Logistic management is one component of supply chain management, which is designed for meeting the customer demands through effective planning, controlling, and implementing process. According to Waters and Rinsler (2014), logistic management helps reducing the expenses and enhancing the customer services that develops the reputation of the company. The case study provides the insightful knowledge about Dell’s CTO supply chain strategy that led the company towards immense success. The study would concentrate on the strategic direction that is required to be undertaken to maintain the competitive advantage. The description of the case scenario would be helpful for suggesting the best practices to develop the effective supply chain process.
Background of the case
Dell has been a growing firm since the establishment in 1984 by the medical student Michael Dell. In late 2013, Michael Dell took the complete control of 75% of the company. The company has achieved their ascribed success due to their expertise in SCM (Mangan, Lalwani, and Lalwani 2016). In 1983, the company built up most of their success story with the help of the greater distribution strategy. Dell has been looking forward to exploit the opportunities of the technological advancements. Dell has invested in the customer relationship process in order to stay close to the customers. Similarly, the company concentrates on evaluating cost-to-serve different designing products and customer segments accordingly. Dell has been using internet extensively. The company mainly uses this medium to communicate with the customers. The extensive use of the internet by the customers can help in understanding the features of the products and specific services as per their demands (Stadtler 2015). The third party logistic partners are involved for delivering the finished products to the customers. Dell uses internet as the key strategy that allows the company to communicate with the customers directly. It provides the real-time visibility of purchasing patterns. The company has established the standardization and postponed the manufacturing process, which is considered as the “mass customization”. Another initiative undertaken by the company is the focused manufacturing and building to order. This distribution process saves the invested amount and increases the customer base by delivering the product as per their expectations. The further study would highlight the fundamental reasons for Dell’s success and the method of managing the competitive advantages.
Fundamental Reasons for Dell’s Success
Dell maintains a real distribution strategy, which is the most prioritized segment of the organisational functionalities. It is already specified that the company sells the computers direct to the customers without involving any intermediary (Crane et al. 2015). Therefore, the customers have been receiving faster delivery of the products and services in compare to other companies. On the other hand, it has been observed that the company maintains the high level of customer relationships to maintain the remarkable brand reputation. The strong visibility developed through internet is much appreciable for creating the direct communication with the potential clients (Dell.com 2018). When the customers receive the greater opportunity to maintain a transparency while communicating with the company, it generates the sense of reliability. Eventually, this strategy leads towards retaining a large number of customer bases. In addition to this, Dell has utilized the opportunity of the technological advantages to introduce more innovations on their electronic products (Gibson, Rosen and Stucker 2015). It has been observed that the company has the smaller number of the common platforms that are even customized as per the demands of the customers. Therefore, the products manufactured in the company are adapted to each of the customers. These are the major areas of success that the company has achieved though maintaining such customer service processes.
Another company that has achieved success through distribution process is SAP. SAP focuses on increasing the blog traffic through the effective leadership strategy. The major comparison between Dell and SAP is that Dell is primarily focusing on customer demands whereas SAP is focusing on the distribution channel by organizing the internal functionalities and creative approaches (Harsono 2014). Even though the major purpose of booth of these companies is to satisfy the clients, it has been observed that the distribution procedures are different. On the contrary, Adidas experienced the greater failure in the supply chain process. The company tried initiating the new management system in their distribution centre (Choudhury and Harrigan 2014). However, the lack of knowledge regarding the implementation of their technological system, the company faced the failure in their distribution channel and supply chain procedures. In compare to Dell’s strategy, it can be implied that Dell has the strategic insight to the absolute timing and process of utilizing the appropriate method of technologies for their distribution procedure. Hence, Dell succeeded in developing the effective customer relation and building the greater supply chain process.
Method of Maintaining Competitive Advantage
It has been observed that Dell has succeeded in developing the greater customer relationship segment that has led towards achieving competitive advantage. However, the business world is frequently changing by concentrating on the changes of demands. Therefore, it is essential to develop the unique method to retain the competitive advantage for the long term sustainability. In order to maintain the competitive advantage, Dell requires focusing on the following aspects,
- Dell needs to deliver and design more efficient and superior services while managing the customization model to fulfill individual needs (Tedjamulia et al. 2017). It would engage the customers for the future profitability.
- Dell needs to enlarge the source of relationships for offering increased configuration options for the potential clients (Hasanian, Chong and Gan 2015). The larger choices available for the customers would help in increasing the customer interests.
- Dell can expand their business in abroad to get hold of the international market.
- Customers usually look for the access to the credit cards and internet due to which the showrooms are required. Dell needs to develop more showrooms in the emerging markets (Xu et al. 2018). The customers would generate the sense of reliability if they can get access to the products as per their convenience.
The direct model strategy developed by Dell enables the JIT inventory system as the customers are allowed to order directly from Dell. The official websites are used for contacting the customers directly. The maintenance of the better relationships with the customers develops the stronger bonds with the customers. It develops the customer loyalty that leads to the ‘positive word of mouth’ (Panda et al. 2015). Therefore, it can be signified that the above mentioned strategies can help Dell to maintain the competitive advantage. As a result, it would maintain the long term sustainability of the company.
