Sub: HBS Topic: Case study
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Supply Chain Management at Dell
Dell lost it worldwide No.1 position in delivering PC shipments to Hewlett-Packard Company (HP) inJanuary 2007. But, it had the largest revenue increase by the end of 2011 with their increasedfinancial results. Soon, it transformed from direct sales to a successful reseller network within 3years.Dell initiated changes in its business model and engaged more with channel strategy. It concentratedon hiring distributors and making them to improve their efforts. Dell invested heavily in the channelmanagement involving new channel sales initiatives. Out of the total annual sales in 2011, thebusiness of Dell channel achieved about 33% of the company's $62 billion.This case study is about supply chain management practices of Dell. For more than 20 years, it has
been following ‘direct build
-to-order' sales model, through which customers can design their ownconfiguration and order directly with the help of phone or its website. This gave a competitiveadvantage to the Dell's supply chain to work effectively through direct sales.Dell ran into several problems in 2006 as there were many delays in delivery. Sony battery cells usedin laptops gave an undesirable publicity to the company. Hence, customers are dissatisfied and thisled to reduced sales. Ultimately, dell lost as a market leader to HP. According to industry analysts,this is due to the reason that the competing companies even improved their supply chains whichalmost matches with the Dell's direct model. To speed up retail distribution Dell has to bearadditional costs reducing its cost advantage and there is a chance for profit margin of the company togo down as it has to offer incentive to compete with HP. It also improved product design and range,but still Apple is a step forward when compared to Dell. Finally, Experts found that these initiativeswould only deviated dell from its supply chain operators.