Logistic Management For Dell Computer Corporation

Fundamental Reasons for Success

Discuss about the Logistic Management for Dell Computer Corporation.

Dell Computer Corporation was founded by Michael Dell in 1984. Michael Dell started the business as a startup which aimed to sell IBM PC-compatible computers built from stock components. Right from the beginning, Michael Dell was clear on his view about how he wanted to sell his computers. He believed that he wanted to create a system where he had a complete information of what the customers wanted. As a result, he created a huge innovation in the supply chain management of the company. This enabled him to understand the problems and needs of individual customers.

The fundamental reason for the success of Dell Computer Corporation was its founder Michael Dell (Mann, 2011). Two things inspired Dell was his parents and the other was the business because he had craved for computers and the stock market.

The real success of Dell was assembling its own computer and selling its computer products directly to customers with a free warranty service for a year and it avoids intermediaries this led in faster reaching of products to its customers. The founder dedication to service got him hundreds of satisfied customers. Dell has also invested in building customer relationship management with a view to holding its potential customers.

It has a good supply chain management process where it delivers its products to its customers in quick times leaving behind its competitors by providing the finished products from third party logistics and also adding compliments with the product like printers (Kujawa, 2009). It also focused on good designing products and cost to serve different customer segments. Dell also upgraded with time by selling its product online and launched a server and the growth of the product doubled within years thus making it the world’s largest manufacturer of personal computers and it also won various awards.

Lenovo is a Chinese American multinational Technology Company with headquarters in Beijing and it designs, develops, manufactures and sells personal computers, tablet computers, smartphones and notebook and IT software. Lenovo is the world largest personal computer in terms of sales.

The success behind Lenovo was the hard work of the Chinese and American teams as they merge to make the company success. Lenovo acquires IBM top PC’s execs (Miller, 2013). Lenovo focused on delivering innovative products and branched out into new areas this result in its growth. Lenovo is committed to creating great hardware based products and also eco-friendly goods and also Lenovo is keen in innovating in software and hardware products. The company also made a huge amount of deal of $1.75 billion making it the third largest PC company and it also won various awards.

Success Story of Lenovo

Compaq was founded in 1982 and became the largest supplier of PC in the 1990s.

The company focused on differentiated products by providing better graphics and improved performance but after 20 years it came to end with almost $2 billion in debt and shares valued at $12 in the stock market. The demise of Compaq lay beyond market forces.

By buying Tandem computers in 1997 and DEC in 1998, Compaq added a great deal of complexity. Excess inventory and unexpected price competition in PC’s led to wiping out the profits of Compaq. The wrong decision of the company and strategic management led to the failure of the company.

Conclusion and Recommendations

While Dell has maintained an advantage over the other companies through a very efficient system, it must be taken into account that the number of players in the market has increased in this particular industry. The Technology Industry has a lot of potentials but it must be kept in mind that it would be used by the other companies as well. Dell must at present, focus on creating, even more, product differentiation strategies that will provide it with a significant advantage over the other competitors in this field. 

Dell can maintain its competitive advantage with good strategic management policy and right decision taking ability. Since it has incorporated it had grown steadily and became the world’s largest multinational enterprise. Till 2012 it was the market leader. The company maintains its advantage with its successful direct sales business model, superior supply chain management and its initial advantage from other sources. While the other companies believed in mass production, Dell created a system where the parts were standardized and everything was built to order. This was a system that gave Dell an insight that was much more than other competing brands.

1. The advantage that the company acquires is by replacing inventory with information. It is a supply chain management concept that seeks to manage and reduce inventory through the use of information (Hugos, 2013). With the use of information, it leads to lean and active supply and results in cost reduction. The company focused on gathering information about market trends and sales data. This improves planning and forecasting. The software solution provides real-time information about demand and supplies this help maintaining minimum inventory.

The company used strategic information like internet based ordering system which provides the latest information to the supplier with the current demand trends and the company succeed to maintain the perfect balance between demand and supply.

1. Dell is very competitive in executing its global strategy and initially, with this strategy, the competitors failed to match its strategy thus giving the company advantage. Its marketing skills in direct selling its products to its customers and assembling of PC related to the number of orders have honed its competitive advantage(Kasarda, 2016). It’s Just in Time strategy formulates in keeping the inventory minimum reducing cost and direct selling bypass intermediaries resulting in high profits of the company. It also offers customizable options that prove to be customer oriented. Its correct location of manufacturing plant has resulted in low labor cost and high productivity forces. This has also allowed Dell to possess a supply chain that allows it to report to the customers immediately. Because of having manufacturing plants at suitable locations, Dell can supply goods to its customers right when they need them.
2. Dell localized its manufacturing plants in certain locations. The reason behind is that a foreign company must offer location specific advantages this will lead to low labor cost and high workforce (Pilbeam and O’Driscoll, 2010). The company choose developing countries where the wage rate is low and also it gets tax exemption from certain developing countries because the country wanted to attract investments. It chooses India to install its factory so that delivery time takes less to deliver the goods to its customers. This led to proximity in the market.
3. Dell outsourced the manufacturing of PC’s to take advantage of the competitive market. The company strategy was to build a healthy relationship with the suppliers rather than making the product by own. Outsourcing helps Dell to built customer service relationship, to develop research and development and also to manage its efficient supply chain management but Dell does not outsource the whole process if its business, it keeps the finishing process of its products to prevent itself from duplicity (Priem and Swink, 2012). This strategy aids the company to achieve a competitive market advantage.
4. It adopted strategies for its advantage to be sustained in a competitive market. The company allows its product to sell in the retail market to cover its loss previously it was only direct sales so the strategy changed and also launched laptops and notebooks.

