Question

Read carefully the case study below and solve the following questions at the end:

Dell’s Value Chain

Dell Computer, with close supplier relationships, encourages suppliers to focus on their individual technological capabilities to sustain leadership in their components. Research and development costs are too high and technological changes are too rapid for any one company to sustain leadership in every component. Suppliers are also pressed to drive down lead times, lot sizes, and inventories. Dell, in turn, keeps its research customer-focused and leverages that research to help itself and suppliers. Dell also constructs special Web pages for suppliers, allowing them to view orders for components they produce as well as current levels of inventory at Dell. This allows suppliers to plan based on actual end customer demand; as a result, it reduces the bullwhip effect. The intent is to work with suppliers to keep the supply chain moving rapidly, products current, and the customer order queue short. Then, with supplier collaboration, Dell can offer the latest options, can build-to-order, and can achieve rapid throughput. The payoff is a competitive advantage, growing market share, and low capital investment. On the distribution side, Dell uses direct sales, primarily via the Internet, to increase revenues by offering a virtually unlimited variety of desktops, notebooks, and enterprise products. Options displayed over the Internet allow Dell to attract customers that value choice. Customers select recommended product configurations or customize them. Dell’s customers place orders at any time of the day from anywhere in the world. And Dell’s price is cheaper; retail stores have additional costs because of their brick-and-mortar model. Dell has also customized Web pages that enable large business customers to track past purchases and place orders consistent with their purchase history and current needs. Assembly begins immediately after receipt of a customer order. Competing firms have previously assembled products filling the distribution channels (including shelves at retailers) before a product reaches the customer. Dell, in contrast, introduces a new product to customers over the Internet as soon as the first of that model is ready. In an industry where products have life cycles measured in months, Dell enjoys a huge early-to-market advantage.

Dell’s model also has cash flow advantages. Direct sales allow Dell to eliminate distributor and retailer margins and increase its own margin. Dell collects payment in a matter of days after products are sold. But Dell pays its suppliers according to the more traditional billing schedules. Given its low levels of inventory, Dell is able to operate its business with negative working capital because it manages to receive payment before it pays its suppliers for components. These more traditional supply chains often require 60 or more days for the cash to flow from customer to supplier—a huge demand on working capital.

Dell has designed its order processing, products, and assembly lines so that customized products can be assembled in a matter of hours. This allows Dell to postpone assembly until after a customer order has been placed. In addition, any inventory is often in the form of components that are common across a wide variety of finished products. Postponement, component modularity, and tight scheduling allow low inventory and support mass customization. Dell maximizes the benefit of postponement by focusing on new products for which demand is difficult to forecast. Manufacturers who sell via distributors and retailers find postponement virtually impossible. Therefore, traditional manufacturers are often stuck with product configurations that are not selling while simultaneously being out of the configurations that are selling. Dell is better able to match supply and demand.

One of the few negatives for Dell’s model is that it results in higher outbound shipping costs than selling through distributors and retailers. Dell sends individual products directly to customers from its factories. But many of these shipments are small (often one or a few products), while manufacturers selling through distributors and retailers ship with some economy of scale, using large shipments via truck to warehouses and retailers, with the end user providing the final portion of delivery. As a result, Dell’s outbound transportation costs are higher, but the relative cost is low (typically 2% to 3%), and thus the impact on the overall cost is low.

What Dell has done is build a collaborative supply chain and an innovative ordering and production system. The result is what Dell likes to refer to as its value chain - a chain that brings value from supplier to the customer and provides Dell with a competitive advantage.

Questions: Evaluation will be done based on valid, clear answer and excellent writing skills.

1. How has Dell used its direct sales and build-to-order model to develop an exceptional supply chain?

2. How has Dell exploited the direct sales model to improve operations performance?

3. What are the main disadvantages of Dell’s direct sales model?

4. How does Dell’s supply chain deal with the bullwhip effect?

5. In your opinion, how Dell should take the responsibility for the products presented to customers from the perspective of social responsibility? (please dont use the internet it will count plaigrism)

Answer 1

1.. Dell has recognized that in a market of numerous contenders, it is extremely hard for one organization to support the administration in each part because of highly innovative work expenses and fast mechanical changes. So all things being equal they have centred to keep up a cozy relationship with its Suppliers and kept their examination client situated. Dell has developed exceptional website pages for providers, in this way permitting them to see orders for parts they produce alongside current stock levels at Dell. This empowers providers to design dependent on the genuine interest of clients and furthermore helps keep the store network moving quickly and abbreviates client line. Direct selling over the web permits Dell to eliminate extra expenses and decrease cost. This likewise connects clients straightforwardly to providers, who recognize what is sought after and produce in like manner. The subsequent itself should be possible from the providers' end and there is no extra cost required beginning from amassing to item conveyance.

2.. : Dell has utilized the direct sales model to preclude the presence of retailers and dissemination from the general store network the board. Using the web additionally permits Dell to exhibit their items to clients in a shorter time allotment, though delivery to retail shops and afterwards to clients would occupy a great deal of time. This permits them to appreciate a noteworthy right on time to-showcase advantage. Dell is likewise getting instalment online ahead of time from clients, in spite of the fact that the item structured or amassed in the wake of accepting from providers, will be conveyed later. Dell has packed its inventory network by legitimately connecting the requests straightforwardly to the providers. Providers can see existing requests so they know whether or what number of segments to create and deliver. This production network pressure gives Dell a generous unit cost advantage over another person. With a stock turnover pace of around 60 times each year, Dell has limited the fast deterioration and stock discount costs that ordinarily hurt the PC business. Additionally, on account of its immediate deals model, Dell works on a negative money transformation cycle. Dell gets its cash preceding paying its providers for the parts. Dell's immediate deals model has improved tasks in light of the fact that the client can arrange precisely what they might want without Dell agonizing over stocking each conceivable item. Dell gets the requests and instalment for the thing and the client gets the specific item and extras they need inside day conveyance right to their home.

3..Although Dell has fabricated a collaborative supply chain and an inventive requesting and creation framework, the primary detriment of their model is their higher outbound transportation costs related to direct conveyance to clients from their industrial facilities. This includes little amount shipments however with more recurrence instead of producers who appreciate the economy of scale in making enormous volume shipments to retailers before conclusive conveyance. Consequently, Dell encounters higher vehicle costs than most producers. The other inconvenience would be the nonappearance of client support during pre and post request.

4.. They can see a request for parts and furthermore monitor current degrees of stock at Dell. This permits the provisions to work for request progressively. In outline, as long as they can work progressively dependent on real interest Dell won't need to stress overstock develop of superfluous segments and items. Dell's modified site page for providers permits them to diminish the bullwhip impact.

5..Dell is generally known as an ethical company and has as of late conceded to turning into an all the more earth manageable business. In the wake of checking on the Corporate Social Responsibility segment of Dell's site ..Every business works in the general public and utilizations the assets of the general public and condition, in this way they should contribute towards supportable improvement by conveying monetary, social and ecological advantages to all partners. A portion of the arrangements and projects that help the organization D to accomplish its vision of driving social condition changes while as yet remaining improve and benefits are as per the following: Design for the condition is an approach that considers the earth at each phase of item development. Reducing their effect under the arrangement the organization attempts to make the items such that it causes negligible consequences for the environment. Climate transforms they center around the utilization of that innovation that can tackle the issue of atmosphere changes. The energy they make most extreme reuse of sustainable assets and ideal use of resources waste consolidates netter waste administration techniques Green pressing and delivery the follow3C's technique to decrease the effect of bundling on nature through managing cycle you electronic gadget the point of the organization is to reuse its item.

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