Today, under increasing competition conditions, firms are constantly trying to increase their market share while aiming to reduce their costs. Therefore, while it is necessary to bring the necessary products to the potential customers when necessary, on the other hand, it is necessary to work effectively with the suppliers in order to supply the necessary raw materials or materials at the right time and at the lowest cost. The establishment of a supply chain system is required for such a system to be built in today’s large companies and for the continuation of the level of competition.
The supply chain is technically a network of services and distribution options that fulfill the procurement of materials, transform them into semi-finished and finished products, and then deliver them to customers through distribution channels. This network fulfills the functions of providing materials, converting these materials to intermediate and finished products, and distributing finished products to customers. Supply chain management is an activity that covers the control and coordination of all upstream and downstream material and information flows in the chain from the raw material to the system until it is delivered to the end user. (Eymen, 2007). A company’s supply chain strategy defines how the supply chain should operate in order to compete in the market. And in this project Dell Computers’ supply chain strategy will be explained.
Dell was founded in 1984 by Michael Dell and his colleagues at the University of Texas student dormitory with a capital of $ 1000. In 1985 it has produced its first personal computer “Turbo PC”. Dell, which has managed revenues from personal computer sales, has become more successful than the “Compaq” company in the computer manufacturing sector after 1992. At the end of 1992, Fortune, the famous business life magazine, included Dell Corporation among the world’s most successful top 500 companies. Dell gained more customer satisfaction by choosing to arrange the products it produces to the needs of its customers. Dell, one of the world’s leaders, especially in advanced server options, has a world-class commitment to the creation of the Internet infrastructure. The company, which has experienced a sharp decline in personal computer sales since 2011, has begun to be financed by giant companies like Google and Microsoft.
There is a close relationship between the success of a supply chain and the design and management of supply chain flows (product, information, and money). Dell Computer is a good example for companies that successfully implement supply chain applications that support the competitive strategy. Dell has become the world’s largest PC producer in a short time. The market value, profitability and profit margins that it reached were beyond compare from other PC manufacturers. For Dell, the main reason for its success was the product-information and money-management flows in its supply chain.
Dell’s supply chain model is based on direct sales to customers. Because the distributors and retailers are bypassed, the Dell supply chain consists of only 3 phases: customers, manufacturers and suppliers. Dell manufactures according to the order, which means that the production starts with customer orders. Company does not use a retailer, wholesaler, or distributor. Since Dell was directly in a relation with its customers, it was able to identify customers as small as possible and accurately identify how much each segment needed and how much profit can be made. In addition, having a close relationship with customers has allowed Dell to make more accurate forecasts of demand. To further increase supply and demand alignment, Dell offers customers a choice of their own PC configurations. Stock levels are key performance benchmarks that Dell considers very much. Dell holds less inventory than 10 days. On the other hand, stocks held by competitors selling through retailers are measured by hundreds of days. If Intel initiates a new chip, Dell will be able to offer their new chip integrated computers to the market in a much shorter time since Dell has a lower inventory level. If prices suddenly fall (which is a common occurrence in the electronics industry), Dell’s depreciated stock amount will be much less than its competitors. For some products, Dell itself does not keep stocks (for example, Sony brand monitors), the shipping company picks up the necessary number of computers from Dell’s factory in Austin, Texas, and then handles the monitors from Sony’s factory in Mexico. It is not uncommon for your scanner to arrive a few days after the computer and monitor if you have a scanner from Dell because the scanners are delivered directly to the customer’s address by the scanner manufacturer. Such applications enable Dell to save time and money from the extra transportation of monitors and scanners. Another factor that facilitates the success of Dell’s supply chain is complex information exchange. Dell gives real-time data to its suppliers about the current status of the demand. Suppliers are able to access inventory levels and daily production quantities of the components they provide. Company factories are in Brazil, China, Ireland, Malaysia and Texas. As the demand in each region is very high and stable, it is easier for suppliers to replenish their component stocks, thus reducing the amount of component stocks Dell keeps. In some cases, the amount of component stock that Dell keeps in the factory is only a few hours. In addition, low stock quantities prevent large manufacturing errors that could occur. Dell also manages fund flows very efficiently. Dell’s collection time does not exceed 10-15 days.