Nevertheless Dell does have one serious threat the reason being; in order for Dell to stay competitive they need to develop more consulting services to corporations and large buyers not just the individual consumers. There is also the possibility that another individual or entrepreneur will have a revolutionary idea and that can change the whole industry once again.
I believe that the method in which Dell has expanded its company was by having a successful, innovative distribution system. The strategies used gave the firm competitive advantage over other rivals, for example by using a number of suppliers efficiently, integrating a factory planner solution for manufacturing, installing web-based services for not only consumers but suppliers as well, and notably operating with a Just in Time (JIT) supply chain management system.
Effectiveness of systems, policies, and processes for web-based transactions:
I will now discuss how the strategies mentioned above have been employed into the firm, and how they have assisted in the growth and well running of Dell. Dell is an excellent example of a company that has consistently worked to improve their supply chain management, by reducing the costs of their products and making it more viable for the consumers. In addition Dell has decided to utilize multiple suppliers, which as a result thoroughly helps to provide specific components required for each computer ordered, within the necessary time period. Dell calls this its Factory Planner Solution which manages 250 suppliers, who handle 4000 components. This structure enables them to calculate schedules, estimate surplus parts in the factory and in the supplier inventory, and assists in placing orders that are delivered within the required departments, in reasonable time.
The current manufacturing infrastructure via Information Technology (I.T) integrates the Factory Planner with five systems which are DOMS, WTCS, EMPACT, valuechain.dell.com, and ODS.
FACTORY PLANNER SOLUTION:
I will now discuss each of the systems firstly Dell Order Management System (DOMS), is an application that records all orders and releases them to manufacturing. DOMS carries out various amounts of transactions i.e. purchase orders, individual credit card transactions. Consumers are able to select their orders on Premier Dell.com; these orders are internally approved and then sent to Dell via the Internet.
Work-in-Progress Tracking Coding System (WTCS) plays a pivotal role of the manufacturing process because orders from DOMS are moved to WTCS, which delivers it to manufacturing departments. The WTCS system also creates a bill of the materials and service tag number etc for each product. These service tag numbers is printed on all products and then can be used for warranty and maintenance purposes. Subsequently the Engineering Materials Process and Cost Tracking (EMPACT) is a part of Dells inventory control, because it tracks the small components that are ordered in a quantity. These small parts can also range from minor screws to processors etc.
Value Chain (valuechain.dell.com) is extranet portal designed for suppliers, this provides direct access via Internet to Dell’s forms, documentation, tools and supplier details etc. Lastly the Operational Data Store (ODS) is the database that helps assist real-time manufacturing decisions and support queries. For example queries can be related to the location of a particular order or what systems should be compiled for which customer, materials-related queries and also contains information about the current day’s production schedule.
Strategies used to develop & maintain effective supplier relations:
In addition I think that the web-based applications used by Dell i.e. software from both Microsoft and i2 Technology has immensely helped to develop a supply chain structure that is cost effective, practical and potential for further growth. The implementation of i2 supply chain software has enabled Dell to link to its suppliers in real-time thus limiting any delay, and has allowed them to approximate the correct level of materials needed at Dell’s manufacturing locations. I believe that the i2 supply chain software was set up for the purpose of planning and execution of the products. The software helped the planning stage by gathering the needed materials from the suppliers and Dell factories. Then the execution stage required Dell to have the right components on hand in order to construct the customer’s order. Consequently these two steps helped to create a more efficient supply chain.
Furthermore the i2 technology has helped the planning process because it has enabled the option of having suppliers linked to Dell’s supply chain system, through the web i.e. valuechain.dell.com. This web-related access mentioned previously is a secure extranet portal that acts connection for suppliers. The benefits of this are that the suppliers are offered the chance to view their materials at Dell, including reports on performance, product quality, cost reports, supply/demand forecasting and engineering alterations.
How web-based applications contributed to integration of SCM:
I consider that by having valuechain.dell.com and other web-based applications, Dell has created a more resourceful communication tool between the suppliers and itself. Another positive aspect of this site is that that it enables orders or deliveries of products without having to deal with sales representatives. This saves everyone time and money.
What’s more Dell has ensured that its suppliers have the components within close range of its manufacturing facilities. This allows for the reordering of parts within a certain time frame. When all the components of a new computer system are assembled, it is usually loaded and ready for shipment within 24 hours. Also in order for components to be used in Dell computers, there must be an agreement by suppliers to use the value.dell.com portal. Overall the implementation of the software’s has been beneficial for all parties concerned, because it is a very fast and convenient process for Dell and allows the consumer to receive their custom made computer, within a very short period of time.
Conclusion
On the whole I believe that regarding the development of the supply chain management, Dell has produced exceptional and numerous partnerships with its suppliers. By reducing the inventory costs for the supplier Dell has established better relationships, that just reputations is not able to do. These partnerships have also created loyalty and trust amongst the parties. The supply chain can not be as successful as it is at the moment without the well balanced partnerships.
Supply chain management is an affective management skill for reducing costs. I consider that the technology implemented by Dell has aided them significantly. The technologies has given the company a competitive advantage. In addition by Dell using an Enterprising Resource Planning System it has enabled them to improve and streamline internal business processes i.e. strategic planning, management control and operational control via extranet portal and other web-based applications, for example the use Management Information System (MIS). This software has also allowed Dell to run procedures such as product planning, parts purchasing, inventory control, product distribution, order tracking, finance, accounting and human resources.
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Dell Homepage [Online] viewed April 12th 2009
http://www1.euro.dell.com/content/topics/global.aspx/about_dell/home_page/about_dell?c=uk&l=en&s=corp
[Online] viewed April 11th 2009
case-study.html
What is supply chain management [Online] viewed April 11th 2009
http://searchcio.techtarget.com/sDefinition/0,,sid182_gci214546,00.html
Definition and Solutions [Online] viewed April 12th 2009
http://www.cio.com/article/40940/Supply_Chain_Management_Definition_and_Solutions
Supply Chain Management [Online] viewed April 11th 2009
http://www.qualitydigest.com/magazine/2008/dec/article/supply-chain-management.html
