Question

Dell's Supply Chain

Dell has been selling computers for over 25 years with its unique, direct build-to-order, sales model. Read about Dell on pages 90–93 in our textbook and also watch the Dell Supply Chain video and answer the following questions:

Why has Dell's direct supply chain been so successful?

Describe the main supply chain challenges that Dell is now facing and provide your recommendations for solving them.

Why did Dell decide to sell its products via retail outlets a viable solution? Do you agree with this distribution strategy? Why or why not?

Answer 1

• Why has Dell's direct supply chain been so successful?

Dell’s direct supply chain is so successful because its impact on online sales. Its inventory cost, facility costs, transportation costs, and the information costs make a positive impact on the sales in the pc industry. Its online sales offer Dell the ability to reduce its inventories by aggregating them in a few geographic locations . The online channel also allows Dell to lower facility cost. Facility cost has the ability to add incrementally to the information cost and affects the transportation cost which are higher and a larger fraction of cost for low cost configurations

• Describe the main supply chain challenges that Dell is now facing and provide your recommendations for solving them.

The main supply chain challenges that Dell is now facing would be the impact of retail sales as far as inventory, facility, transportation, information cost, and customer service. The sell of computer hardware online has considered to be more successful rather than through retail stores such as Walmart, Target, etc. Dell’s supply chain channel for retail push/pull boundary assembles the pc in the push phase of the supply chain often well in advance of the final sale . When using the online channel Dell starts assembly after receiving a customer order . Another disadvantage for Dell’s supply chain challenges is its customer request on online sales. This is a disadvantage for Dell when trying to sell low cost standardized configurations online .

• Why did Dell decide to sell its products via retail outlets a viable solution? Do you agree with this distribution strategy? Why or why not?

Dell decide to sell its products via retail because selling their products though a retail channel gave them the ability to sell their products at a low cost and they could sell all or most customize configurations via internet. The standard models can be produced using a low cost approach even if it involves longer lead time . Selling scandalized models through distributions and retail stores allow the supply chain to save on transportation costs which are higher with this distribution strategy. Manufactures can use the tailored approached online to take advantage of the strengths of both online sales and traditional retail distribution channels.