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Analysis of Dell Supply Chain Model
Analysis of Dell Supply Chain Model

Dell has become the world's leading computer system distributor and one of the major manufacturers in this industry. The following is the analysis of Dell's supply chain model that I have compiled for you. Welcome to read and browse.

1, Dell's supply chain management model

In the late 1970s, the personal computer market began to develop rapidly. At that time, the sales model of personal computers was mainly indirect channels. Many famous companies, such as Apple, IBM, Compaq and Hewlett-Packard, put their products on the market indirectly through distributors and retailers. Since its inception, Dell has adopted a completely different business philosophy: bypassing intermediate vendors and providing products directly to customers at lower prices.

Dell's direct sales model focuses on shortening the execution time of orders and reducing inventory. The former ensures that Dell will provide products that customers need as quickly as possible, thus significantly improving customer satisfaction and loyalty; The latter effectively reduces the company's cost, thus significantly improving the company's profitability and competitiveness. In short, the Dell direct selling model has the following characteristics:

(1) Flexible and low-cost distribution system. According to Compaq's investigation, under the traditional indirect sales mode, the channel expenses generated by distributing products through distributors and retailers are usually13.5%-15.5% of sales revenue; Under Dell's direct selling mode, the cost is greatly reduced to only 2% due to the omission of intermediate links. At the same time, Dell has great autonomy and freedom in product distribution, and the simple direct selling model effectively shortens the transmission time of information and products in the whole supply chain. 1994, Dell's inventory needs to be kept for 35 days to sell the required products; In 2000, Dell only needed to sell the required products for five days to cope with any market changes. The quick response ability makes Dell a leader in the computer market with a shortened product life cycle.

(2) Direct customer relationship. Under the traditional indirect sales model, computer manufacturers cannot guarantee that retailers and distributors will give priority to customers' complaints or service requirements for their products. Under Dell's direct selling mode, the relationship between the company and customers is direct selling and after-sales service, and the omission of intermediate links significantly reduces the time of customer information transmission and effectively reduces the loss of information. Because the retailer is omitted, the customer's after-sales service requirements are directly transmitted to Dell through the telephone hotline, which employs thousands of technical support personnel to answer the phone 24 hours a day, ensuring that 90% of the problems can be solved on the spot during the call, thus greatly shortening the time and cost required for after-sales service. According to the user survey of Computerworld from 65438 to 0998, Dell ranks first in customer satisfaction. This further shows that the direct selling model can significantly improve the service level to customers while reducing the operating costs of enterprises.

(3) Production on order and on time? Just in time? Mode of production. Under the traditional management mode, production depends largely on demand forecast, and the order mode is "Company A needs 5000 computers in two weeks". However, under Dell's direct selling model, the relationship between customers and companies is direct selling, which gives customers great freedom to decide the type and quantity of products. In this case, the mode of the order becomes "Send 28 A computers to Gate D of C warehouse of Company B at 7: 00 tomorrow morning". In order to meet the increasingly personalized and diversified needs of customers, Dell has adopted the production mode of make-to-order and just-in-time production. There is no storage space in the assembly workshop, the original parts are directly transported to the assembly line by the supplier, and the products produced are directly transported to the designated customers. Original accessories and finished products are zero inventory. This advanced production management method greatly reduces the inventory cost and effectively improves customer satisfaction and loyalty.

(4) Products and services are aimed at specific customer groups. In the direct selling mode, customers order directly from Dell through the website, hotline or email. This determines that the positioning of Dell's products and services in the whole computer user market is different. Users who use a computer for the first time usually need to actually touch the computer at the retailer's point of sale before deciding to buy it. Only users who have enough computer knowledge will choose direct selling mode to order, because they pay more attention to the cost performance of products and need to freely decide the computer settings (such as the size of hard disk and its computing power). ). With the popularization of computer technology and the increasing proportion of skilled users, Dell's direct sales model will surely have greater use.

2 Dell's direct sales model of logistics management in China.

Dell's successful experience mainly provides us with the following three inspirations:

First of all, the design and management of supply chain directly affect the development of enterprises. In recent years, the competitive situation of commercial society has undergone fundamental changes. The competition among enterprises has gradually shifted from the original technology to the supply chain. Enterprises pay more attention to the design and management of supply chain than before. Dell's successful experience tells us that an advanced and reasonable supply chain model can effectively reduce production costs, improve production efficiency, increase after-tax profits, better serve customers, and ultimately greatly improve the competitiveness of enterprises. In recent years, European and American enterprises have set off a process reengineering movement, the essence of which is to adjust their own supply chains in order to form stronger competitiveness in the future development. Therefore, Chinese enterprises should attach great importance to the design and management of supply chain. Draw lessons from the successful experience of enterprises in developed countries, establish a supply chain system suitable for the development of enterprises, so as to improve the competitiveness of enterprises.

Second, a good cooperative relationship between enterprises is the key to supply chain management. In order to ensure the smooth operation of direct selling mode, Dell relies on advanced network information technology to share all important customer and production information with suppliers in real time. Most original parts suppliers build warehouses near Dell factories to ensure that the original parts needed for production can be delivered to their assembly workshops within 20 minutes. Dell's technical design team is composed of all suppliers' engineers. When new products are launched, they will be based in Dell to ensure the smooth launch of new products. In order to maintain this mutual trust and tacit understanding, Dell strictly selects suppliers, gradually reduces the number of suppliers, and strives to establish long-term cooperative relations with suppliers.

Therefore, in order to improve the supply chain management of enterprises in China, we should strive to promote long-term cooperation between enterprises and establish a cooperative foundation of mutual trust; At the same time, it is necessary to effectively improve the level of information construction and establish an effective operating platform for information sharing among enterprises.

Third, we should learn from foreign advanced supply chain management methods and seek truth from facts. Take Dell as an example, its advanced supply chain management method is worth learning, but it is not suitable for all industries or all enterprises. First of all, the direct selling model is only applicable to highly standardized products, such as computers and home appliances. For other types of products, such as fashion, jewelry and so on. The customer's personal experience of products is very important, so retailers are indispensable in promoting the sales of such products, and the direct selling model is not applicable. Secondly, even if the direct selling model is applied to highly standardized products, enterprises should carefully determine the correct target customer base. Just as Dell is positioned as a skilled computer user, the direct selling model is mostly suitable for customers with certain product experience. Therefore, while introducing foreign advanced supply chain management experience, it is necessary to objectively analyze the characteristics of its methods and the actual situation of China enterprises to avoid falling into the misunderstanding of blind introduction.

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