Case Study - Dell Value Chain

Topics: Supply chain management, Supply chain, Customer Pages: 4 (1162 words) Published: May 1, 2013
Question 1
How has Dell used its direct sales and build-to-order model to develop an exceptional supply chain? The many challenges in order to improve the supply chains usually come with the unidentified. Many companies produce products they think their consumer will want. After that, they ship their products to retail stores. Then, these stores try to sell the products to the customers. Here, the supply chains slows down as they are figuring out what to build next. Then, these companies deal with their suppliers to get the materials for the products. Here, the supply chain slow down more and even slower as they wait for the product to get sold and get paid. Dell's assembly plant in the US

Dell has used its direct sales and build-to-order model to create this exceptional supply chain by integrating everything from the beginning to the end process. Dell starts by researching customer to find out what they want. As soon as an initial product is designed, Dell starts to market that product on the website. Dell does not start to produce any of the products until the customer tells Dell exactly what they want and pays for the product. Only then does the procurement process start. Dell has improved the supply chain to make it excellent by integrating the suppliers. The suppliers have a Web page which informs them of pending orders. This allows the suppliers to plan based on actual demand. This sales model created an exceptional supply chain because this integration of activities from the procurement of materials to the final product and Dell’s direct shipment to the customer can be done in a matter of hours compared to months. Additionally, this allows for exceptional cash flow compared to traditional methods since the payment is received before Dell pays for the components itself.

Question 2
How has Dell exploited the direct sales model to improve operations performance? Dell has been able to exploit the direct sales model because of the internet. Dell has...
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