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Although, many articles and studies mention Dell's supply chain as one of most success management style in business world, few look at the theory that led Dell to become one of the competitive companies in computer' industry. One of exclusive tools that shove Dell to leading position is supply chain management. It is necessary to investigate how Dell's supply chain management and its exclusive "build-to-order" concept interact with each other and the way that these combination effects Dell competitive.
Dell's management model relies on supply chain efficiencies to build customer satisfaction. As a result, analysis these factors can clarify the basic that allow Dell to achieve maximum effectiveness with minimum cost. Dell prides about its supply chain management system that enables them to increase their efficiency and effectiveness and keep their competitive edge in their industry. Dell uses advanced information technology to connect themselves to their customers and increase customer communication.
This study will discuss Dell history in brief and investigate Dell Supply Chain management, in terms of analysis of supply chain performance and its integration. The study also will include the effect of supply chain on customer satisfaction and how these techniques benefit Dell in compete with others.
The impact of Dell's supply chain management on customer satisfaction.
The use of effective Supply Chain Management for competitive advantage at Dell.
There are a numerous questions this research is going to answer. These questions are:
How Dell start its Supply chain management?
What are the advantages of using supply chain in Dell chain?
How Dell develop its supply chain management to get customer satisfaction?
Are Australian customer satisfaction about Dell's service?
Figur1: Study Boundary
Specific project objectives
Define Dell service strategy which builds its business.
Identify Dell's business model that caused its success.
Discover Dell's IT Tools and Infrastructure that used.
Recognize Dell effective Supply Chain Management in competitive advantage
Discover the relation between Dell's SCM and customer satisfaction.
Measure the Australian customer satisfaction compeering with other countries.
Review of Existing Research
Michael Dell (COE) work differently than other business men. He harvested success when he released his inimitable idea 'Direct Sale'. Dell's exclusive supply chain management gave the success against its competitors. Rather than making products and storing, Dell takes orders directly from Web site, builds them specifically to personal needs and delivers to clients that known as 'Build-to-order'. Adopt Internet using caused the early success of the Dell.
Figur2: Dell Distribution channel (Manataki, 2007, pp.11)
The recipes of Dell's success can be summarizing in three components: Direct Sales, Build-to-order and Supplier Integration. "Dell's business model is no secret, of course, and it's been emulated with considerably less success by many of its competitors" (Henricks, 2003). These factors together allow Dell to achieve maximum effectiveness with minimum cost. Dell remains to use this successful principle to keep its competitive advantage. Supplier integration is the last piece of Dell's business model. It enables Dell to order parts and have them delivered on extremely tight schedules Dell's focus on collaboration with its suppliers enables an effective supplier integration.
Dell's supply chain management (SCM) success relies on sole brilliant idea. According to e-business Technology Manager of Dell, Michael Chong "Supply chain management shortens the cycle between the component, the manufacturer and the end customer. We are allowing them to almost touch each other, (E-commerce)". Supply chain management is the most successful and faster movement of materials from suppliers through a company to consumers.
Supply chain management is one of most proud system in Dell's work environment, because it enables Dell to raise the efficiency and effectiveness of its operations which maintain its competitiveness in computer industry. Dell used an extensive network of advanced information technologies to link with its suppliers and customers successfully, causing a competitive advantage for Dell. These techniques allow Dell to grant the best service and support site in Computer Shopper Magazine in February 2004 (Dell Support).
Dell has a little expenditure due to its reliance on the internet. Moreover, Dell does most of its business by the internet. Excluding the need of warehouses is one of the Dell's secret to reduce its operating cost. "The company has no more than two hours' worth of inventory at any time, and no more than three days of inventory across its entire value chain. Inventory turns at an astounding 73 times a year, compared with an average 5.4 times across the high-tech industry" (Pellet, 2004)
Customer's freedom to set up their order is one of the best advantages futures of Dell's Supply Chain Management system, which results to decrease Dell's operational cost and lets consumers to organize their own order with options they require. Moreover, Dell's SCM system allow client to have the ability to choose without any pressure from other circumstances from seller, time, place and promotional offers, which results customer satisfaction about their sales service.
Dell also works to establish good customer service, communication and retention. One method Dell uses is to provide easy access to support via their web site. Their website allows customers to find answers to common problems without Dell's "people" assistance and therefore helps to decrease Dells payroll costs. There are also chat, email and phone opportunities to make it easy for customers to contact Dell to answer questions they couldn't answer by the above means. Keeping customers involved with Dell through chat groups and users groups, can result in customer retention for future systems or components sales from satisfied customers.
Technology Business Research (TBR) has ranked Dell Services number one for customer satisfaction among corporate IT users for the first quarter of 2010. Dell Services topped the rankings for the 31st time in the past 39 reporting periods over almost 10 years. According to Peter Altabef, President of Dell Services, "We are very pleased with this ranking because it is based on third-party customer surveys, and it demonstrates the consistency of our commitment to customer service and satisfaction."
Dell has also done exceptionally well in Germany as indicated by TBR on June 17, 2003. The Germany Customer Satisfaction Study determined that Dell is the No. 1 ranked vendor in Germany across all three segments ofÂ Intel-based servers, desktops and notebook PCs. Customer service and overall value were the leading factors that made the Dell the top vendor according to German IT directors. In the Asian market, Dell Computer ranks highest in customer satisfaction and was cited particularly in its strength in usability, performance and cost. Dell also received a high score for areas such as frequency of breakdown and problem occurrence, hardware processing speed, hardware expandability, and introduction/maintenance cost.
The main way to find out the answers for this research questions will be qualitative method based on some literature reviews. In the same time the quantitative method will be utilized in this research to proof some clients' opinions in Australia. In order to find out the impacts of supply chain management on competitive advantage at Dell, the researcher can conduct survey methods. The researcher can give out questionnaires to consumer send it via E-mail to ask them about their satisfaction on Dell services. The suggestion study sample is 100 persons.
Although Dell continues to win market share and turn out record quarterly profits, two recent surveys have shown that they have not been as successful in the area they pride themselves in the most; customer service. In a report that rated the satisfaction of PC buyers, Dell's scores have declined in recent months. Statistically, the results are not catastrophic, but it is still an issue that Dell needs to address and improve in. The March 2004 issue of Consumer Reports, included a survey of 4,100 consumers, who gave Dell 62 points out of a possible 100 for its support on desktop PCs. Although it still managed to top competing brands Hewlett-Packard and Compaq, HP scoring 54 and Compaq 51, Dell's rating represented a decline from a score of 64 which was given in the magazine's last desktop support survey, published in June 2003. A score of 80 would mean that respondents were very satisfied, while 60 is described as fairly well satisfied. According to the report, differences of more than four points in the survey were meaningful. Dell's overall tech support scores for desktop PCs have dropped substantially since 2001, from scoring a 74 in December 2001 and a 65 in September 2002 (Spooner, 2004).