Characteristic of Dell Supply Chain Strategy

Characteristic of Dell supply chain strategy

In Figure X1, the supply chain strategy of Dell is much simple than traditional supply chain, it has several characteristics:

1. Internet and Phone order

Dell only accepts the Internet and Phone order because they only have experience center, not retail stores. Customer can customize their own specifications. So Dell can know the demand immediately and know exactly what customers want.

2. Manufacturing

After Dell received the order, they will communicate with suppliers and get the raw material immediately. From the raw material request to the finished good, it takes only 4 hours to complete the whole process. Also, Dell requires highly modularization in their raw material, so their manufacturing process becomes smoother.

3. Logistics

The finished good will be delivered to the customer by Dell via Logistics Company. Since Dell doesn't have Logistics department which is responsible for delivered goods. So they need rely on Logistics company. Dell is committed to deliver the product to customers in 2 to 5 days. Also, Dell will track the package by communicate with the Logistics company. So the rule of Logistics is very strict.

Furthermore, since Dell is running a Pull production system which includes Just in time strategy, so the quality of supplier is extremely important for them. About 75% of material come from 30 large-scale suppliers, 20% of material come form 20 small-scale suppliers. To ensure the quality of suppliers, Dell will communicate with 50 major suppliers every day to see whether they have enough inventory and deal with some sudden situation. So the selection process of supplier is very strict.

1. Environmental protection and employee benefits.

Dell respected the environmental protection and employee benefits. So they need to ensure the supplier has the same purpose which led them to have a stable and long-term cooperation.

2. Cost leadership

Since the Dell use Direct Business Model because of the cost advantage, they can offer lower price to the customers. Therefore, they will compare different supplier and find a suitable supplier which has the lowest cost and highest quality.

3. The improvement of industrialization and marketization

As technology changes so quickly that the manufacturing company can quickly become has-beens. So Dell requires that their supplier should have ability to improvement their productivity by using the new technology.

4. The capacity of supply

Since Dell receives huge order every day, and they has a wide range of sales market, Dell requires their supplier should have ability to supply