Dell is a multinational technology company that supports, develops, repairs, and sells computers and its related products. It is one of the largest technology companies globally because it employs more than 100000 people globally. It sells software, personal computers (PCs), network switches, servers, and data storage devices. The company is famous for its electronic commerce and its innovations in its supply chain. It has two main strategies in its supply chain: configure to order or build to order and direct sales model ( Fredendall & Hill, 2016) . The company can deliver individual PCs manufactured according to customers’ needs. The case study will evaluate Dell's supply chain.
The success of the Dell's Supply Chain
The success of the company is attributed to its supply chain strategies. Initially, Dell’s clients often went to electronic or retail stores to purchase computers. Clients did not have a direct interaction with the computers’ manufacturer. Moreover, most of the salespersons were only focusing on selling computers rather than understanding customers’ needs. Also, some of the salespersons were not knowledgeable regarding Dell’s products. Therefore, Dell developed the direct interaction strategy with their clients through the internet and phones. The direct sale interaction ensured that the company had the right computer parts that were always available when required by clients ( Christopher, 2016) . The strategy allowed the company to develop a personal connection with their clients. Moreover, it ensured they develop strong relationships with their clients.
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The focus on addressing customers’ needs gave Dell a competitive advantage in the industry. The direct sales strategy main focused on developing effective supply chain strategies via the internet that streamlined the supply chain process by connecting suppliers and planners of Dell’s products to meet customer requirements and demands. Additionally, they developed technologies that would enhance their build-to-order strategy ( Fredendall & Hill, 2016) . Dell was able to integrate the supply and demand sections of the business by developing software that eliminated inventory overages. The system allows Dell to send materials directly to their factories every two hours according to real-time customer orders. Ultimately, the company achieved the lowest inventory in the computer industry.
Dell’s Main Challenges and Related Strategies
The company is vulnerable to extreme market changes such as a recession. For instance, in 2008 and 2009, the company experienced major setbacks due to their supply chain strategies. After the recession, the company lost its position as the main computer manufacturer and HP became the main computer manufacturing company. HP developed competitive advantages that allowed it to improve their supply chain process and produce their main components at cheaper prices than Dell. Dell aced serious problems especially in the existing price system and the sophistication of their main products. Moreover, their sales volume dropped significantly because of the reduced demand from organizations that were facing a difficult time because of the recession. According to the research, the money allocated for research and development in Dell reduced by 1.3% in 2006 (Mangan, Lalwani, C., & Lalwani, C. L. 2016).
Therefore, the company should develop strategies that will allow it to withstand and adapt to market changes. The company should focus on developing quality products and better customer service so that if a recession occurs again in the future, Dell will still retain their production and sales levels. Dell should also develop new strategies that will reduce the time spent during dispatch and production costs ( Hugos, 2018) . Dell should modify their existing cost control strategy models and replace it with an innovative based model that focuses on customer needs and requirements.
How Dell’s Supply Chain Strategy Positively Impact Customer’s Satisfaction
After the company realized that selling PCs through retail outlets was ineffective, they focused on boosting customer relationships. They developed a unique strategy of directly selling their products to customers. Dell realized that they dealt with three main types of clients: corporate customers, Small business customers, and the public sector. The communication channels in the company acted as call centers that assisted customers directly through the internet or telephone calls. They also developed a website that allowed regular and new customers to quickly communicate with the company. Customers could request technical assistance and make online orders 24 hours a day ( Hugos, 2018) . The direct model improved customer satisfaction because clients could just explain their needs and the company would develop solutions for customer needs and demands.
Dell also improved customer satisfaction in the supply chain through platinum councils. The company would organize meetings with corporate customers and invite executives and technicians to analyze Dell’s latest products and allow them to give feedback. Laos, they improved relationships with suppliers to ensure they developed quality parts. Previously, the company had about 140 suppliers and the relationships were quite costly and led to poor performance. After redesigning their supply chain processes, Dell has only 30 suppliers who provide over 75% of their material needs ( Christopher, 2016) . The dynamic relationship with suppliers reduced their production costs and improved the quality of parts. Ultimately, the company produced quality products that improved customer satisfaction.
Conclusion
The case study evaluates Dell's supply chain. Dell is a multinational technology company that supports, develops, repairs, and sells computers and its related products. After the challenges the company faced in the 1990s, the company redesigned its supply chain models to interact with customers directly. The decision was effective and it improved sales and customer satisfaction. Regardless of the success of their supply chain strategy, they should modify the direct sales strategy to be innovation based (Mangan, Lalwani, C., & Lalwani, C. L. 2016). Other than just addressing customer needs, they should develop new technologies that will improve the user experience.
References
Christopher, M. (2016). Logistics & supply chain management . Pearson UK.
Fredendall, L. D., & Hill, E. (2016). Basics of supply chain management : CRC Press.
Hugos, M. H. (2018). Essentials of supply chain management : John Wiley & Sons.
Mangan, J., Lalwani, C., & Lalwani, C. L. (2016). Global logistics and supply chain management : John Wiley & Sons.
