Dells Direct Sales Model as a Good Supply Chain and Supply Chain Management Principle - Case Study Example

SUPPLY CHAIN MANAGEMENT Name Date Table of Contents Table of Contents 2 Introduction 3 Case Study: Dell Value Chain 4 Dell’s direct sales model is a good supply chain 4 Operations management development from Dell’s direct sales 5 Disadvantages of Dell’s direct sales model 6 Supply Chain Management Principle and Distribution Management. 6 Conclusion 8 References 9 Introduction Many profit making companies come up with means and strategies to remain relevant in business and compete favorably (Dawei, 2011). According to Basu and Wright (2010), a competent management has to ensure that various units within an organization are operational and efficient. Management objectives aim to increase productivity, increase profitability, increase on sale, eliminate time wastage, and reduce the cost of operation. All the goals apply to the various departments that include production department, human resource department, marketing, and supply department (Blokdijk, 2015). Due to this broad scope of management, managerial roles are divided and assigned to a departmental level. In this case, the department of marketing and supply coordinates and controls all matters relating to marketing and supply of organizational products or services. One important duty of marketing and supply department is supply chain management. The department role requires the agency to investigate external business environment and develop strategies to maintain the supply of a company’s product (Alturas et al., 2006). This report reviews a case study of the Dell value chain, opportunities, and impacts, as well as supply chain and supply chain management principle. Case Study: Dell Value Chain Dell’s direct sales model is a good supply chain For many years, the Dell Company has avoided using retailers and middlemen when supplying its products (Manataki, 2007). Dell opts to sell its personal computers online in their www.dell.com website where they link with their willing buyers. This step adopted by Dell is useful in eliminating many steps in the supply chain that can increase the cost of supply. Besides, the method used by Dell also allows them to contact directly their esteemed customers, where they can get useful information concerning Dell’s product (Blokdijk, 2015). Dell can know their customer base and related needs and respond to the needs adequately. Dell has its way of characterizing its customers into large organizations, small business enterprises, and personal consumers. Dell can forecast the future trends through this method of supply. The individual customer can work with the supplier as real partners in business through the premium pages and platinum council. The various channels adopted by Dell include Customer Experience Initiative, Direct2Dell blog and IdeaStorm (Manataki, 2007). As stated before, all companies aim at reducing cost and increasing sales with the corresponding profit. For this reason, a company will tend to adopt a method by which they can get a product to a broad customer base at a lower cost (Croxton et al., 2001). The Dell Company has taken advantage of the growing technology to sell personal computers online. According to Stadtler and Kilger (2007), an efficient supply chain management should ensure that customer relations are enhanced. Improving customer relationship enables quick access to relevant information concerning the customers’ complaints and preferences (Basu & Wright, 2010). Dell has been efficient in enhancing customer relations through direct communication. As a result, Dell Company can gather useful customer information that can be useful for the upgrading of the product or planning for future development. Supply chain management is efficient when there is available data concerning the market base and customer preference (Dawei, 2011). Operations management development from Dell’s direct sales According to Manataki (2007), direct sales approach by Dell Company has enhanced operation control. The direct operation method has improved collection of enough information on the market trends, customer preferences, threats, and opportunities. The information is then analyzed by Dell Company to develop their products and services to suit the client preference (Alturas et al., 2006). Dell Company can modify their products to rhyme with the evolving technology. Such a trend makes the company’s product remain competitive in the market. There are other various means, which a company can employ in managing its operations to enhance total quality management (Dawei, 2011). Firms can concentrate on specific processes within production and supply, which can benefit the company. The approach is referred to as flexible specialization and is essential for a long-term relationship between a company and its external links. Another approach is by getting rid of factors of wastage, a method known as Lean Production (Blokdijk, 2015). Mass customization is an approach a company can follow to meet the special needs and recommendation of its customer. A company can also alter its market goals in that agile manufacturing become an option (Stadtler and Kilger, 2007). Operations management requires that human resource managers, asset managers and cost managers work together. Relevant and accurate decisions in operations management should ensure workable operating system regarding design, operation, and improvement. Disadvantages of Dell’s direct sales model According to Alturas et al. (2006), the sales and marketing approach used by the Dell Company is generic and cannot be active in the supply chain management of its products. The method used by Dell creates products on order and may not be the type of product Dell preferred (Manataki, 2007). Over-relying on external recommendations may jeopardize the internal marketing strategies of the Dell Company. The total cost the direct marketing is higher than in the other marketing strategies. The direct marketing considers communicating and sending