Dell started its business as a small company in 1985; it became the world’s leading company computer manufacturing company with more than 96000 employees. Revolutionary supply chain strategies of the company are the main reason behind the growth and success of the company.
Objectives of Dell SCM
After restructuring the SC network and processes, some of the main goals and objectives of Dell supply chain management are as follows;
- Optimizing and increasing the global IT infrastructure
- In-stock and ready-made system for quick delivery
- Streamlining customer priorities relevant to cost, choice, and speedy
- Standard and flexible processes and operations by exploiting global partnerships
- Infrastructure that is relevant to the changing needs and requirements of the company
- Employing segmented SC models and strategies rather than implementing one-sized fit for all
- Standardization offers comprise of most frequent procurement configuration
- Implementing global structure rather than regional or local, and it focuses on three areas; small consumer, enterprise, public, and corporate
Supplier & Inventory Management of Dell
Long Term Relationships
Dell develops a long-term relationship with suppliers and vendors just like many other retail giant companies. It allows the computer manufacturing brand to streamline its various inventory management processes. Resultantly, it plays a significant role in the growth and success of the company.
Optimization & Low Cost
The focus of Dell’s inventory management processes is to optimize the production and manufacturing speed and decrease the inventory level. It helps the company not to hold the inventory for more than 6 days and avoid carrying any type of unnecessary cost.
Establishing Principles for Industry
Many tech giants companies like Sony, Samsung, and Motorola; have got worldwide supplier networks. When it comes to the supply of various tech hardware components like motherboards, HDDs, and cables; they follow the Dell SCM rules and regulations.
Dell makes sure that the production and manufacturing plants of Dell should be in close proximity. They both should coordinate with the logistics companies while shipping and delivering various components to the customers. However, the company deals with the inventory based on the VMI (vendor manages inventory) model. VMI means that the company would only load the supplied components on trucks based on demand and the vendor manages the inventory.
Dell communicates and shares information with its suppliers via the internal web platform “Value Chain.” This web platform helps the company to collect information about the inventory status through production data, demand, or supply chain.
SCM Strategy of Dell
Some of the Dell supply chain management strategies are as follows;
Dispersed Manufacturing Units
Dell has got manufacturing and production plants in various countries across the world;
Dell also hires contract manufacturers in different countries to assemble and produce Dell’s products and Dell Technologies’ label as a part of its strategy. It would the computer hardware manufacturing company in the following ways;
- Improve SC strategy for Dell
- Delivering products faster
- Achieving cost efficiency
The production and manufacturing process of Dell comprises of following;
- Quality control
- Functional testing
- Software installation
Dell launches and conducts various operations by employing a formal documented quality management system to make sure that the products and services satisfy the needs and wishes of customers.
Dell implements quality control and testing methods on the system, sub-assemblies, parts, and components obtained from the 3rd party suppliers and vendors. The company maintains the quality management system by testing the system, software, sub-assemblies, and components in various areas of the production process.
Dell applies various strategies and practices to make sure the quality of the following elements for continuous improvement;
- Supplier relationship
- Testing processes
- Ensuring Dell Design and Manufacturing
Dell applies a supplier code of conduct and actively manages the recycling process for returned goods and products. It is a certified practice by the “Environmental Protection Agency” as a smart transport partner.
The SC strategy of Dell is to procure materials, products, product components, and supplies from various suppliers. Procuring and purchasing supplies from various vendors and suppliers go by the name of multi-vendor sourcing.
Dell has a network of more than 2400 vendor and supplier-managed service centers. Its supply chain strategy of Dell achieved operational efficiency and long-term growth. According to an estimate, the company procures annually 750 parts worth more than 75 billion US dollars.
Advantages of Dell Supply Chain Management
- Employs the latest technology for its SCM processes like Extranets to communicate with its suppliers, and post the demand on Extranets and it becomes visible to everyone
- Improves distribution and manufacturing processes and offers good computers to customers at a competitive price
- Helps the company to decrease its cost by maintaining minimum inventory, decreasing the number of mediators in the distribution channel, and building customized computers based on their requirements
Disadvantages of Dell Supply Chain Management
- Problematic for home user customers because they can’t order customized computers based on the company’s requirements and specifications. If any problem comes up, then they can’t go to any repairer
- The SCM strategy of Dell helps the company to decrease costs, but it increases the repair and maintenance cost
Conclusion: Dell Supply Chain Management
After an in-depth study of Dell supply chain management; we have realized that Dell is the world’s leading computer manufacturing company. If you are learning about Dell SCM strategies, then you should keep in mind its strategies, advantages, and disadvantages.
Ahsan is an accomplished researcher and has a deep insight in worldly life affairs. He goes Live 3 days a week on various social media platforms. Other than research writing, he’s a very interesting person.