Supply Chain Management

http://hk.youtube.com/watch?v=EEhNkzdKyrw

MBA655 B2B Marketing

Prepared by: Henry G. Lam, Perry Lee and Desmond Ho
Date: 13 December 2008
 Agenda
• Introduction
• Analysis of Dell’s Competitive Advantage
• Analysis of Dell’s Business Model
• Analysis of Dell’s IT Infrastructure
• Implications & Recommendations
 Introduction
• Dell Computer is a leader in the e-commerce computer
hardware market.
• It is an established brand that leads personal computer
manufacturers both in U.S. sales and overall online sales.
• The Dell Direct model, a Web-enabled infrastructure that
allows both corporate and individual customers to customize
their PCs and order other products they need or desire.
• It uses the power of the Internet to share and exchange
information with suppliers and vendors to build a truly superior
supply chain that keeps inventory turnover low and costs to a
minimum.
 Introduction (Con’t)
• The Dell Direct Model helps Dell focus on price for
performance, customization, service and support, latest
technology and superior shareholder value.
• Additionally, Dell is able to distinguish itself from its competitors
with its customized on-demand manufacturing. With this
customization, Dell is able to offer customers more value for
their money by eliminating intermediaries in their procurement,
manufacturing and distribution processes.
 Introduction (Con’t)
• Dell’s primary resources include the most up-to-date technology
and IT tools that allow it to successfully move along their
superior supply chain and achieve the value they strive for.
• Dell’s value chain allows Dell and its suppliers to exchange
information and interact with each other.
• The Internet, Dell’s key IT factor in its success, results in lower
costs to customers than other retailers because customers tell
Dell exactly what they want and Dell creates products for the
consumer without experiencing wasteful resources in production.
• It is evident that Dell’s competitive advantage lies in its Direct
model success. Through Dell’s IT performance, which
combines its resources, its relationship with suppliers and its
consumer communication capabilities, Dell has developed one
big advantage over its competitors.
 Analysis of Dell’s Competitive
Advantage
• Dell is able to sustain a competitive advantage over competitors
in the computer industry because of an extremely efficient
supply chain and distribution systems.

• Dell is able to achieve superior profits in the industry because

they are a knowledgeable user of information, communication,
e-commerce, e-business, internet, and web technologies.
 Analysis of Dell’s Competitive
Advantage
• Michael Dell states that Dell is so successful because of
“Knowledge Management”  physical assets are being
replaced by intellectual assets.
• This relates to Dell’s inventory system. Dell implements a Just-
In-Time inventory system which operates on only 6 days of
inventory  achieve greater profit margins, increased profits,
cut costs on warehousing, hiring people to track and maintain
inventory, and avoid holding on to obsolete technology, to free
up cash flow to invest in other value adding activities.
 Analysis of Dell’s Competitive
Advantage (Con’t)
• Dell uses a JIT inventory system because Dell’s customers can
only order computers directly through Dell itself.
• Dell uses their website www.Dell.com to take customer’s orders
Dell focuses on direct sales, cutting out other distribution
channels entirely This allows for a deeper relationship with the
customers whereby Dell can offer their customers better service,
savings, convenience, and efficiency.
 Analysis of Dell’s Competitive
Advantage (Con’t)
• A customer can order their own custom computer, have it built by
Dell in three days and have it delivered to the customer’s
doorstep within one week.
• Dell uses “Premier Page” for larger accounts including
corporations, the Government, and educational institutions. It
includes dynamic price upgrades, easier navigability, and a
greater range of available upgrades/options. Customer
relationship management software keeps close tabs on the
types of computers that customers are buying.
 Analysis of Dell’s Competitive
Advantage (Con’t)
• Dell also uses the internet to build better relationships with their
suppliers.
• In order for Dell to work off of 6 days of inventory, their suppliers
have to be very involved in the company to make sure superior
service is met.
• Dell uses state of the art production planning programs that
forecast the quantities of components needed to build the
computers.
• After those forecasts are made, supply chain systems pass those
forecasts to suppliers, who respond with cost estimates and plan
their production as a result.
 Analysis of Dell’s Competitive
Advantage (Con’t)
• To achieve their supply chain superiority, Dell uses solutions from
i2 Supply Chain Management.

• i2 streamlines the supply chain by providing component suppliers

and Dell planners with global views of product demand and
material requirements.
• It also provides real-time factory scheduling and inventory
management, so employees can generate key reports based on
accurate and timely data, pinpoint inventory on the factory floor,
and receive supplier deliveries on a true just-in-time basis.
 Analysis of Dell’s Competitive
Advantage (Con’t)
• Dell achieves its competitive advantage over other firms in the
industry by having superior supply chain management.
• Dell utilizes technology to interpret information.
• By being involved in the customer buying process they are able
to determine their customers’ needs.
• This allows Dell to streamline production and have close
relationships with their suppliers which results in getting timely
deliveries in order to mass customize customer’s computers.

