Dell Inc Chain Management
The Company has often been cited as one of the premier innovators in supply chain design and execution. Its demand-driven, outsourced operational model enabled it to achieve market domination, which then allowed it to dictate costs and standards to suppliers. This report is based on analysis of information available on the Company’s website and publicly published reports.
Supply chain management (SCM) is a comprehensive activity including management of the flow of materials, information, and funds across the entire supply chain, from suppliers to component producers to final assemblers to distributors, and ultimately to the consumer. including after-sales service and sales returns Johnson.(M. Eric &. Pyke F. David 1999). In a global environment, firms have to deal with multiple suppliers and customers and are required to manage inventories in new and innovative ways. Various industrial researchers have stressed the importance of viewing SCM as an integrated system. With different methodologies of SCM implemented by various businesses in the same sector, it is more of competition amongst the various methods of managing the supply chain for businesses, even those belonging to the same sector.
SCM has generated much interest in recent years for a number of reasons. It has become crucial for businesses across sectors to realize that weak performance of one member of value chain could ultimately influence the profitability of the entire business. In this highly competitive business environment, cost of poor coordination between suppliers and customers can be extremely high. Especially in sectors characterized by fluctuating demand, a weak SCM can result in inefficient use of production, high transportation costs and high inventory costs. This cost increases as we move up the supply chain from consumer to distributor to producer, a phenomenon known as a ‘Bullwhip Effect’ (Johnson .M. Eric &. Pyke F. David 1999). Similarly, an efficient SCM which is well integrated across the value chain of the business can provide a significant competitive advantage.
On a broad level, supply chain management can be based on one of the two approaches. ‘push approach’ or ‘pull approach’. The push system takes full benefit from economies of scale in production and input acquisition by producing optimal output size and then distributing to wholesalers and retailers (Papadakis 2002). On the other hand, pull approach is known for its adaptive efficiency and is applied by sectors where demand is highly volatile and technology is depreciated fast. According to the pull system, a value-adding transformation takes place only after someone demands it, in a Just in Time (JIT) fashion, thereby inventory risk is minimized (Papadakis 2002). Dell has applied the pull system of supply chain management and selling products directly to customers via telephone or internet, known as the ‘Direct Business Model’.