Dell Supply Chian Strategy

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DELL SUPPLY CHIAN STRATEGY Company Background Dell, Inc., founded in 1984, is an American multinational information technology corporation with headquarter in Texas, U.S.A., three major manufacturing facilities in the U.S.A. (Austin, Texas; Nashville, Tennessee; Winston-Salem, North Carolina) and facilities in Brazil, China, Malaysia, and Ireland. It develops, sells and supports computers and related products and services. It is one of the largest technological corporations in the world with $61.5 billion annual revenue (Jan.28. 2011) and 100,300 fulltime employees worldwide. Company’s Strengths Dell’s key strategy and strength is its business model: eliminating the retailers from the sales channel and selling directly to customers. Under this model, a customer orders a computer online or via phone according to his/her preferred configuration. After receiving the order, Dell would start to manufacture this computer based on customer’s requirement, and deliver it to customer directly. This model enables Dell to keep manufacturing cost lower than its competitors, since it doesn’t only save Dell money from logistic by delivering to customer directly, but also helps Dell to reduce inventory cost because it builds to order. It also helps Dell to reduce the lead time it costs for customer to get the computer after placing an order, thus helps improve service level and customer satisfaction. Problems and Alternatives The problem Dell is facing is the increasing manufacturing costs caused by the increase of its Level 5 desktop PC. Dell breaks its PC assembly into 10 levels. The higher the level, the more fully integrated it is. Level 5 includes the assembly of desktop PC chassis, floppy disk drive, and fan. Supplier ships the chassis to its supplier logistics center (SLC) and air-freights motherboards separately, from the SLC the chassis and motherboards are sent

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