Logistics and Supply Chain Management

Discuss About The Marketing Creating Competitive Advantage.

Logistics is all about getting the right quantity of the right product, to the right customer in the right direction at the right place. Logistics management typically refers to governance of the activities like inbound, outbound, warehousing materials, order fulfilment, materials handling.

Supply chain or SCM refers to a practice which involves giving the customers an effective service. It is a mixture and channelizing of all the resources and techniques available like raw materials, production, inventory, and transportation between the participants in a chain (Rai and Chunrao, 2016). This process helps in making the business sustainable taking into consideration the aspects from supplier to customer.

Dell is a computer technology company that develops sells, repairs and gives assistance on computer and computer related products. It is believed that supply chain management is becoming a core component in deciding the success and the competitive edge over other competitors in the market.

In this paper, which kind of processes of supply chain are utilised by Dell will be taken into account. A critical analysis of supply chain of DELL, aspects of management and relevant integrated strategies and future sustainability is done.

Its model is completely unique when compared to its competitors who fail to attain a particular level. It simply avoids retail channels and sells directly to its customers. Therefore it creates a static relationship between specific customers thereby making the reach easier (Fossati, et. al, 2016).

 The company uses build to order strategy. As the customer places the order the manufacturing unit receives all the eye to eye details of the configuration. That’s when the assembly of the PC initiates. After all the components are assembled the assembly will be delivered to the customer using 3PL mechanism.

Due to these characteristics and facets Dell has an edge over other similar line of companies.

• The cost of inventory is minimal (Ferrara, et. al, 2016). Keeping costs attainable is one of the challenging tasks. At times variable costs fluctuate too much and fixed costs are necessary to pay. This bridge creates havoc therefore, Dell Company insisted on incurring low costs or at least minimising them.
• Customer pays before the Dell company pays to its suppliers. This creates high velocity among the suppliers to manufacture products in bulk and make them available to customers as soon as possible.
• The direct relationship is the key for the existence of the business. It serves as a common portal of interaction where the specific needs are taken into consideration and alternatives can be decided as per the requirements and range of the customers (Buganza, et. al, 2015).
• Michael Dell grew his business exponentially from its legendary start from University of Texas because of one simplistic idea he figured out before anyone else could (Khadrouf, Talea and Bakali, 2017). The idea was to provide better quality products to customers at comparatively lower price by removing the middle man and selling to the customers directly.

An efficient supply chain management system makes Dell earn superior profits in the industry (Inc, 2018). The knowledge it possesses, the bucket of information it communicates, web technologies, e-commerce and a lot more.

A sound under the wire inventory methodology which functions only for 6 days is one of the reasons for competitive advantage over others. The profits and volume increases and side by side the cost to labour decreases (Poponi, Braccini and Ruggieri, 2017). Thereafter the inventory will not lie inside the warehouse ideally.

Dell’s Business Model

Dell can utilise its cash flow in more potential areas as the people are not hired to look up to the activities like warehousing, keeping a track of inventory and holding on to obsolete technology (Sakas, Vlachos and Nasiopoulos, 2014). The manpower cost is saved and thereby better investments can be purchased to generate more revenue.

Dell focuses on customers directly and helps in reducing the distribution channels and allocating better savings and services to every individual customer. The elimination of distribution channels provides better understanding of each customer typically.

The customer friendly website itself is a reason with which the orders can be placed easily. For large corporations, governmental organisations and institutions navigation is simple and range of alternatives is available.

To form better relationships with the suppliers and to carry on a smooth customer order processing in internet plays an important role. Proactive production planning programs ensures the right quantity of components needed. Early implementation of the internet is the effect of the robust success. The interaction with the customers without an intermediary is a pivotal operator in elevating the sales of the year 2000 (Sayre, 2014).

Dell has built strategic alliances with other corporations to sell their products via direct distribution channel. Earlier in 2000 Palm Inc. entered into the agreement with the Dell to extend their products and accessories increasing the momentum for the operating market. Along with Palm, Xerox was second to form partnership with Dell. The benefits derived from Dell’s e-commerce were multiplied eventually. Dell company sold superior quality printers accompanied by computers, but consequentially it allowed the customer buying process for printers to be captured fully.

The strategy opted by Dell company is now augmented by a range of other sectors. For example in case of automobile Toyota, Volkswagen Group, Harley Davidson, in fashion sector ZARA. These companies are following the same strategy of just in time inventory which is also known as “lean manufacturing” where product is built as and when ordered (Chiu and Chiou, 2016).

In case of Toyota the raw materials are not procured unless and until an order is placed. With this strategy the costs are almost minimal without worrying about the disposal of the same. Accuracy of forecasting involves only stock up of required quantity (Kotabe and Kothari, 2016).

Similarly Harley Davidson decreased their inventory till 75 per cent, became a whip-smart manufacturer and increased the internal productivity. The inefficiencies were solved quickly by following the concept of less is more (West, Ford and Ibrahim, 2015). Another example is of Walmart which was a total success after implementing the strategy of Dell. Walmart faced a major stock issue and by the time it was a major threat to the company the Walmart entered into the red zone. They started running out of stock quickly before the new stuff came. The shelves were not piled up with the stocks because of the low budget. The low budget attracted the problem of less number of employees which were not there to keep a track of goods often required (Lee, et. al, 2016). Therefore it became necessary to keep a minimum level order quantity and stock became the first priority.