The magic formula in figuring out

what stage of the evolution given
technology is at and when it is
right for Dell to use its business
model and customer relationships
to make a product that’s much
higher volume and much lower
cost.
 Analysis of Dell’s Business
Model
• Dell has four markets: B2B, B2C, C2B and C2C. But
Dell focuses on B2B and B2C commerce to satisfy
their business and individual customers.

• Dell's business model is no secret, of course, and it's

been emulated with considerably less success by
many of its competitors.
• Matching customer ease of ordering and direct
interaction through the internet proved successful
because Dell believes that it is the customer that
drives the business model.
 Analysis of Dell’s Business
Model (Con’t)
• Dell controls its inventory and costs by being a demand-pull
company, whereas most of its top competitors are strictly
supply-push companies and operate in a more traditional
manner.
• Such competitors have to be good at forecasting what the
customers will need, while Dell makes the computers according
to the actual orders.
 Analysis of Dell’s Business
Mobel (Con’t)
• Dell is more efficient and therefore more profitable because it
can buy its component parts based on the customer’s demand
and not have to worry about building up its supply of inventory
that may or may not be used.
 Analysis of Dell’s IT
Infrastructure
• IT infrastructure and business-driven technology are
extremely important to Dell.
• IT infrastructure provides, through the use of technology, the
underlying foundation to support the organization's operations
and future growth.
• This principal is profoundly important within the computer
industry.
 Analysis of Dell’s IT
Infrastructure
• One main goal of any successful company is maintaining
employee productivity.
• A major concern for companies relying heavily on a productive
workforce that makes extensive use of digital data, is the threat
of a system failure.
• Since computer based companies do a majority of their internal
and external business through the use of computers, a system
failure would result in a loss of valuable human resources &
could decrease employee productivity.
 Analysis of Dell’s IT
Infrastructure (Con’t)
• Dell has introduced a highly reliable and manageable system
that redefines server value.
• The PowerEdge server has the ability to run dedicated server
applications such as file and print, Internet/Intranet and e-mail,
therefore safely increasing employee productivity through the
use of secure workforce systems.
 Analysis of Dell’s IT
Infrastructure (Con’t)
• Recently Altiris Recovery Solution has been selected by Dell
for integrated delivery of backup and disaster recovery.
• Altiris along with Dell OpenManage Client Administrator
(OMCA) will provide direct integration of Altiris backup and
recovery technology with Dell OMCA which helps ensure
business continuity and helps provide additional cost savings for
Dell customers through proactive IT management.
 Analysis of Dell’s IT
Infrastructure (Con’t)
• Dell has managed to maintain high employee productivity
consistently.
• One of the main ways in which they have managed to do this is
to provide near unlimited availability to their IT
infrastructure.
• Dell keeps consumer information lines open 24 hours a day, 7
days a week and they also have an easily accessible online help
services.
• Full time access is crucial to the support of the IT infrastructure
by allowing knowledgeable workers ease in admission to the
source regardless of varied schedule.
• The majority of Dell's business is done through the internet
which allows the customer to customize his/her product directly
for their purposes.
• These factors give Dell a competitive advantage in its high
scalability and flexibility.
 Analysis of Dell’s IT
Infrastructure (Con’t)
• Enhancing decision making is also a critical factor in the
sustained life of a computer company because technology is
constantly changing. With today's fast-paced computer market,
innovation through customer feedback is key to the success
of Dell’s products.
 Analysis of Dell’s IT
Infrastructure (Con’t)
• Dell maintains very competitive business partnerships and
alliances through the use of electronic catalogs. Dell does
nearly all of its business through the use of electronic catalog
while other competitors continue to increasingly rely on the
business generated through them.
• The use of electronic catalogs gives a specific competitive
advantage because it presents products to customers or
partners all over the world. This is also a factor in Dell's global
reach enhancement.
 Implications &
Recommendations
Dell should consider selectively adding other
vendors to its supply chain management
system.
• Due to the increase in Dell’s global sales,
Dell may need to consider to selectively
adding additional suppliers to their supply
chain management system.
• The additional suppliers should not result in
any significant cost to Dell and Dell might
be able to negotiate better component
costs from new suppliers.
• New suppliers would want to participate in
this exchange because they would be seen
doing business with a leading technology
company.
 Implications &
Recommendations (Con’t)
Use “Customer Surveys” to gain market share.
• Although Dell does well in its markets overseas, Dell has lost
some domestic market share and has more potential
overseas.
• It is important for Dell to advertise and get their products
noticed in international markets.
