Research Report
The purpose of this research report is to discuss Dell logistics/supply chain activities which are carried down with the help of lot of resources. Dell is high tech computer vendor and leading seller of computer in the world.
Dell sells its products and services directly to customer by communicating and connecting with customers through mails which help company to identify and learn the customer expectation easily (Dell, 2016).
Moreover, Dell is targeting its corporate customers and individual customers equally as Dell wants maintain a strong and stable relationship with its customers by understanding the budgeted needs and predetermined set of models.
Dell has large number of supply chain and suppliers who sales their products at wholesale rate to Dell so that dell can modify the computer system according to the customer’s requirements.
Dell is secondary sector industries as it don’t produces all parts of the computer system as it jobs is to fit the part according to customer needs.
This research emphasis more on identifying the approaches which Dell adopts for planning and implementing of logistics/supply chain activities. The approach used by Dell is identified in order to understand and plan the implementation process for logistics / supply chain activities (Christopher, 2016).
In addition to it, issues are also determined which directly impact the decision to implementation in which strategy will be discussed which are employed by Dell. Further, future trends for the organization is also identified which help organization in meeting out the future demands for which recommendations are provided to organization (Formentini and Taticchi, 2016).
The recommendations will help organization for better improvement and development of logistics/supply chain activities in future.
Dell Company is founded by Michael Dell in year 1984. The dell company is leading market player in information technology system in which it produces the products and services which satisfy the customer’s needs efficiently.
Dell Company is selling both products and services which satisfy the requirements of the customers or users to a very large extent (Dell, 2016).
For achieving the competitive advantage, company uses direct business model under which it reduces or eliminates the retailer’s involvement between company and customers so that company can directly understand the customer expectation and requirement for products and services.
The company size of Dell is high as Dell produces the products with the help of different logistics and supply chain activity in which Dell brought the parts from wholesale and then assembles them according to the mail orders of customers who wants cheap rate prices computers and best quality of products & services.
There is large number of products which Dell manufacturers and sell as Dell has its own production area which are located at different areas worldwide. The production locations of Dell are Nashville, Tennessee; Austin, Texas; Brazil; Limerick, Ireland; Eldorado do Sul, Xiamen, China and in Malaysia (Dell, 2016).
Dell faces a high competitive environment due to high increase in demand for its product and services.
The increase in demand is because dell designs the product according to the customer needs and usage i.e., Dell modifies its product on the basis of requirement and demand. Dell sells its products directly to customers, small and large businesses, and healthcare and government agencies and so on.
The competitive environment of Dell is increased due to increase in prices and quality of products and services which is offered to customers at cheap rates. To respond to highly competitive environment, Dell increases its technical assistance and sophistication in its computer products and services.
The market share of Dell is very large as it produces personal computers, notebook computers, workstations and network servers and many more like software and other hardware system.
The market share of dell is 16% which indicates that Dell is third largest computer vendor in the world. At the same time, market share of company is highly influenced due to the services which company offers to customers in terms of modification.
(Source: Kriengs, 2017)
Further, Dell moved into other computer electronic products and services in which company offered projectors, LCD television and many more. Dell has an ability to differentiate its customer wants on the basis of operation.
Like for corporate customer, there is requirement of high-tech services or product whereas for school student, there is need of best product at cheap rate with effective service facility. On the other side, market share of Dell in increasing rapidly due to its efficiency and feasibility.
This research paper highlights approaches and techniques which are adopted for planning and implementation of logistics or supply chain activities. Through this discussion, it will become effective for Dell to manage its supply chain activity as well as relationship with its customers and supplier.
Further, issues are also determined which affects the implementation process of approach in logistic and supply chain activity (Wisner, et al., 2014). For overcoming the issues, recommendations are made available to Dell for improving its business performance by providing right direction to move forward.
Approach adopted for planning and implementation of logistics / supply chain activities
For achieving business success, Dell Company is adopting effective approaches which help in planning and implementation of logistics/supply chain activities.
The approach which is adopted by Dell for effective implementation of logistics or supply chain activities is business process modeling approach (Rushton, et al., 2014).
Business process modeling approach is developed by artificial intelligence applications institute of the University in Edinburgh. In this approach, there are three layers which are considered and support the workflow system of the business.
The three-layer business process modeling approach includes Business requirements, logical layer and implementation requirement. With the help of these layers, it becomes easy for businesses to understand the business requirement and collect details which are required for implementation process.
(Source: Manataki, 2007)
Dell’s Business process model is influenced by the supply chain strategy which is developed for effective flow of supply of products and services. In context to it, it is determined that business process model approach which is used by Dell is supported by MIT process Handbook because Dell creates computers on orders.
