DELL COMPUTERS

How Dell Computers' Supply Chain Model Provides Competitive Advantage

Dell Computers' Supply Chain Model

Introduction

Dell is officially the No. 1 computer systems company in the world. Dell is able to sustain a competitive advantage over competitors in the computer industry because of an extremely efficient supply chain/distribution system. Dell is able to achieve superior profits in the industry because they are a knowledgeable user of information, communication, e-commerce, e-business, internet, and web technologies.

Michael Dell states that Dell is so successful because of "Knowledge Management". Mr. Dell defines that term by saying "physical assets are being replaced by intellectual assets." This relates to Dell's inventory system. Dell implements a Just-In-Time inventory system which operates on only 6 days of inventory.

Dell is able to achieve greater profit margins and increased profits because of their inventory system. Inventory and labor are the highest liabilities of a firm. Since Dell only operates with 6 days worth of inventory, they are able to cut costs on warehousing, hiring people to track and maintain inventory, and avoid holding on to obsolete technology. This allows Dell to free up cash flow to invest in other value adding activities.

Discussion

Dell uses a JIT inventory system because Dell's customers can only order computers directly through Dell itself. Dell uses their website www.Dell.com to take customer's orders. Dell focuses on direct sales, cutting out other distribution channels entirely. This allows for a deeper relationship with the customers whereby Dell can offer their customer's better service, savings, convenience, and efficiency. A customer can order their own custom computer, have it built by Dell in three days and have it delivered to the customer's doorstep within one week.

Dell's use of the internet has revolutionized the company. Dell makes their website extremely consumer friendly to offer an easy order process to the customers. Dell has ...