceptional competitive advantage that mask potential retail competitors. Question 5. How does Dells supply chain deal with the bullwhip effect? 
 While addressing issues that may cause bullwhip effect, the company focused on two fundamental areas. Firstly, it keeps its research customer-based and modalities to help build business systems and its suppliers. In a competitive environment, the focus should be on the target markets. It has established web pages to allow consumers have a view of the variety products and make purchases based on existing inventory (Sheffi & Rice Jr., 2005). A purposeful strategy help the suppliers provide anticipatory production and thereby reduce the cost of supplies. Besides, building supplier collaboration enables the suppliers meet the needs of the company and thus facilitate a speedy supply chain. Further, supplier collaboration allows them offer latest options and current products to address queues. The implication of this concept is to create an integration of the supplier, the business, and their customers. While the company produces computers and other electronics, the suppliers facilitate delivery of specific materials needed. . References Kumar, S., & Craig, S. (2007). Dell, Inc.’s closed loop supply chain for computer assembly plants. Information Knowledge Systems Management, 6(3), 197–214. Lee, H. L. (2000). CREATING VALUE through Supply Chain INTEGRATION. Supply Chain Management Review, 4, 30. Sheffi, Y., & Rice Jr., J. B. (2005). A Supply Chain View of the Resilient Enterprise. MIT Sloan Management Review, 47(1), 41–48. Read More