Dell?S Supply Chain Management Strategy Case Study


Case Details:

Price:

Case Code:OPER063For delivery in electronic format: Rs. 500;
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Themes

Supply Chain Management, Direct Model, PC Retailing

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

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.

Issues:

» 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

» Critically evaluate Dell's retail strategy

Contents:

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

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Case Study Contents

  1. Introduction
  2. Dell – Company Overview
  3. Dell Products and Services
  4. Dell – Key Facts – Key Employees, Top Competitors, Revenues, Manufacturing Facilities
  5. Dell Timeline
  6. Dell – Business Segment Information
  7. Dell’s Evolving Supply Chain Strategy
  8. Typical Working of Dell’s Supply Chain
  9. Five key strategies in Dell’s successful Direct Model
  10. A supply chain with old technology is of little value
  11. Restructuring at Dell
  12. New Distribution Channels – Direct Model and Retail Strategy
  13. Integrating the Supply Chain
  14. Related Reading
  15. View sample pages of this case study

Case Study Abstract

The focus of this case study is the supply chain management practices of Dell. Dell has been following its unique ‘direct build-to-order’ sales model for more than 20 years. Customers can plan their own configuration and place orders directly with the company via the phone or its Web site. Over the years, Dell’s supply chain efficiencies and direct sales gave it a competitive advantage.

Can Dell regain its market leader position from HP?

In 2006 however, Dell faced several problems. Many customers complained about long delays in supplies. Recall of Sony battery cells in its laptops brought undesirable media hype to the company. Increasing discontent of customers led to a slowdown in sales. Consequently, Dell lost its market leadership to Hewlett-Packard Co. (HP). Industry analysts felt that, with Dell’s competitors also improving their supply chains and matching Dell’s direct model, the company had been losing its competitive edge. Dell will have to bear additional costs with its foray into retail distribution thereby minimizing its cost advantage. Besides, profit margins of Dell will drop further since it will have to offer incentives to compete with HP in retail stores. Though Dell spruced up its product design and range but Apple is clearly far ahead of it. Many experts feel that such new initiatives will only distract Dell from its supply chain operations.

This case study covers the following issues:

  • Examine and analyze Dell’s Direct model, its basic working, success and future challenges
  • Typical Working of Dell’s Supply Chain and future supply chain challenges
  • Highlights Dell’s evolving Supply Chain practices and strategy and steps being taken by it to recapture its lost market leader position
Case Study Keywords: Dell, Direct model, Supply Chain Management, Supply Chain Strategies, Build-to-order model, Inventory optimization, PC Manufacturing, Retail Distribution Channel, HP, Notebook computers, Desktop personal computers, Competitive Business Strategies, Sustaining competitive advantage, Michael Dell, Distribution Strategy, Supply Chain Case Study

Case Snippets/Update

Dell’s market share in U.S. and Worldwide (in Q1 2009) compared to other top PC makers

  • In year 2010, PC sales are expected to rise 12.6 percent, according to research firm Gartner.

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