Dell's Supply Chain Management Practices

            
 
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Case Details:

Case Code : OPER063
Case Length : 26 Pages
Period : 1991-2007
Organization : Dell Inc.
Pub Date : 2007
Teaching Note :Not Available
Countries : US
Industry : Hardware

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Excerpts

The Direct Model

Dell's direct selling model traces its origins to Michael's idea of selling computers directly to the consumer eliminating the need for middlemen and distributors. Michael believed that by selling PCs directly to the consumers, the company would be able to better understand the needs of its customers. The first computer that the company introduced in 1985 - Turbo PC, was advertised in computer magazines and sold directly to customers. Dell also began employing computer literate sales personnel, who guided consumers in their choice of systems. Each system was assembled according to the preferences of the customers. This option helped customers to get computers at a price lower than other brands...

Operations Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

Role of Dell's Suppliers

In order to manage its operations with low inventory levels, Dell collaborated closely with its suppliers. The company's procurement decisions were based on four criteria - quality, cost, delivery and technology. Suppliers were selected on the basis of cost (given a weightage of 30%) and quality, service and flexibility (with a weightage of 70%)...

Balancing Demand and Supply

Dell maintained a database to track the purchasing patterns of corporate customers and their budget cycles, in order to forecast demand. It also maintained a similar database for individual customers in order to cater to their future requirements for PCs. Through its forecasting techniques, Dell was able to forecast demand with 75% accuracy. Thrice a day, the changing demand patterns were communicated to the major suppliers. In all the countries in which Dell operated it had a direct sales force, which was directed by the marketing department located at the headquarters...

Production Process

Dell received orders via the telephone, Internet, e-mail, etc. Orders were received by business units, which downloaded the orders every 15 minutes. With advancement in technologies, the choices available for the consumers also widened. Customers could use Dell's website www.dell.com, to configure their customized computer and place an order for it. Customers could choose from a variety of products ranging from desktops, notebooks, servers, printers, etc. The website catered to different segments of customers like individuals, home office customers, small businesses, medium businesses, large businesses and public sector customers like Government departments, educational institutions and healthcare institutions...

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