Direct from Dell: Strategies that Revolutionized an Industry - Essay Example

Supply Chain Management By Supply Chain Management Introduction Supply chain management is the management of resources and finances in a given channel of distribution. This channel usually consists of suppliers of raw materials, Production Company or manufacture, wholesaler, retailer and finally consumer. This practise is meant to ensure that the goods manufactured flows smoothly from one channel to another. It is important to note that the three important things that flow from the supplier to consumer is product, information and finances. The purpose of this research paper is to critically analyse supply chain of Dell computers and Mercedes-Benz. It will focus on the design of the chain supply system of the two brands, how these manufacturing make decision in chain supply management, the role of consumers in producing and supply of their product and finally the importance of producing quality products. Dell is a computer manufacturing company that began its operations in the year 1984. Its founder Michael Dell was an undergraduate of University of Texas when he saw the need of distributing computer spare parts. His selling strategy was directly focused to consumer. This was meant to enable him understand the need of consumer at a personal level and was therefore able to provide effective solutions in the world of computing. The company grew to the extent that it could build its own computer and it has since grown to the present age Dell Company. On the other hand, Benz is an automobile manufacturer based in Germany. Karl Benz founded this company in the year 1926. Benz earns it reputation of producing the first car whose engine used petrol. The company has really grown and its automobiles have found ways in both the local and international markets. This automobile industry is currently known for manufacturing or luxurious cars like the Phantom Roll Royce, Porsche among others. The overall design of the supply chains In order to understand the supply chain designs employed by Dell and Mercedes-Benz, it is good analyse the principles of supply chain management. One, producing goods and commodities that are in accordance to the needs of a customer. Dell began as a company of selling computer parts to consumers before making its way to selling complete computers. It has achieved this by its direct model of approaching customers. Dell manufactures and configures their computer in accordance to consumer’s specifications. On the other hand, Benz also produces its cars to meet consumer’s needs. According to Dell, Benz standards “seek to achieve sustainable and efficient cooperation with our suppliers in a system marked on mutual expectations and obligations. (Dell, Michael and Catherine, 9)” The organisation of Dell is very effective. There is an analyst who is in the field. These analysts collect data about the market and report it to the chief procurement officer. Another function of these analysts is produce and relay facts and figures that will be used in the process of decision making. Finally, the analyst is supposed to come up with recommendations for the procurement team. Another important factor of chain supply that is important to consider is product differentiation and standardization. Dell makes used to assemble their computers in accordance to customers’ demands and due to this they offered variety of products. This is because, product preference of one customer to another varies greatly and this leads to product differentiation. Benz has achieved product differentiation through making of different car to suite different tasks for instance lorries and personal cars. Another important aspect to consider in design of chain supply is standardisation of product. This is very important if the product has to sell in global markets (Kimes, Beverly and Harris, 6). Dell is now coming out of the practise of designing products in accordance to consumers’ needs and it is embracing the aspect of producing variety of standardised computers for its consumers. Benz on the other hand, make cars that are compatible with most roads of different countries. By supplying such cars, they are able to increase sales. Another important aspect of supply that is exhibited by the two manufactures and distributors is the use of Internet to connect to customers and sell their products. Online marketing also enables them collect market statistics on rate of sales and where market is promising. Stats show that Dell makes more than $4 million everyday through online marketing. Furthermore, Benz has capitalised on Instagram, this strategy was developed in order to reach young people. Young people love luxury and Benz is a luxurious car, therefore its market is promising as far as young people are concerned. How decisions are made Before analysing how decisions are made in an organisation it is good to recognize the management and leadership of Dell. The company began on a humble background and sharply grew. This meant that there was need to employ more managerial staff. Leadership style of Dell is participatory; this means that everyone has the ability to air their views. When Michael Dell began the company however, he was autocratic and he would make his own decisions and pass them to the team. However, as time progressed, he became participative. One great lesson from Michael Dell is that decisions are not made based on emotions but rather decisions should be based on facts and figure collected, analysed and proved. Benz uses follows several methods to make decisions. They employ the 80/20 principle. This principle asserts that one should make 80% of output from 20% of input. The main resource produced in German is steel and therefore they have to get other material from outside countries. Benz is a car whose demand is rising rapidly (Williams, 11). This means that for Benz to be on the cutting edge it has to make fast decisions. The decision making process is heavily dependent of practicability and not based on theoretical and bureaucratic procedures. Moreover, Benz believe in making durable and luxurious cars that are in accordance to consumers standards. Therefore, their decision making process is deeply rooted in what they believe rather than the surrounding facts. Benz also makes its decision through discussions. Role