Dells Supply Chain Management Essay Example for Free

dells depict Chain Management EssayThe term depict concatenation management (SCM) was initially practice sessiond in wholesaling and deal out to de none the integration of logistics and physical distribution functions with the destruction of reducing delivery lead times. Manufacturers and expediency providers have used the same term to describe integration and partnership lawsuits with first- and second- tier suppliers to lessen be and improve quality and delivery timing. Terms such as integrated purchasing dodge, integrated logistics, supplier integration, value chain management, bring base management, strategic supplier alliances, lean production, Just-In-Time (JIT) logistics, and yield chain synchronisation have been used in the literature to address certain elements or stages of this bare-ass management philosophical system (1998 1994). Conceptually, SCM take ons all value-adding activities from the extraction of raw materials through the transformation act iones and through delivery to the end user. SCM spans organizational boundaries and treats the organizations deep down the value chain as a unified virtual profession line entity (1991 1995). (1995) further expanded SCM to include recycling or reuse activities. In general, SCM seeks improved performance through elimination of waste and break down use of inseparable and external supplier capabilities and technologies (1996).The retailing industry has focused on different aspects of SCM, namely, location, transportation, and logistics issues. Indeed, the caudex of supply chain management potty be traced back to efforts to give way manage the transportation and logistics functions (1997 1995 1994 1993 1991 1987). The wholesaling and retailing industries incorporate a logistics focus within their strategic decisions. In this respect, SCM is synonymous with integrated logistics systems that control the forepart of goods from the suppliers to end ruleers without waste (1991).Mo reover, integrated logistics systems seek to manage inventories through close relationships with suppliers and transportation, distribution, and delivery services. A goal is to replace stock-taking with frequent communication and sophisticated information systems to provide visibility and coordination. In this way, product can be replenished quickly in small lot size and arrive where and when it is needed (1994 1993). Firms that use advanced process technology to increase flexibility and involve manufacturing managers in strategic decision reservation alter the role of logistics in firm success (1998). A supply chain can reduce overall inventory while maximizing customer service by efficiently redistributing stock within the supply chain using effective postponement and speculation strategies (1998 1993 1991).New logistics technology gives businesses a involved way to make things easier for their customers and suppliers. Within logistics industry, dells system is recognized as o ne that takes reinforcement of technology to decrease storage and increase efficiency. The calculating machine companys supply and shipping net subject areas exemplify the latest slue in logistics, that is, visibility. Companies with the money and foresight are making sure their inventories can be traced and tracked passim their entire logistical operations, even if their systems are entirely outsourced. Executing a supply chain with affluent visibility gives companies better information to work with and a more agile system.Dell has a better control of their operation which has reduced safety stocks and has operate faster to get cash-to-cash conversion cycles. By producing custom products at a rapid pace, the computer manufacturer receives payments from customer before it pays suppliers. Companies can do this exactly if theres a short window mingled with receiving an order and shipping it.In addition, Dells customers can also keep track of their order status. They can trace t heir computer as is moves through aggregation and testing, and can track its shipment due to the technology of major shipping companies.The pulse of Dells execution effort centers on increasing business velocity and eliminating waste. Dell employees are constantly focused on impulsive down backlogs, promoting best practices, and creating synergies among adjacent processes as seen in cross-functional enterprises such as the design-for-manufacturability effort amidst manufacturing and RD. This initiative successfully promoted product designs that are easier to assemble.In 1994, Dell was a struggling second-tier PC maker. Like some some others, the company ordered its instalments in advance and manufactured to inventory. Then Dell began to implement a new business model. It converted its operations to a build-to-order process, eliminated its inventories through a just-in-time system, and sold its products instanter to consumers.Dell carefully targeted corporate relationship cu stomers that had predictable, budgeted needs and that wanted a pre-determined pock of product models. The company also selected someone customers who were high-end, repeat purchasers with a preference for early technology adoption. Both account segments had the stable, predictable purchase patterns that Dell needed to make its joint build-product-to-order/buy-component-to-plan system work.In connection with this, Dell create a set of new operations capabilities in five crucial areas (2005). First, it created the flawless make-to-order system that has been widely noted. Secondly, Dell worked at length to build an effective supplier management function in order to shorten component lead times and fend for the absolute quality standards required by the just-in-time operation. Third, Dell authentic the sell what you have system that was essential to matching supply and demand. Fourth, it instituted an extraordinarily crisp set of product manners cycle management capabilities that yielded great cost reductions and strategic advantage. Fifth, the company worked with its suppliers to shorten their product life cycles, extending the Dell business model to the whole channel. Together these operating capabilities formed a cornerstone for Dells business model.Moreover, to maintain its rapid growth, Dell needs to hone