12 Order Fulfillment Along the Supply Chain

Segmented Supply Chain

In 2008, things began to change for Dell. Dell found that their online configure-to-order system was too inflexible and resulted in configurations that were too expensive for its other, faster grow- ing business segments – their retail stores, enter- prise customers, and high-volume consumer products. In each case fewer, cheaper configura- tions were required. Because of the mismatch between their supply chain model and the expecta- tions of their newer customers in newer channels, Dell’s competitors were able capture significant market share. In response, Dell decided to trans- form its supply chain into a segmented model with different policies for different types of customers. The result was four supply chain segments each focused on a different customer. The four seg- ments are displayed in Table 12.2 along with their distinguishing characteristics.

Results 579
Table 12.2 Dell’s segmented supply chain

SC production policy	Build-to-order: built when configured order received	Build-to-plan: built in anticipation of forecasted demand	Build-to-stock: Built and stocked in anticipation of demand	Build-to-spec: built in short time period according to corporate specs with no inventory stocks
SC segment	Online	Retail	Online	Corporate
Volume	Low	High	High	Med-high