Dell Case Essay

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Dell’s Supply chain and the impact of E-commerce - case study 2. How has Dell exploited the advantage of the Internet to improve performance? Dell established a unique e-commerce model by embracing the Internet in its supply chain. • Dell brings products to market faster than its competitors • Customization and quick response • Attract large business customers • Reduce Bullwhip Effect • Collecting the payments 3. What is the main disadvantage of Dell selling PCs over the Internet? • High Shipping Costs • Economies of Scale The Dell company can’t enjoy EoS (Economies of Scale) in shipping because it sends individual PCs to customers from its factories. Competitors sell through distributors and middlemen ship their products with EoS using large truck shipments to warehouses and retailers 4. How does Dell compete with a retailer who already has a stock? Advantages of Direct Sales system over Brick and Mortar system • Price Advantage • Differentiation advantage Price Advantage of Dell • Increase in Dell’s profit margin (Elimination of retailer and distributor margins) • Decrease in Inventory Costs (5 days inventory vs. 30-45-90 days inventory and Decrease in costs of materials) • Negative Working Capital (Suppliers financing Dell’s growth) 5. How does Dell’s supply chain deal with the bullwhip effect? Bullwhip Effect The phenomenon in which order variability is amplified as it moves up the supply chain from end-consumers through distribution and manufacturing to raw material suppliers. Supply chain management • Sharing Data with suppliers (Flexibility) • Investment • Privileged Suppliers • Long time relationship with suppliers (Helping suppliers become more like

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