its just-in-time process. Dell believes that the central to JIT is integrating with the suppliers into its operation. It is important for the company to work with the suppliers to figure out how to minimize the supply chain and hold the least amount of inventory in it. Inventory can add costs, damage quality, slow production, and wreak havoc with Dells rapid response reputation. To follow against this, Dell has optimized its supply base and developed a tightly run system in which it pulls separate from suppliers just as they are needed for production.Dell has manufacturing facilities in Austin Limerick, Ireland and Penang, Malaysia, from each one of which produces PCs on a JIT basis. In order to ensure the smooth flow of production supplies into these plants, Dell has developed a two-tiered strategy that employs different sourcing arrangements and delivery schedules for custom and commodity parts.When Dell receives an order for a PC, it faxes or phones its requirements to suppliers who pick the strait-laced parts and pack them in reusable bins with kanban cards attached. Trucks on a continuous loop between suppliers and Dell, known as a milk run, deliver the sorted parts to the computer makers plant for closing assembly. This process frees Dell from having to manage inventories and the costs associated with them. However, Dell has made efforts to ensure that suppliers dont get stuck with much inventory. The computer maker allows suppliers to participate in a revolver program, where they can sell parts stored at the storage warehouse to other customers.In comparison with Dells supply chain management, Baxter, a hospital supp ly company, developed a powerful new type of partnership with its hospital customers. Baxter develops a strategy which is the vendor-managed inventory system, then called the Stockless System in managing its customers inventories within their hospital facilities (2001). The hospital specifies its stock requirements for each ward an on-site Baxter employee counts the stock in each ward each day or all few days the employee enters this information into a hand-held device and transmits it to Baxters warehouse, where a replacement order is derived at the warehouse, the order is picked into ward-specific containers that order is delivered the next day or in a few days behavely to the ward, and the Baxter employee puts the stock away finally, Baxter invoices the hospital. Baxters Stockless System created a powerful new channel that changed the ground rules for all other hospital supply companies. However, in the long run, the shift to service competition led to significant gross revenu e increases as conversions to Baxter products naturally occurred. The company also gained significant first-mover advantage as it tied up key accounts with this new channel.In the case of Procter and Gamble (PG), the company first partnered with Wal-Mart to develop a pioneering continuous replenishment system. Through this system, PG replenishes Wal-Marts facilities without purchase orders based on the retailers product movement data. Based on this experience, PG systematically shifted its strategic focus toward supply chain-based service innovationand in the process transformed both the consumer products and retail industries. PG also developed a careful account selection plan as part of an innovative product supply model. The company developed operating partnerships with major customers capable of linking electronically, taking full-truckload deliveries, and engaging in joint business process reorganization programs. Smaller accounts were shifted to master distributors, which in t urn were selected for their ability to partner effectively with PG.PG, for its part, developed operations capabilities in two key areas ( 2001). First, it created a sweeping new set of industry-change programs such as ECR (efficient consumer response), CRP (customer requirements planning), and streamlined logistics. These programs required a solid new understanding of channel economics and the impact of supply chain innovation. Second, the company developed sophisticated IT ties to coordinate its product flow, enabling it to raise service levels to look the needs of the new system.With regards with Dells, supply chain strength of the company comprises of four qualities which includes demand management, national collaboration, leveraging partners, and financial fundamentals (2004).Dells direct model enables the company to excel at demand management. The process of selling directly to customers and building product to order creates opportunities for true real-time collaboration an d synchronization between manufacturing and sales. By being in direct contact with the market, Dell can quickly see changes in customer demand. Synchronization allows Dell to respond more quickly to customer demand than its competitors can. Additionally, this true internal collaboration allows for highly accurate forecasts.Another key aspect of Dells success is its ability to collaborate internally. This competency is driven by a culture that values information sharing and empowers all employees. At Dell, direct refers not only to how the company sells but also to how team members communicate and attack issues (2004).Moreover, Dells culture and processes not only help the company collaborate internally but also help it leverage its business partners. Dell leverages its partners by linking suppliers planning and execution activities with Dells systems. The company uses information technology to gather and share a constant stream of data on supply and demand trends. On the supply side , Dell gathers real-time information about the inventory levels of its suppliers at various positions in the supply chain.Finally, Dells entire supply chain is focused on fundamental business performance. Operating margin and not just profits or growth rate is the number that Dell cares about most to ensure long-term profitability.Dell Inc.s celebrated direct sales model is regularly cited as the key reason for its overall competitive prowess. At Dell, supply chain management is truly viewed as a strategic capability it drives coordination with, and in many another(prenominal) instances it includes, activities such as marketing, sales, finance, and information technology.