The MIT process Handbook provides generic business processes support to Dell which helps in identifying the potential customers through its customized customer channel through which it get connected with customers easily (Tayur, et al., 2012).
This business process modeling approach is very useful for Dell as company creates computer to order where it needs to perform some specific general business activities so that company can succeed and survive in highly competitive environment.
For achieving sustainability, Dell needs to develop its effective strategies which support in marinating its resources and external customer relationships as well as change management system within the company.
At the same time, business process modeling help Dell Company to plan and implement a strategy which is effective for better logistics/supply chain activities (Laguna and Marklund, 2013).
For implementation of approaches adopted by Dell also help in managing the supplier for the parts of the computer system for which this approach help in understanding the policies and procedure set by supplier in order to maintain relationship with them.
While studying about Dell supply chain activities, it is observed that Dell follow ups the direct model that demonstrates that Dell sell its products and services directly to its customers instead of supplying to through retail channels.
In today’s economy, personal computer industry is using both direct and indirect model for targeting customers for selling product and services (Stadtler, 2015).
On the other aspect of Dell, it is identified that Dell supply chin activities are unique and it uses effective strategy i.e., Build-to-order strategy. At the same time, Dell implements a Just-In-Time (JIT) approach that assist the manager in maintaining the inventory system efficiently as this system operates for only six day on inventory (Aksoy and Öztürk, 2011).
With the use of Just-IN-Time (JIT) approach, Dell has developed its ability to obtain high profit margin and sales ratio.
Moreover, Dell is using a collaborative strategy in order to manage a strong relationship with customers and supplier too. The company is required to use proper strategy and planning for attracting the customer and satisfy the supplier by developing collaborative attitude between them (Brandenburg, et al., 2014).
The supply chain activities of Dell involve supplier, customers order, manufacturing, storing, merging activity and customer.
In context to it, Dell is required to focus more on improving logistics activities for which Dell is required to configure its customers by using the internet facilities in which all detailed information is provided on the Dell.com web sites where customers can easily place their orders. For Dell, internet is used as a source of sales channel because Dell can create the customized websites for its clients.
Thus, customized sales channel for clients supports them to differentiate from other PC companies and this lead to achievement of competitive advantage.
On the other hand, it is studied that Dell supply chain or logistics activities involves the managerial level in which three levels are made i.e., strategic, tactical and operational.
The most of strategic decision of Dell are made by senior management level for manufacturing of products or services and offering to its customers. For analyzing the supply chain activities and its capacity, the middle level management is responsible to consider and look after all operational level activities.
For successful implementation of approach for supply chain activities, then Dell relies on strategy which is useful for managing the supply chain activity under which detailed information is collected through direct model and then information is shared with internal procurement and external suppliers of the organization (Monczka, et al., 2015).
The business process modeling approach is used to modify the supply chain strategy of Dell in order to enhance the alternative computer solutions as well as to develop the new market share in respect of perspective customers (La Rosa, et al., 2013). So, in regards to it, company introduced new model Configure-to-order (CTO model) where customers are offered and asked to configure their PC’s on the basis of their requirements and needs. While developing Dell supply chain strategy, it is determined that Dell has incorporated both configure-to-order (CTO) model and build-to-order (BTO) model. As these models help in developing Dell supply chain activities and also growth of strategies because both models are complementary to each other and provide desired outcome in economics of scale.
At the same time, techniques which are used by Dell in order to support the approach adoption for planning and implementation include statistical process control (SPC) and benchmarking technique (Christopher and Peck, 2012). The benchmarking technique is used by Dell in order to measure, understand, and communicate the supply chain performance. However, statistical process control technique is used for monitoring the individual activities which are performed under the supply chain or logistics (Liao and Kao, 2014). The investment required for planning and implementation is high as Dell is using the approaches which are connecting Dell directly to its customers and for which Dell required a high investment in managing its logistics and supply chain activities. Dell is targeting customers worldwide for which company is required to develop its networking system for which company has to adopt new approaches and technology which help company to interact and understand the customer expectations.
Issues impacting the implementation decision
There are numerous issues which are faced by the organization while taking implementation decision related to supply chain activities. For every organization, it is very challenging to expand their business in respect of global logistics and supply chain activity as well as to offer customers directly products and services which demand for the products in a highly competitive environment (Russo and Comi, 2011). The issue which is faced by Dell due to supply chain logistic is the shortage of the supply of resources to the unit where product is collaborated with other products. This shortage of supply to the production unit brings dissatisfaction in the customers that indirectly create impact on the company’s performance. However, the shortage of resources from supply chain creates negative impact on the consumer buying behavior.
