DISTRIBUTION CHANNEL OF ACER

Acer Computer is a global PC brand name company headquartered in Taiwan. It follows a global
direct distribution model.
GDD is a complex end-to-end global distribution model. In the Figure, the bottom part
describes the business context of GDD that belongs to the private sector and is also the core
of GDD. Brand Y leads in this supply chain. Producer X is a contract manufacturer for Brand
Y. LSP Z is a contract logistics service provider for Brand Y. Brand Y takes orders from
many end customers in the global markets, sends the orders to Producer X, and LSP Z
following the instruction of Brand Y fulfills all orders to meet the end customers’
requirements. The supply chain is highly integrated through the collaborative processes
supported by the advanced supply chain/logistics technologies and systems.

The top part of figure framework shows the governments’ roles in GDD which belongs to
the public sector. In order for GDD to work, the origin and destination governments must be
supportive to free trade and better yet have mutual free trade agreements to reduce the trade
barriers caused by tariffs. The customs clearance procedures of two governments must be
very efficient, allowing 24 hours and electronic cargo clearances. Furthermore, two
governments must provide good international and domestic logistics infrastructures,
including airports, seaports, inland warehouses and easy access road system to these
facilities.

The middle part of figure illustrates the importance of the close partnership between the
public and private sectors among multi-countries that GDD operates in. Drawing from TDS
(Taiwan Direct Ship) experience, GDD, being the initiative of private sector, cannot be
successful without the breakthrough of long-standing trade and customs regulations, which
require strong support from public sector. 24 hours and electronic customs clearance
procedure, for example, was a major breakthrough Taiwan government made to facilitate the
practice of GDD on the origin side of the global distribution channel.
SUPPLY CHAIN AT ACER

Before 2001, Acer was both a brand name PC/NB company and an ODM manufacturer with separate
internal business units handling these two major customer segments. Due to the shift of notebook
computer distribution of major competitors such as Compaq (now merged with HP) and Dell to GDD,
Acer could not compete effectively and often had operational conflicts between its two internal
business units for setting up production and delivery priorities to own brand distributors or ODM
customers. The consequence was the loss of major orders from ODM customers and the worsening of
the profits. This had also shown directly on Acer's stock price at home, with a historical poor record
of ten New Taiwan Dollars (exchange rate at one U.S. dollar to thirty NTD in 2003).
Acer made a major corporate decision to reorganize the company to spin off its ODM manufacturing
unit to an independent and purely ODM manufacturer and keep its brand name unit as a sole business
for Acer Computer. The supply chain strategy for the new Acer has been "Direct SCM," which is the
term used by Acer for supply chain communication purposes, but the essence of "Direct SCM" is
actually GDD. This dramatic shift of supply chain strategy has resulted in a large leap in Acer's
supply chain efficiency and effectiveness, which has shown in the dramatic increase of stock price to
sixty NTD, a five-times increase since the implementation of the new supply chain strategy

The dotted lines represent the commercial document flows and payment flows. The full lines
represent the product flows.

The features of global direct distribution are :

 Direct to customer distribution

 Pull based supply chain
 Inventory only on two ends of supply chain
 Highly integrated logistics from end to end
 High flexibility
 High e-commerce support