Dell implemented a Voice of the Customer or “end-to-end” flow of distribution, fully embracing the entire supply chain. Dell has aligned its supply chain people, processes and technology to meet customer needs at each step, but here is the critical point: Dell recognized those answers and capabilities were different for its different customer segments and hence the need to build multiple supply chains (e. g. , customer direct versus retail). Dell has over looked one major opportunity; though they refer to their supply chain as “end-to-end” they have not incorporated their own suppliers.
By doing this, they would be able to take their already advanced supply chain to the next level, enforcing the difficulty of reproducing their supply chain for their competition. Additionally this would allow Dell to implement a planning, forecasting and replenishment (CPFR) system this would help provide more information to the supply and demand so that it can be better matched. Some of the other benefits that can be realised by implementing a CPFR system can include;
* Better relationships Increased sales and revenues * Greater product offerings * Higher return on technology investments Although Dell is in the middle of their supply chain, representing assembly through retail, Dells point of view for their supply chain takes place at the consumer’s level, as they build the supply chain from the customer back. But most companies don’t have just one type of customer, do they? So we need to build perhaps several supply chains back from different types of customers. How the heck do they do that?
As you can see from the chart above, Dell has a customer driven supply chain. This means that they operate on a “configure to order” approach to manufacturing—delivering individual PCs configured to customer specifications; otherwise known as pull type manufacturing. Their supply chain begins at the design stage of the computer and flows through to the consumer. This pull manufacturing reduces Dells inventory levels while simultaneously eliminating the need for inventory tracking technology.
Reviewing the supply chain, there are many different directions the consumer is able to choose, this allows Dell to expand its customer value proposition, reaching different market segments. This permits Dells the ability to emphasise their flexibility to customise not only the product that they offer customers but the service provided to them as well. What Dell was able to accomplish was the ability to leverage the synergies in the market where they are available.
Dell realises that configuring a computer to order is a consumer option that has been available for years for folks who would rather not buy a machine off the shelf. Additionally, Dell has developed a Do-it-yourself designing to create your own PC exterior. This is less common than adding high-speed hard drives or four gigabytes of memory. Usually, you can have any color, as long as it’s black or white. Once again, it’s Dell that’s expanding that part of the process.
The company has introduced its online Design Studio where, for an additional $75, buyers of a 15- or 17-inch Studio Laptop can decorate the lid from more than 100 designs. The decoration is “tattooed” onto the laptop lid, not many companies offer more choices than Dell. Dell’s promising integrated flow of distribution has brought supply chain to the next level. In 2009, Dell had captured a 300% reduction in forecast error, 30% freight cost reduction, a 30% reduction in manufacturing cost, product availability improved by 37% and order-to-delivery times improved 33%, according to the released financial statements.
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