From the above study, it is clear that Dell is fully based on its supply chain activities which are carried out to meet the customer demands efficiently. The other challenge which Dell faces is building a customer trust towards the brand as in past company has not provide customer with quality product which is demonstrated by the company in its offering (Diabat and Govindan, 2011). Due to this challenge, Dell loses the competitive advantage in the competitive environment due to decrease in sales and increase in risk. The fall in competitive advantage affects the company’s future decision related to implementation of new effective strategy for logistics or supply chain activities.
The other real problem which Dell faces is that its products are differentiated in terms of cheap computers rather than as an innovative one. This problem is raised because of increase in demand for the innovative product is more due to rapid change in the market trend (Gold and Seuring, 2011). In addition, this problem creates negative influence on customer as well as on suppliers because the demand for innovative product reduces the supply of components required for main product. So, this affects negatively on the relationship between company and supplier.
On the other hand, the approaches which are adopted by Dell for implementation and planning of logistics activities are effective but in that Just-in-time model is less efficient. Adopting Just-in-time approach affects the implementation decision of the logistic and supply chain activities because this JIT model is useful for short period of time as increases the impact on existing supply chain process of Dell (Ninlawan, et al., 2010). In similar manner, Dell needs more better business strategy which support the logistic and supply chain activities of the company because Dell only emphasis on its supply chain management rather than focusing on other managerial level of business which are required to improve for enhancing the employee’s performance and increase the company revenue.
The issue faced by Dell due to fall in sale is loss of revenue and this ultimately affects the implementation decision of the management related to development or improvement of supply chain activities (Green Jr, et al., 2012). However, there is negative impact on the company efficiency as company is not able to meet the increase in market demand for customized products. This issue brings inefficiency in the production process where Dell is not having ability or capacity to meet the customer demands and understand their expectations.
There is an issue which creates a positive impact on the implementation decision is inability to meet market demand. This inability of Dell encourages the company to look forward and take major action which help in eliminating the inefficiency in production and increase the ability of production and employees in order to achieve customer satisfaction level and encourages employees to work effectively (Sarkis, et al., 2011). The encouragement and motivation in employees creates high influence on the development of company’s revenue, sales and profit for long period.
While studying, it is identified that Dell produces customized product but there is challenge for the company to produce the product which is expected to be met with the customer requirement. This sometimes creates a positive or negative influence on the customer buying decision as well as on the implementation decision of effective logistics and supply chain activities (Ellram, et al., 2013). Therefore, implementation decision related to supply chain management activities are influenced highly from the issues stated and identified in above discussion and assist Dell to concern this issues while making any implementation decision.
Benefits of Logistics and Supply Chain Management
The benefits of implementation of logistics and supply chain activities in the organization would provide better opportunity and benefits in terms of increase in sales and profit margin. The benefits of logistics activities can be achieved with the help of approaches which are adopted by Dell for managing and maintaining the network and relation with the customers and suppliers effectively. Moreover, the logistics and supply chain operations include mobilization of resources by integrating the needs of both workforces and business processes (Grabara, et al., 2014). This could help the Dell to enhance their technicality so that they will reduce the requirement of large investment of the company in regards to deliver the value. At the same time, supply chain management also give advantage to the company in terms to make improvements in the quality of the products. Likewise, with the incorporating the efficient supply chain into their business operations, Dell could be delivering the quality services to the customers (Christopher and Holweg, 2011). Besides that, logistics and supply management also assist in improving the customers’ services as logistic technology allows to tracking the materials, products and it help the company in making ensure that products are supplying at the right place and it also assist in providing the quality deliver to the customers.
In addition to this, in case of properly implementation of supply chain and logistics management then Dell could provide timely deliver to their target customers and able to get the response of the customers so that they can make necessary improvements in the future their delivery system. At the same time, implementation of supply and logistics system will help the companies in regards to understand the changing needs of the global market so that they could supply in a similar manner (Roh, et al., 2014). So this will give the opportunity to the Dell to easily understand the changing market taste and preferences and accordingly they supply their products so that customers needs to be fulfill in a timely manner. Thus, supply chain management assists the companies to overcome the issues of the changing technology and market needs. It also helps the Dell to deliver the quality products on a timely manner by understanding the current needs of the customers. Hence successfully implementation of supply chain management provides various advantages to the companies in regards to stay in the market over the long period of time.