direct advertisements directly to individual customers. The marketing approach systems can lead to Dell spending more time to develop specific products whose market is limited (Dawei, 2011). Such a condition can accumulate the cost of production, narrow the market for the product and result in losses made by Dell Company. Also, more costs are incurred in delivering the Dell products to specific customers. Given the nature of the company’s product, the level of handling should be enhanced, and this enhancement comes with an extra cost to the manufacturer. Supply Chain Management Principle and Distribution Management. The Seven known principles of supply chain management are relevant to managing the distribution of products by a company. The first principle recommends a company to classify its customers according to the particular needs and services. It then needs to ensure the customers’ needs are satisfied (Croxton et al., 2001). Dell Company has tried to meet the specification of this principle through its direct sales approach (Manataki, 2007). Dell gathers enough information by directly communicating with its customers and thus can classify the particular needs of the clients. In this approach, however, a company should conduct extensive research on how to minimize costs in an attempt to meet the profit goals of a business (Stadtler & Kilger, 2007). Another principle requires a company to tailor its logistic set-up to related services and particular benefit from the classified customers (Zigiaris, 2001). The Dell company attempts to utilize this principle through its business process model. It is important to do this to avoid possible losses that can result from a change of design and change of process. The principle ensures that an approach to meet the needs of particular customers is feasible. A company should at all times be aware of the market trends and plan the supply chain according to the demand trends (Zigiaris, 2001). This principle ensures that companies make accurate predictions and adequately allocate resources. Direct sales approach can enable Dell to make an accurate prediction of market trends. However, the particular needs of customers may not be the general needs of the market. A company should be able to make a distinction between products nearer the consumer and the swiftness of conversion across the supply chain (Croxton et al., 2001). A supply chain management should ensure that the cost of storing finished products is significantly reduced through managing its strategic supply bases. The direct sales approach can be useful in ensuring that finished specific products get to the company’s customer (Basu & Wright, 2010). By doing this, the company reduces the cost of storage and managing the finished product. According to Stadtler & Kilger (2007), technological advancement in the supply chain management is another principle that a company can adopt to manage the distribution of its products. Such a supply chain should ensure that a holistic decision-making approach is made. In adopting the principle, a company can have a comprehensive picture of its products, services and information (Dawei, 2011). Dell has attempted to incorporate technology into its supply chain management. For instance, Dell Business process model is based on the MIT process handbook, a technology innovated at Massachusetts Institute of Technology. This technological approach helps the Dell Company understand the business environment. With the understanding of the business environment, then the company can develop its market and supply plan (Stadtler & Kilger, 2007). According to Croxton et al. (2001), measuring the success of a business approach is essential. The assessment can be achieved through channel spanning of achievement in determining collective accomplishment. Services are gauged based on the arrival of merchandise as ordered. Zigiaris (2001) insists that efficient supply chain management should consider all information on cost and revenue in planning. A company like Dell should have a system that can create an enormous database with high manipulation and transformation ability to generate useful market information. The system should be able to use a broad range of data. Conclusion Supply chain management is one important component of a company’s management goals. A competent management has to ensure that various units within an organization are operational and efficient. Effective supply management ensures that finished goods reach the customer within the shortest time possible and at a manageable cost. Many sales practices exist, and one unique strategy is direct sales that the Dell Company uses. The direct sales method has its advantages and disadvantages. The direct sales approach helps the company to collect enough information that can be useful in supply management. However, the cost incurred in direct sales can be high if not well managed. However, proper planning and management can ensure that the system operates above its limiting factors. Seven principles can help a company develop a good supply chain and boost its market strategy. The direct sales approach can help a company stick to these principles. References Manataki, A. (2007). A Knowledge-Based Analysis and Modelling of Dell’s Supply Chain Strategies. Retrieved from Alturas, et al. (2006). Direct Selling: Finding Consumer Segments. Retrieved from Croxton, et al. (2001). The Supply Chain Management Processes. The International Journal of Logistics Management 12(2),13-36. Retrieved from Zigiaris, S. (2001). Supply Chain Management. Retrieved from Dawei, L. (2011). Fundamentals of Supply Chain Management. Bookboon Basu, R.J. & Wright, N. (2010). Total Supply Chain Management. London: Routledge Stadtler, H & Kilger, C. (2007). Supply Chain Management and Advanced Planning: Concepts, Models, Software, and Case Studies. New York: Springer Science & Business Media. Blokdijk, G. (2015). Supply Chain - Simple Steps to Win, Insights and Opportunities for Maxing Out Success. New York: Emereo Publishing Read More