Supply Chain Essay Example | Topics and Well Written Essays - 2000 words

Supply Chain - Essay Example The last part of the report analyzes how the use of e-commerce in supply chains has enhanced the value and business operations for both the companies. Dell Computers Dell was incorporated in 1994 by Michael Dell while he was a student at University of Texas, Austin. From its very first initiatives, direct selling model was adopted. In the beginning PC’s were sold over the phone and they were customized according to customers’ specifications. Dell’s strategic choices and ways of realizing those choices have played an effective role in story Dell’s success. The supply chain management of the company is the key element in its successful business model. The core element of the company’s business model is its direct sales model, referred as ‘direct mode’, with the build to order strategy. Business Model and Supply Chain The differentiated model of dell help it creates a niche in the distribution channel and eliminates the entire mid channel members to arrive at cost leadership position in the industry. The basic principle of Resource based view is that the competitive advantage for any particular organization completely depends upon the resources which are available at any company’s disposal. ... The above figure shows hot the direct model of Dell was different from the indirect distribution channel of the rest of industry. In its direct sale model, the intermediary steps that add cost and time are eliminated, and the company is directly able to link with its customers. Dell directly sells to all its customers, regardless of a home-PC to world’s largest corporations. The direct relationship with individual customer creates a great source of competitive advantage for Dell. This creates a valuable information about the end customers, and thus Dell knows who are the end users of their product, what they have purchased from the company, what are their future preferences, a fact that allows the company to stay closer to their customers by offering add-on products and services. Build in order and Integration with suppliers Thus, a computer is build after the customer places and order, then just-in-time production and lean manufacturing takes place. This means when an order i s placed, its configuration details reaches the manufacturing department and the assembly begins, and once the PC is configured it is shipped by a 3PL to the corresponding customer. The choice of JIT and build to order has several advantages for the company. Firstly, the level of inventories remains very low, leading to faster responses to demand changes and low inventory costs. For instance, if a new microprocessor comes into the market, the company can immediately place an order with its suppliers, as the company need not get rid of the excess inventory. Also, in case of Dell, customers pay in advance. That means the customer pay for the order prior to when the company pays its suppliers for the products, thus giving Dell the opportunity of operating on