Abstract

US-based Dell Inc., one of the leading PC manufacturers in the world, pioneered a unique model of selling PCs directly to the consumers, bypassing the resellers. The model is popularly known as the Direct Model. The case describes this model in detail and explains how it enabled Dell to manage its supply chain efficiently. In the third quarter of 2006, Dell’s major competitor HP had overtaken the company in terms of market share to become the top PC manufacturer in the world. Industry experts opined that lack of new products, poor customer service, increasing support costs, lack of retail presence and the limitations of the Direct Model were some of the reasons for Dell’s poor performance. Dell’s Direct Model, which was company’s strength, lost its sheen, with the competitors gaining better supply chain efficiencies and opting for a mixed sales model. The case examines how Dell planned to consolidate its supply chain and manufacturing activities globally and venture into retail business in order to regain its leadership status.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Study and understand Dell’s Direct Model
• Critically examine the limitations of Dell’s Direct Model
• Understand the problems faced by Dell in late 2006 and 2007
• and Critically evaluate Dell’s retail strategy.

Keywords

Dell Inc., Supply Chain Management, Direct Model, Global Operations Organization, Global Procurement, Distribution Models, Inventory Management, Vendor Managed Inventory, Suppliers Logistics Centers, Sales Forecasts, Valuechain.dell.com, Demand Shaping, Order Management System, Working Capital, Retail Format