of customer In any business setup, customer are key in the success of the business. Dell through its direct contact model with consumer, it has made gigantic step in its product innovation and design. The company keeps contact with its customer whether physical or through online communications. Most customers prefer products that are customised in accordance to their preferences. As a result, Dell has been able to incorporate the so many ideas of clients into their production and this has enable them come up with wide range of products, ranging from desktops, laptops and notebooks. In addition to that, customer have enabled Dell cut down on operation cost (Hymes, 3). The direct model and the constant feedback they get from customers has reduced the presence of middlemen and this has also enabled Dell sell its products at affordable prices. In the automobile industry, consumer act as tools for identifying differences in brands of cars. In addition to that, consumer has enable a company like Benz, which produce luxurious cars, standardize the price of their cars. Through consumer interaction, Benz has been able to establish communication channels in Africa, especially countries like Kenya and Tanzania. In addition to that, Benz has been able to establish outlets in these countries from which it sells spare parts and other accessories related to their motor vehicles. Benz sell its car in different countries that have different policies pertaining to environment. Due to this, Benz has had to make its cars environmental friendly (Kotler, Philip and Gary 23). In countries like Japan, consumers always insist on goods and products that are reliable and quality. As a result, manufactures of vehicles, like Benz have to produce high quality and durable cars so as to sell in these markets. In doing so, manufacturing product to meet quality standards of domestic consumers, they end up making good quality cars that can also compete for international markets. Cars like Peugeot and Renault have are not competing well in the market, this is because they have poor designs and their manufactures never designed them focussing on meeting customer’s demands. In Germany, where Benz is made, most people are engineers. In addition to that, roads Germany are smooth and there are no policies governing maximum speed in which one can drive. As a result, the Germans define the materials use to make Benz. As a result, comparison of Benz, in terms of its architecture and engineering, outshines other vehicles in the international market. The importance of quality Computer world is undergoing rapid and instantaneous changes (Bankston, 4). With emergence of super quality computer manufactures like Apple and Samsung, Dell has been found to lag behind in production of quality computers. When consumers what to get more information about something, the easiest and best place is from a website. However, Dell’s website showcase outdated products, that is, desktops and laptops. According to computer market standards, these products have lost value. Counterparts like Apple is inventing tablets and so forth. Another quality problem with Dell is that they are still holding on to their old fashioned ideas of assembling different materials to make a computer and are focused less on producing ready made products (Lyles, 13). As a result, they products are inferior in quality as compared to others. History indicates that Dell has ventured into the world of manufacturing other products like iPod, mobile phones, tablets but it has failed. This is because of inferior quality products. Dell has also been found guilty of selling faulty computer to consumers and then blame consumers. It was alleged that, they had built motherboards of their machines using faulty capacitors imported from Japan. These product when they were sold in the market exhibited alarming irregularity. As a result, Dell is slowly loosing market and if it is not careful it will be like Nokia which was once a giant in mobile phone industry but it is currently nowhere to be seen. German has a good reputation of its engineering architecture in automobile industry. However, in the beginning of early 90’s, Benz M-class SUV was poor in quality. Statistics have shown that since 2007, Benz quality has been steadily declining (Dell, 50). Benz has is reputable for its luxurious nature, however this makes manufactures of Benz make complex audio systems too complicated for consumers. Despite the fact that the quality of Benz has declined, its cars are good as compared to cars like Toyota and Nissan from china. In addition to that, the comfort and luxury they offer makes consumers crave for them. Germany is known for steel production therefore cars from Germany, especially Benz is very reliable and strong and cannot compared to cars from other countries which are made of alloy. Conclusion Supply chain management deals with analysing how information, products and finances flow from the supplier of producer to consumer. An organisation that follows this channel clearly wins the market. When Dell came into the industry, it really tried. However, with entry of rivals like Apple, the quality level of Dell has gone down. Benz on the other hand is striving to maintain as image. By producing luxurious car meeting the needs of domestic consumer, it has been able to manufacture cars that are acceptable global wise. Finally, for any business to prosper, correct decisions must be made by the management. References Dell, Michael and Catherine F. (2009). Direct from Dell: strategies that revolutionized an industry. HapperBusiness. Kimes, Beverly, R. and Harris L. (2006). The star and the laurel: the centennial history of Deimler, Mercedes and Benz 1886-1986.. Mercedes-Benz of North America. Williams B. (2001). Karl Benz. New York: Bookwright. Kotler, Philip, and Gary A. (2012). Chilton European service manual: Audi, BMW, Mercedez-Benz MINI, Saab, Volkswagen, Volvo. New York: Cengage Learning. Bankston J. (2011). Karl Benz and the single cylinder engine. New York: Mitchel lane publishers. Lyles, W. H.. (2003). Putting Dell on the map: A history of the Dell paperbacks. New York: Greenwood press. Dell A. (2011). A comprehensive history of Dell. Abhishek Publications. Hymes D. H.. (2013). Study in the early history of Dell: success and failures. Indiana University Press. Read More