It is noticeable that Dell has captured the leading position as the best computer system company in the world. The most efficient supply chain management process has made the company win over their competitors. The association of the knowledgeable user of communication, information, e-commerce, internet, e-business, and web technologies is the key to develop more innovative business strategy to remain competitive. The case scenario follows that Dell implements the just-in-time inventory system operates only 6 days of inventory (Lambert and Enz 2017). It helps Dell to reduce the expenses on hiring people who would manage the functions at the inventory houses. In addition to this, it helps in increasing the profit margins through the inventory system. Holding on to obsolete technologies allows Dell to free up the cash flow and invest the capital in other value adding activities. Dell has been using internet extensively (Hugos 2018). The company mainly uses this medium to communicate with the customers. The extensive use of the internet by the customers can help in understanding the features of the products and specific services as per their demands. Hence, maintaining these aspects would help the company to retain the competitive position and develop the better customer services for the long run.
Dell’s Business Model Analysis
In an industry, the four markets usually reside, such as consumer to business, business to business, consumer to consumer, and business to consumer. In order to maintain the business, Dell focuses on two types of two markets, such as business to consumers and business to business. It helps the company to satisfy the customers’ expectations and the business demands. One of the most appreciable segments maintained by Dell is the differentiation between the customer classes and the individual demands. The Configure-to-order would work elsewhere as well. Dell can use this formula in following aspects:
- This formula would work on supplying the products in every two hours and if necessary in just one hour (Simatupang and Sridharan 2018).
- This formula would also work in placing the customer orders.
- In assembling the plants, the formula works the best.
- It helps in finishing the product as per the order placed by the customers
- Finally, this helps in delivering the final products to the customers.
The postponement strategy leverages the demands of forecasting. It generally ensures that firms should postpone the delivery of the products as long as possible to determine the high quality. It has been observed that Dell has mastered the art of postponement for developing their custom-designed machines for meeting the need of their individual customer. The customers have been receiving faster delivery of the products and services in compare to other companies. On the other hand, this configure-to-order is conceptualized as the value chain activity that enables the product manufacturing process based on the individual requirement (Bag, Anand and Pandey 2017). The development of this process requires the strengthened alignment of the key expertise skills and technological advancements. It is essential for the company to concentrate on this requirement while developing the process. This activity can even work elsewhere where the company is driven by its customers. Generally, this activity builds up the greater customer relationship that helps the company to strengthen competitive position.
This process can be used in developing the official websites of the company on the on the internet as well. The company has the smaller number of the common platforms that are even customized as per the demands of the customers. The customized version present in the internet sites to provide the review of the products would create the positive impression (Heckmann, Comes and Nickel 2015). The customer can select the option to comment on their experiences. In fact, these customizations would help in placing their orders in an easier way with the required specifications. Accordingly, the company can use the configure-to-order model for delivering the better products or services to the customers. When the customers receive the greater opportunity to maintain a transparency while communicating with the company, it generates the sense of reliability (Turban et al. 2018). Eventually, this strategy leads towards retaining a large number of customer bases. Dell has invested in the customer relationship process in order to stay close to the customers. It provides the real-time visibility of purchasing patterns. Hence, the company can maintain the longer stability in managing their potential clients in future.
Concept of Sustainability and suitability for Dell
Sustainability is maintained when any company meets the customers’ needs by developing the suitable strategic functions. In spite of the effective strategic directions adopted by Dell, it is quite beneficial for Dell to follow up the recommended sustainability strategies. It is important for Dell to consider the selective addition of the vendors for the supply chain management process. Considering the increasing rate of the global sales, it is quite necessary for Dell to involve selective additional suppliers to manage the costs. On the other hand, the company can use the ‘customer survey’ for gaining more market share (Van Jaarsveld and Scheller-Wolf 2015). Dell has performed much remarkably in the international market. However, it has been observed that Dell has lost some shares in the domestic market. Therefore, it would be beneficial for the company if they can build up more shares in the domestic market as well. A well structured advertising process helps in developing the customer base in the domestic market as well. Another helpful strategy that Dell can avail is to offer the online data back-up capabilities that help I increasing revenues. In addition to this, enhancing the customer support service would also be another helpful strategy for Dell. It is notable that the effective communication and efficient customer relationship have been crucial to the success of Dell. However, the declines in the customer support may affect this successive approach (Martin et al. 2014). Therefore, it is essential for Dell to keep the focus on maintaining higher level of customer services. The products manufactured in the company are adapted to each of the customers. These are the major areas of success that the company has achieved though maintaining such customer service processes.
The study deals with the supply chain and distribution process of Dell. It has been observed that the establishment of the effective distribution process and customer relationship management has been the key to successive position of Dell. The customers have been receiving faster delivery of the products and services in compare to other companies. On the other hand, it has been observed that the company maintains the high level of customer relationships to maintain the remarkable brand reputation. The strong visibility developed through internet is much appreciable for creating the direct communication with the potential clients. However, the lack of knowledge regarding the implementation of their technological system, the company faced the failure in their distribution channel and supply chain procedures. Dell concentrates on evaluating cost-to-serve different designing products and customer segments accordingly. The third party logistic partners are involved for delivering the finished products to the customers. It is essential for Dell to keep the focus on maintaining higher level of customer services. The products manufactured in the company are adapted to each of the customers. Accordingly, the company can maintain the long term sustainability for the future prospects.
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