Directorate of distance education

CASE STUDY
Supply Chain Success: Dell Computers
Michael Dell the man behind Dell Computers started in 1984 
with the exceptional idea of selling PCs through a mail-order approach. 
It offered customers a customised configuration. The approach enabled 
Dell to cut down the price of a computer by saving on the margins of 
distributors and retailers. Also, this approach enabled Dell to deliver PCs 
at short notice. 
Dell upgraded its supply chain by making small changes in the 
path a computer earlier used to travel to reach the customer. The web was 
used to offer online visibility of components, configurations, costs and 
delivery. Customers could choose from various options and arrive at a 
configuration that suited them. 
Once the order was received the computer was built using just in 
time (JIT) manufacturing. This resulted in many benefits like lower costs 
and quick deliveries. There was no need of maintaining higher inventories. 
Dell positioned its warehouses at locations close to their factories so 
that components could be easily and swiftly called for. Dell started their 
innovation process by taking the customers views on various aspects of 
the deal.
Dell did well because of its competitive strategies like 
identifying and taking advantage of opportunities that existed but
was still untouched. They made the customers the focal point of their ac-
tivities and tried to provide the best service to them. They maintained the 
quality of their products so that so that the customers achieved two ad-
vantages: a customised computer and a high performing machine at that.
Dell was also successful because it created an IT-based 
manufacturing system along the entire supply chain. It used the web, 
computerised manufacturing systems, EDI, videoconferencing, electronic 
procurement, intranets, Decision Support System (DSS) and a web-based 
call centre. 

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Notes
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As part of the company’s continual efforts to improve its supply 
chain process, recently, Dell positioned a supply chain tool named 
‘i2’ ‘TradeMatrix’ to forecast global views on product demand and 
materials requirements and to improve factory scheduling and inventory 
management. Dell suppliers and Supply Logistics Centres (SLCs) were 
able to view short and long-term materials requirements in each Dell 
factory globally due to these new supply chain tools.
Optimising delivery and inventory use in Dell factories was one 
of the primary goals of i2 implementation. The i2 implementation. The i2 
solution thus has increased the efficiency of Dell, which has already been 
a leader in innovation in SCM.
Source::
Anurag Saxena and Kaaushik Sircar (2008), Logistics & Supply Chain 
Management.