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Dell Supply Chain Management Table of Contents TOC o 1-3 h z u HYPERLINK l _Toc353168900 1. Analysis PAGEREF _Toc353168900 h 1 Analysis Challenges faced by Dell with its SCM In 2008 when Dell entered into the retail market and tried to use the same SCM that was used by its online make-to-order business. The online SCM was designed to guarantee the customer satisfaction that allows maximum customization. But with the conventional retail market being more price sensitive and needed fewer configurations than the online and the SC for online was not designed for cost optimization dell suffered a challenge to address in its SC. The corporate and public sector clients looking for a design specifically for their organizations also put a challenge on dell to employ a different strategy than the one it uses for its online customers. Dell Supply Chain Models Dell in order to address the above challenges has decided to create multiple supply chains each dedicated to a specific segment of its customers in the PC industry. This helped to capture new customers in new channels with the new set of products effectively. Effectively in the terms as it took advantage of synergies to reduce the complexity and benefit from economies of scale. The supply chain strategy should be different when dealing with uncertainty in demand and customer relationship. So dell rolled out the following SC strategies Build-To-Order When the relationship between the customers and company is loose and demand uncertainty is high, the SC should be based on the pull strategy. Dell employs this in its traditional online business. The focus is on the customer satisfaction and higher margins. The component inventory is managed based on the realistic forecast. Build-To-Plan With the entry into the retail business in 2008 dell has a different segment of customers looking for fewer customizations so the number of different configurations of its PCs sold is less when compared to its online. So dell needed to use the push strategy with low demand uncertainty, loose customer relationship and high volume. With this model of SCM dell procurement, production and shipments decisions are purely based on its forecast. Build-To-Stock Hybrid of Push and Pull. For another segment of customers with low demand uncertainty and loose customer relationship which covers very of its popular products sold online. As the volume and demand forecast accuracy are high Dell decided to use the push strategy for procurement and production. Using this supply chain strategy based on long term forecasts and to provide very aggressive responsive time it uses Build-To-stock. Shipment to customer locations is based on realized or actual demand. Build-To-Spec Another segment of customers with low demand uncertainty and tight customer relationship. The design and product varieties are customized to specific corporations. The relation between dell and corporate clients is tight with low certainty in their demand. The volume is high. The corporate clients order the same PC configuration for a longer time. This is very different when Dell deals with its individual online customers. Build-to-spec commits to short response time and does not keep finished goods inventory. Products are assembled based on its order well ahead of time again based on forecast. Current Dells supply chain strategies Dells below strategies in supply chain management have made it successful in the PC industry. Direct Sales With the direct sales model Dell was directly selling its PCs to the end customers through its online website. This strategy as it eliminates the retail channel will decrease time and cost. Also this strategy helps Dell to have direct relationship with its customers and help in understanding the customers requirements. Dell distinguishes its customers in three rough customer segments. Large Organizations (large companies and Government institutions) Small and medium businesses Personal consumers No customer

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