Limitations of logistic and supply chain management
The main limitations that occur with the planning & implementation of logistics or supply chain activities are that as Dell used the JIT (just in time) method of production so this will limit the scope and operations of the company. It is because, Dell develop its product within the six days in that case it reduces the efficiency of the product and this will affect the quality of the Dell product. On the other hand, the implementation of supply & logistics management also incurred huge cost for the company (Hu and Hsu, 2010). Likewise, Dell to efficient implement the logistics and supply chain management for that they should need to make more investment in order to develop the logistics infrastructure that is suited to the current technology. This will challenge the company regarding to stay strong in the market and able to give tough competition to the competitors (Tang and Musa, 2011). On the other hand, for better supply chain management, proper skills and experienced workforces Dell required to carry out the business operations for that retaining skilled or the changing talent workforces is the crucial task for the Dell to manage. This crucial task somewhere limits the employee’s skills and competency to be used for developing and managing effective supply chain activities.
Future trends and recommendations
The market trends in computer industry changes very significantly which affects the company’s performance and their sales in order to maximize the profits. The change in market trends creates influence on the customer buying decision and behavior that made Dell to experience the market share losses. For meeting the upcoming future trends, Dell decided to transform its strategy and core principles that will support the company to gain high market share through new prospective customers and determining effective computing solutions to the problem.
After studying and analyzing the logistic and supply chain activity of Dell, it is identified that company shares a strong relationship with its customers and suppliers. But at the same time, it is also observed that Dell is a third leading player as its market share is raising (16%) in comparison to other personal computers producers. For Dell, it is better to create direct relationship with customers but at the same time, it is considered less effective strategy for big customers like retailers and this may become threat for supply chain (Stavrulaki and Davis, 2010). However, this customer services offered by Dell will represent an adverse impact on their relationship.
On the other hand, it is identified that company is using Just-In-Time (JIT) approach which is used for short period of time. For this, Dell is recommended to not to focus on short-term profits because it will result into thrive opportunity for company to these aspects of earning profit and increasing sales. Dell Company should develop a separate strategy for operational level which is based on suitable balance between supply chain performance and risk which is faced by organization while managing the supply chain activities. Similarly, Dell should keep equality in probability and potential threat effect on supply chain in order to maintain the redundancy and flexibility at all managerial level of Dell.
Thus, Dell is recommended to develop or manufacturer its own product and services rather than getting supplied from other supplier. In addition, Dell is also recommended to enhance its production efficiency in which company should develop components which are required for developing a computer system. The development of components in own production unit will enhance the efficiency of production as well as develop company’s ability to meet the market demand on time successfully (Rahman and Subramanian, 2012). In context to it, Dell is recommended to provide customers with more configuration choices to their customers for whom it required to integrate with other suppliers for meeting the product quality and lead to strengthen the customized product position in the highly competitive environment. This step of Dell will result into achievement of a competitive advantage over the other firms and also enhance the supply chain activities to large extent that will help in accomplishing the organizational success efficiently.
For overcoming the issues related to implementation decision, Dell needs to encourage the optimal supply chain activities performance for which techniques of benchmarking and metrics should be used by Dell with the help of penalties and incentives are carefully aligned. Dell should reinvent its supply chain in which it must segment its supply chain so that various customers are suggested about the computer they need to satisfy their wants and need as well as computer system are customized on the basis of customer willing to pay for (Ranganathan, et al., 2011). On the other hand, Dell should keep optimal components for which it suggests suppliers to keep components to meet shortage period. Thus, company should consider the recommendations which are provided to company for meeting customer demands on time as well as eliminates the issues and challenges related to supply chain management or logistics activity.
From the above discussion, it can be easily summarized that Dell is using effective approaches for planning and implementation of their logistics/supply chain activities. The approach adopted by Dell for planning and implementation of logistics/supply chain activities include Business Process Modeling approach. There were issues that affect the company’s reputation and performance such as shortage of supply of components and development of customer trust, timely delivery of products & services and so on. From this study, it can be determined that Dell is facing problem in existing supply chain activities which creates negative impact on implementation decision of effective logistics activities. In addition, benefits of implementation of efficient logistic or supply chain activity help Dell to improve and develop its supply chain facility in order to overcome the shortage of supply and decrease in revenue. But the limitation of implementation of logistics activity is found that Dell requires more manpower and effective networking system for effective flow of information between the customers, company, employees and suppliers. Therefore, Dell can be recommended to develop supply chain strategy which supports the company in meeting the demand and efficiency in production on time. At last, Dell can meet the future trend efficiently and effectively as customer will demand for customized product in future according to their expectation and requirements for particular product and services.
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