How Supply Chain Activities Within Dell Support Its Competitive Advantage

Introduction

Dell Corporation, with headquarters in Texas, is a worldwide information technology that gives its customers various services and solutions through various distributors. The company operates all over the globe through its subsidiaries (Slone, 2004). The company is focused on offering solutions and services that are more effectual, easily accessible and easily manageable.

The company increased in customer base through listening to customers and making solutions to meet customers’ requirements (Bowersox and Stank, 2000). The company initiated a broad transformation aimed at becoming an end-to-end technology solution company. The company since its formation has expanded its servers, networking, enterprise solutions and storage services. The company has also majored on growing customer computing offerings, which entails modality and desktop services.

The failure or prosperity of a company depends on its ability to organize and take control of flow of it materials, information in and outside the company. The flow is called supply chain. Due to the complexity of a supply chain and since they can entail other businesses, at times problems occur in supply chains (Bowersox and Stank, 2000). The problems and delays that may be in supply chains result in delays, and customer dissatisfaction or may lead to increased prices of goods or services. Global operation companies for instance Dell, have their success depends on the management of their supply chains (Dent, 2001). This paper describes Dell’s supply chain management, its nature and the types it uses and the extent to which supply chain activities within Dell support its competitive advantage.

Literature review

Formerly, the supply chain concept was the flow of materials from suppliers to the company or organization, and then within the given company to be processed. After processing, the manufactured products are transported to the customers. Presently, the concept of supply chains is much broader.

A supply chain can be defined as flow of goods, money, services and information, form the manufacturers or suppliers via the company to the customers. It also entails processes and companies that manufacture and deliver goods, information, and services to the consumers (Slone, 2004). Supply chain entails various functions for instance flow of payments, buying, manufacturing, planning and control among other processes involved in the manufacture and delivery of goods and services to the customers. As stated by Chapman and Carter 1990, the main aim of a supply chain is to plan, organize, coordinate, and control all the supply activities of a supply chain (Vokurka and O’Leary-Kelly, 2000).

A proper supply chain management is essential in decreasing risks and uncertainties present in supply chain. A good management affects levels of the inventory, cycle time, manufacture process, and service to customers. All the advantages add to enhanced profitability and boost a company’s competitive advantage.

Dell’s supply chain

Upstream supply chain

This sections entails Dell’s first-tier suppliers who can be assemblers or manufacturers) and their suppliers. The extension can extend to the left further to incorporate second-tiers. In the upstream supply chain, the main activities are purchases and transportation (Giannakis and Croom, 2004).

Internal supply chain

The section entails all the processes employed in a company in transforming the raw materials into finished products, from the time their entered the company through to distributors. The activities in this section comprise management, inventory management, production and control or product quality (Chase et al., 2003).

Downstream supply chain

The section comprises entire processes involved in distribution and delivery of products to the customers (Bowersox and Stank, 2000). Looking at the entire process, the supply chain terminates once the goods are delivered to the customer. The main activities in this section entail packaging, warehousing and delivery of goods.

Dell’s Supply and its competitive advantage

Dell Company started by using the mail-order approach in distributing its computers to customers. The approach changed the way computers were being distributed and sold. The customers received the purchased computers which were customized based on their requirements (Knight, 2002). The direct mail approach helps Dell to cheapen its competitors, who were using suppliers and retailers by 10 percent. Dell constantly grew in its market share over the years and dominated the market. In reaction to this, in 1993, Compaq reduced its prices to regain its former market share.

How Dell used supply chain to gain greater market share

The company realized that the only method of winning market was by the introduction of basic changes in its supply chain. Dell wanted to have its goods move direct from suppliers to consumers, forgoing retailers (Bessant at el., 2003). The company thus used various innovations to boost its competitive advantage over its competitors.

Majority of the orders Dell received were moved to the website. The customer had the ability to configure what they needed, and had the prices displayed. This made it easy in comparing the prices referring to the computer specification. The computers were then delivered in seconds once ordered online. Most of the computers were assembled once ordered. This was possible since the company had employers who offered quick manufacture. As a consequence of assembling computer on demand, Dell enjoyed low inventories, minimized obsolescence, and reduced marketing and administrative costs (Knight, 2002). In 1999, the company started online marketing channel through dellauction.com. In 2001 alone, the company over its website .............