Question

Dell and FedEx Supply Chain

For more than 28 years, Dell has empowered countries, communities, companies, and people everywhere to realize their dreams through the use of information technology. Success also brings great challenges - especially in areas of non-core competencies such as reverse logistics. Dell had worked with GENCO since 2005 (GENCO was acquired by FedEx in 2015 and rebranded as FedEx Supply Chain in 2017).

As customary in the fast-paced high-tech industry, Dell operated under a procurement strategy of “every dollar, every year,” meaning that it used frequent competitive bidding processes to drive down prices. By 2011, the honeymoon was over in the relationship. Dell was driving for the lowest cost, but FedEx Supply Chain believed Dell’s short-term thinking was putting capabilities at risk.

A major tension point was that Dell wanted FedEx Supply Chain to drive proactive innovations and assume the cost of investments. FedEx Supply Chain resisted because it had no guarantee of return on investment within the existing contract structure and constantly faced hard-driving cost reductions. One thing was abundantly clear: Neither party was content with the current contract. The existing contract structure and relationship dynamics placed a wedge in the trust level between the two companies.

A better way was needed.

Question

You have been approached to advise on the way forward for Dell and FeDex relationship. Using an illustration, advise Dell on how they can implement relationship management using the partnership life cycle effect

Answer 1

PLEASE LIKE THIS ANSWER, IT HELPS ME A LOT. THANK YOU!!!

You have been approached to advise on the way forward for Dell and FeDex relationship. Using an illustration, advise Dell on how they can implement relationship management using the partnership life cycle effect

Dell partnered with its FedEx Supply Chain reverse logistics provider to transition to a Vested Procurement Model with results-based process improvement steps. The decision was taken after the understanding by both parties that maintaining a single emphasis on costs is counterproductive to their partnership with the customer and manufacturer and no longer contributes to a new saving.One of the benefits of seeing sourcing relationships on a continuum is that businesses can reassess the ties with a specific strategic supplier as circumstances shift. Just like Dell, an organization which seeks to change the nature of a relationship can easily do this by comparing the existing supplier-based sourcing business model with the continuum of models.This strategy benefits not only the company as a whole, but also the workers level for supplier management and sourcing. The company should encourage the workers to concentrate on ties that need more attention, in separating transactional relationships from more constructive and strategic ties.