Dell’s Supply Chain Management Strategy

 However there are certain companies who failed to adopt this strategy amongst which one of them is Sony Ericsson. It is world’s leading cell-phone manufacturers. Yet this is a perfect example of how supply chain management failed abruptly. In March 2000, a lightning bolt triggered a fire in chips harvesting machine that made the plant below the fold for months. This plant was solitary supplier of harvesting of chips manufactured for cell phones and the company was so slow in reacting to the situation and then found it unable to overcome from the drastic event (Ismai, 2010). They failed to find any alternate source. Without the chips, the demand was gradually declining for the products and Swedish company wrecked up and lost around about more than $2 billion. In less than two years Ericsson ceased the cell phone production and business was completely on the verge of the exit. Henceforth Ericsson joined hands with Sony and developed a venture. Ericsson’s tale is an example of how supply chain risk can be a surprising factor in global market share.

The basic reason for concern is that the disarrangement of   supply chain can create a drastic and profound impact on sales and market share of the manufacturer. As stakes are high, the risk gets escalated, and costs get striped.

The costs are squeezed out of their logistic chains by transferring to just-in-time inventory method and making supply chains more vulnerable than before. Just-in-time process has converted the manufacturing processes into more complicated activities. This happens because they remove all the non-essential redundancies which actually were providing a gap or a room for marginal errors. The producers now count upon enlarging supplies globally inclusive of both domestic and overseas. The factors like awful weather or political issue or social distress in foreign country could cease planes and production of vital components (Forbes, 2018).

The strategy is one of the deciding factors in determining the success of any company. It also acts as a benchmark for other companies to reach at apex level and gain an advantage over other competitors. Dell opted for certain strategies which led it become one of the finest corporations in producing computer technology (Angeles and Fredericton, 2015).

• The heart of the success of the dell lies in integrated planning and its proper execution. This strategy enabled the Dell company robustly improve the product design, assembly and components, fabrication as well as direct delivery to the customers (Ciccullo, et. al, 2015).
• Due to extensive sharing of the data, inventories saw a dramatic reduction along with the technology becoming obsolete. This reduction led to the improvement in the technological aspects of the process.
• Utilisation of seamless connection and communication scale has made DELL company to reach not only to its existing customers but expand its coverage amongst new ones. The website is easy to use and understand. The customers can easily place the order and along with this they have a valid proof so if at a later date any mishappenings or miscommunications occur, the data can be utilised.
• Keeping minimum number of suppliers eliminates boundaries between companies and promotes effective integration directly between the customer and the producer, this build a trustworthy relationship among the manufacturer’s and customers (Ferri, et. al, 2018).
• The assets are not guarded for longer period rather they are utilised quickly as and when they become out of order. Integrated supply chain in comparison to vertical integration and simultaneous benefits from innovative investments, highly specialised suppliers and focus on efficiency and effectiveness led Dell acquire a greater market share (Driveyoursucess, 2018).

Dell as a company is already prospering in the industry. After having analysed all the advanced technological aspects of DELL and challenges it faced to gain a competitive advantage, recommendations on further sustainability is exigent (Giancarli, et. al, 2016). However, even after the current capture and immense market scope, in dynamic technological industry, a minimal margin is left for some room for improvement.

Benefits of Dell’s Supply Chain Management System

Due to DELL’s escalating sales it shall consider to pick the range of suppliers and vendors, add on them to our selective channels of supply chain and logistics. The additional suppliers would not only help in variable opportunities but also be able to compare component costs. It is also beneficial for the suppliers as they would be getting a platform and to join hands with the largest technology developer.

Secondly for increasing marketing shares the Dell company can conduct “customer surveys”. Although Dell is prevailing at wider scope in overseas markets, it lost some share in domestic market. It becomes mandatory for the Dell to attract customers to its products via advertisement in the international market (Hites, et. al, 2014). In order execute this idea and achieve this goal; in markets it shall trail their competition through in-depth surveys. This way the customer satisfaction will be kept on priority.

The Research and Development should incur expenses to increase the concept of minimal errors. The quality competition has amplified, and now it is critical for Dell to stand alone in competition against the competitors the company shall outsource or develop new technology, offer better quality products and services. Dell should consider expanding into ancillary product markets which can augment their computer sales.

The online data back-up facilities are provided my Dell. The targeted revenue can be achieved by offering these facilities to the existing customers whether business or individual consumers. These capabilities are available on Dell’s own servers and prove to be a beneficial project for both consumers as well as Dell. For consumers who are engaged in businesses keeping the security of the data is of utmost importance. Dell makes available the option of retrieval of the data so that if any sudden calamity occurs at plant premises and damages the computers systems, they can avail the data backed up offsite on their system (Van Leeuwen, et. al, 2017). This way Dell can increase its income by charging for extra services as the data is kept at different location.

Aggrandize the customer support services for better management and communication which ultimately is a factor for Dell’s success. Dell should keep well-trained customer executives available verbally as well as digitally for customer support. Few of the surveys were conducted and it was reflected that Dell should improve its customer support system to avoid any further glitch. Further a team shall be formulated to discuss the drawbacks and how to rectify the same (Ghaffarzadegan, et. al, 2018). A proper cost-benefit analysis should be conducted to determine the level of investment required in the relevant. Appoint the people who can evaluate technical questions at their level & assist customers with relevant solutions.

Examples of Companies Following Similar Strategies

Conclusion

It can be concluded that in this dynamic environment the supply chain is an essential component for all the sectors to enable their businesses extend at different levels. To channelize all the resources in the right direction is what makes a manufacturing unit strong. The paper compared the strategies and objectives of Dell which can be followed by companies and are not useful for small scale businesses as they lack economies of scale, product of the volumes and purchasing power. Moreover a complete review of logical activities its future direction and development and its cooperation with the customers is done. The dell’s success story is surely a benchmark for other similar as well as dissimilar companies which can adopt its objectives, goals and strategies to crown their market share. The customer’s integration along with the usage of technology and techniques can best serve the domestic as well as international market. Thus due to the reforms in business patterns companies have to consider the application and importance of supply chain management and logistics management and their experiences.

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Supply Chain Management Risks

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