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April 9, 2019

“Dell’s Logistic Management Strategy”
Table of Contents
Executive Summary    3
Issues In the Case    4
Identifying The Logistic Management Strategies which enabled Dell to become successful    5
Identifying the Logistic Management Strategies necessary for Dell to maintain and improve its success in future    7
Specific issues to address by Dell    7
Conclusion    9
Reference List    10
Executive Summary
Dell Inc. which started its operations in 1983 for upgrading hardware for corporate clients, re-invented itself into build-to-order computer manufacturer in 1985 and has performed incredibly through execution of its unique logistic techniques. Instead of producing components, it outsourced components from best suppliers and assembled the component through contractors. It innovated the assembly process by forming manufacturing cells, where employees would assemble the final output together instead of performing repetitive task. It reduced cost of holding inventory by resorting to Just-in-time model achieved through use of internet in receiving orders from the customers, informing the component vendors and production on real time which would shorten the lead time and the final assembled product would be delivered to the customers through its distribution partners collecting products from the factory gates and picking related accessories like printers etc. to be delivered to the customer. The speed and cost at which Dell could deliver finished product to the customer led to the rapid growth in its sales volume. Dell sold the goods directly to the customers thereby eliminating the profits and costs of middlemen. The sales data and feedback generated from customer provided effective information for forecasting demand and help in market segmentation. Dell pioneered the process of customization of product to suit individual markets, locations and its corporate customers.
As Dell operates in the technology industry, it faces lot of challenges like technological obsolescence, entry of new competitors and products. Also, Dell has seen major supply barriers like unavailability of components in case of increased demand of product, faulty components in laptops resulting in recall of products, security concern in laptops which the company has been able to deal with. The company has huge debt and should incur heavy finance charges. The company has the system of globally integrated sales and marketing team which sees the collaboration with channel sales partners. The company is required to comply with various environment and safety standards which are putting pressure on its costs. The costs of components have been increasing in 2018 but this cost impact is expected to stabilize by 2019 as per the company outlook. The company is incurring huge expenses on research and development as reflected by its financial results which addresses the concern of technological innovation and up gradation. The company has also taken measures to have effective control and quality checks on components and assembled parts at various stages of production so that there is no case of defective products delivered to the consumers there by promoting its customer relation management and customer retention strategy.

Issues In the Case
Dell was founded by Michael Dell who left college and started updating hard-drives for corporate customers in 1983. In its 1st year the company’s annual sales were $6 million. In 1985 Dell started to produce built-to-order computers and generated sales of $70 million, which rose to $25 billion in 2000.In 2018 the net revenue was $78.6 billion as compared to $61.6 billion in 2017.The astounding success of the organization could be attributed to the innovative supply chain and production process planning and unique distribution framework. From supplier of computers and other hardware like printers and monitors software, it enhanced its scope of provide cloud and data service to clients and other digital platform to various clients.
The case study discusses the various logistic management techniques adopted by Dell to achieve efficiency and accelerated growth. But it also highlights major problems which Dell have been facing.
1) In early stages, the products were not technologically advanced –as the Economists commented that Dell was selling computers like bananas.
2) Problem due to defective components – The faulty laptop batteries generated lot of negative publicity as around 4 million laptops with faulty laptop batteries had to be recalled its faulty laptop. This implies lack of quality control on the components and involved a huge loss of resources to the company.
3) Rapid technological advancements and intense competition faced from its competitors.
4) Security concern because of internet attack on its computers and systems.
5) Many channel partners view Dell’s policy of direct sale as their competitors and may be unwilling to collaborate with the company.
Identifying The Logistic Management Strategies which enabled Dell to become...