How useful is a certificate in supply chain management?

supply chain management

• Identify a supply chain management initiative that has provided exceptional value to customers. provide background information on the organisation, the supply chain characteristics and reasons why their model is so unique. provide some critics and perhaps ideas regarding the future environment, given likely trends within supply chain management. the SCM initiative may be retail, manufacturing or any product environment and should embrace the critical logistics or supply chain elements.

• Answer:

  Dell Computer is an excellent example of a company that has undertaken many supply chain management initiatives that have provided exceptional value to customers. One particular supply chain management initiative involved the harnessing of the Internet to the company's already innovative direct sales model. Unlike most companies, and even unusual in the computer business, is Dell's elimination of retailers from its supply chain. Founded in 1984, the company began selling computer systems directly to customers via telephone. However, the rising popularity of the Internet provided an excellent opportunity for the company to reduce costs, and thereby lower the prices it charged customers, by taking orders directly over the Internet. Dell launched www.dell.com in 1994, initially to provide product information, and began accepting orders via the Internet in 1996. Dell was the first company to achieve $1 million in online sales, doing so in 1997. Currently, Dell operates one of the highest volume e-commerce sites in the world. Cisco Systems is another example of a company that has used Internet-based commerce to great effect, achieving a majority of its sales via the Internet. Dell's direct model was already the most efficient in the computer business even before the Internet came along. Because technology products have very short shelf lives because of continuous improvements and decreases in costs of their components, holding inventory is extremely costly. By eliminating the retail channel, Dell does not have to maintain an inventory of products waiting to be sold in stores. This eliminates markdowns and the problem of forecasting the mix of components that customers want to buy in their computers. Instead, Dell builds each computer to order and receives payment from the customer long before it even has to pay for the components used in the computer. However, because it was limited to receiving orders by telephone, Dell still had to employ a large number of salespeople to work with customers to configure their orders. The Internet eliminated a significant portion of this expense by allowing customers to configure their orders themselves with assistance from Web-based software instead of a person. Because of this reduction in expense, Dell has not only been able to reduce its prices overall while still maintaining profitability, but it is able to have web site-only specials that allow customers who are capable of servicing themselves to save even more. Although customers cannot walk into a store and walk out with a Dell computer the same day, they can be confident in receiving a machine tailored exactly to their needs, at almost certainly a lower price, at their home or business within three to five days of placing an order with Dell. Customers have found this irresistible, giving Dell top market share. Dell's use of the Internet has not been limited to only its customers. The company also uses the Internet to share data with its suppliers, such as what quantity of parts should be delivered when. Collaboration with its suppliers allows the company to be aware of parts shortages well in advance so it can take appropriate action. For example, the company may choose to promote a different component when it knows that a given component is not available. The customer views the free upgrade as a bonus, and the company retains the order, instead of the company accepting the order for the out of stock component and later having to tell the customer that it is not available at the present time. Instead of being angry that he or she could not obtain what he or she wanted, the customer is delighted that he or she is getting something better than what they were willing to accept. Dell has successfully used its direct model to hammer its competitors, driving IBM out of the consumer PC business and compelling Compaq to merge with Hewlett-Packard. Now, the company has launched its own line of printers to further challenge Hewlett-Packard in its primary profit center. Dell is obsessed with efficiency and minimizing cost. A future challenge to its market dominance may arise if Legend computer of China or another company manufacturing in a low-wage country is successful at acquiring market share in the United States via dramatically reduced prices. The direct model requires either the customer to be patient in awaiting the delivery of their computer or else requires the computer assembly process to occur relatively near to the customer. The company has already moved most of its manufacturing from the Austin, Texas area to Tennessee. Aside from lower wages, the presence of multiple transportation carrier hubs in Tennessee to speed delivery of Dell products at the lowest possible price no doubt accounts for the move. However, the time may come where the company would need to move to an even lower wage location such as Mexico. Transportation difficulties would have to be overcome, however. A second challenge arises as the company expands into more and more product lines. Generally, the customer would prefer to receive their entire order at one time. However, with the addition of printers made by Lexmark and storage devices made by EMC, considerable coordination is required to ensure that the entire order is merged at some point prior to delivery to the customer. Historically, the company has coordinated speakers, monitors, and the computer, but more items and more suppliers makes things more complex. I hope this has given you a good overview of the importance of the initiative to incorporate the Internet into Dell's supply chain, along with a couple of potential future challenges the company may face with respect to managing its supply chain. The company has also use the Internet to provide customer support, such as providing manuals and drivers for download. A brief summary of Dell's supply chain evolution can be found on their corporate web site at http://www.dell.com/us/en/gen/corporate/access_facts_fact_pak.htm. Please request clarification if you need any. Sincerely, Wonko