• In order to achieve this goal, in-depth customer satisfaction
surveys should be used in markets where they trail their
competition.
• Dell can also send out questionnaires to previous consumers
to see how they can improve.
• By going directly to the consumers, they can get feedback
from sources they care most about.
• It also makes consumers feel that Dell truly cares about how
they feel about their products and service.
 Implications &
Recommendations (Con’t)
Invest more in Research and Development.
• With the growth of quality competition, it is crucial for Dell to
keep its competitive advantage by offering new technology
products and services.
• Dell should consider expanding into peripheral product
markets that would compliment their computer sales.
• This might include specially designed systems for specific
industries (architects, doctors, etc.) or additional hardware for
specific markets (gamers, music lovers, etc.)
• It is also important for Dell to watch its competitors and see
what new products and techniques they introduce.
 Implications &
Recommendations (Con’t)
Dell could offer online data back-up capabilities.
• Another way to increase revenue is to offer existing customers
(business and individual consumers) back-up capabilities on
Dell’s own servers.
• This process will have advantages for both consumers and
Dell.
• For consumers, especially businesses, if something happens
to their plants and computer systems, they can always retrieve
their data from Dell who has their information backed up offsite
on their system.
• By keeping their data saved at another location that is
maintained by Dell, Dell can make money by charging for this
additional service.
• Dell also has a built-in customer list based on the sales that
they make for computer systems.
 Implications &
Recommendations (Con’t)
Reduce errors in Dell’s direct Internet ordering system and
create a “Clearance” area on its website.
• It is important that Dell keeps their service of DellDirect efficient
by avoiding mistakes and making sure that purchases online
are correct.
• Dell should enhance its online ordering system with customer
confirmation before manufacturing starts. This would help
reduce costs of production if there are incorrect orders and it
will also help increase consumer satisfaction.
• If there are cancelled orders or completed orders that don’t get
paid for, Dell can start a clearance area on their website.
 Implications &
Recommendations (Con’t)
Enhance customer support services.
• Based on the results of some surveys that say that Dell might
be losing customers because of actual or perceived decrease
in support.
• Dell should do a cost-benefit analysis to determine whether
they should invest in more people who can answer technical
questions & support customers with their problems and needs.
• Dell has taken advantage of the cheaper labor in other
countries by outsourcing most of its technical support calls from
the US to headquarters in India.
• The only problem with this was that Corporate customers didn’t
like the level of support they were getting.
• In the normal course of business, Dell should make some
adjustments.
 Implications &
Recommendations (Con’t)
Increase Company recognition through a national advertising
campaign.
• In order to keep the name Dell out in the market, it may be
helpful for Dell to consider a national advertising campaign to
increase Dell’s visibility.
• These ads would probably be most effective for the small
business and individual user markets.
• This may include ads on the Internet, as well as commercial,
magazine and newspaper ads.
• Dell succeeded increasing its brand name recognition once
before with its “Dell guy” campaign. This will only help Dell get
its good name out there for all people to see, recognize and
eventually result in purchasing Dell products.
 Implications &
Recommendations (Con’t)
Enhance the Pre-installed Free Software campaign.
• In 2007, Dell has announced to have Linux system pre-
installed in desktop computers for customers
• Linux has been gaining its popularity against Microsoft
Windows because it’s free and expandability.
• With the support with EMC and Oracle, Dell also offers free
software such as system administration tools on the server
platform.
• With free software bundled, the cost of Dell’s products reduced
and Dell will be more competitive.
• The most important thing is the commercial success of Dell’s
offering. A sustainable business in pre-installed free software in
Western markets will give credibility to the Linux computers as
well as providing to build relationship with the rest of the
consumer PC ecosystem.
• http://hk.youtube.com/watch?v=RfkucaGv0oA
 Implications &
Recommendations (Con’t)
Enhance the Pre-installed Free Software campaign.

• http://hk.youtube.com/watch?v=RfkucaGv0oA
 References
• i2 supply chain management systems (March 30, 2004).
Retrieved April 3, 2004, High Tech: Consumer Electronics
Customers (Dell).
• Dell selects Altiris recover solution to provide desktop and
notebook customers with integrated backup and disaster
recovery. EDP Weekly\'s IT Monitor. August 18, 2003, Retrieved,
April 5, 2004.
• Harrington, L. (April, 2002). Retrieved Mar 28, 2004, The
accelerated Value Chain: Supply chain management just got
smarter, faster and more cost-effective, thanks to a
groundbreaking alliance between Intel and i2 technologies,
Industry Week.
• Jacobs, D. (2003). Retrieved Mar 1, 2004, Anatomy of a Supply
Chain, from http://www.totalsupplychain.com
THANK
YOU!!!