Conclusion and Recommendations

The company could use the social media to its advantage by marketing the goods on these platforms. The company should hold its domestic niches. These are the advantages the company could follow in the competitive market to sustain in the market.

The main Feature of Dell’s supply chain system is that it incorporates a direct to customer approach in its delivery. Also, it has utilized a host of other methods that aim at direct interaction with the customers. This provides Dell with an advantage over the others. Dell has stressed on strengthening their relationships with the customers (Reimann and Ketchen, 2017). This has given them the ability to look into the matter more closely and come up with the exact solutions that the customers need (HITT, 2011). Their process of segmentation of customers is thus based on individual means. This kind of segmentation helps the company to locate the exact issue or problem that needs to be addressed. This is what is missing in most other competitors of Dell. As a result, they do not come up with the proper service that would provide a solution to the heart of the matter. This is, in fact, a part of Dell’s strategy to identify the various customer segments that exist in the markets. While this has helped Dell to gain hold of the business market segment, it has also provided considerable service in the normal segment allowing them to “sell computers like bananas”. Also, Dell maintains an extremely transparent system with its Suppliers so that they have an idea of exactly what is needed to address a particular situation. Finally, Dell’s building to order is one of the most important parts of the strategy. This strategy can, in fact, be suitable for other companies as well (Burf, 2009). This is because, while a company does have a line of products, there must be a kind of connection with the customers. The kind of relation with the customers decides the level of customer loyalty that can be seen. As soon as the customers know that the company does prioritize their problems, they would be able to gain the goodwill of the customers. Also, it is important for any company to segment the customer base and mark a priority customer base(Fine, 2013). After that, it can develop strategies to capture other areas of the market as well. Maintaining transparency with the suppliers is also important for any company. This would work without a doubt, in favor of the company utilizing it. As an efficient supply chain is important while addressing any problem, this is without a doubt, suitable for any company (Special Topic Forum onResources and Supply Chain Management, 2013). Building to order is a strategy that any company can adopt in its functioning. While it may seem to be difficult, it must be kept in mind that there is no alternative to this process. As it has been seen, this strategy has led to not only an improved product quality but also a greater job satisfaction among the employees (Grinnell and Muise, 2011). This is quite natural as this kind of approach provides one to one solutions that directly provide a solution. Dell has been able to build a kind of system where standardized products are the norm. As a result, this process provides greater flexibility to the company as a whole. It is because of this flexibility that the company achieves greater success rate as it can function in a wide spectrum.

Failure of Compaq

Conclusion and Recommendations

As we can see from a study of the situation, the strategy does consist of a lot of features that can be used very efficiently by the other companies. The strategies that Dell has utilized are in fact bound to generate the kind of positive output that it has generated. 

The concept of sustainability is the manner through which the company in question manages the various risks associated with the social, financial and environmental factors. However, if we were to delve deeper into the actual function of sustainability, we come to know that Sustainability is, as the name suggests, the ability of the company to maintain its presence in the market and its ability to resist shocks that a business is generally bound to experience. A business that is sustainable possesses the ability to create economic value and contribute to healthy ecosystems and strong communities(Carter, Kosmol and Kaufmann, 2016). In order for a firm to be sustainable, it needs to possess a kind of strategy or framework that possesses the ability to keep the business up and running even in times of problems. However, merely possessing a strategy does not help the company to be sustainable. The firm can be sustainable only when the firm adheres to the kind of strategy it has adopted for sustenance (Weele, 2015). As a result, it is safe to say that business firms can be sustainable only when they have a strict adherence to the rules of sustainable development. Any business firm thus must possess a kind of strategy that has a foresight in the case of matters that may attack the company.

From what can be seen from the Dell case study, the firm has utilized Stakeholder engagement in order to create a sustainable strategy for the company. We see that Dell has taken into account the customer tastes and preferences while designing products. As a result, it has provided Dell with a tool to continuously learn about the changing as well as existing trends. It has enabled the company to create a system that would help it to gain valuable information about how to act and what steps to take next. Also, Dell has utilized all the associated members of the company to formulate future paths for the company. From what we see, Dell has prioritized stakeholders in joint decision making processes throughout the course of their action in the future direction. Dell has also utilized the process of reporting and disclosure in order to build a sustainable framework. We can see that Dell has a kind of transparency among the various suppliers and other parts associated with the company. The kind of transparency and openness has resulted in Dell being able to convey information through the various channels efficiently.

Conclusion and recommendations

From what has been seen, a company can be sustainable when it has the ability to take on the challenges and is prepared for those. Any company must thus possess a kind of foresight in order to build a sustainable framework. Dell has succeeded in creating such a framework by involving all stakeholders and related functional basis of the company. This has provided them with a greater understanding of how to manage the various affairs and how to tackle the incoming issues. 

References

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Chopra, S. and Meindl, P. (2016). Supply chain management. Boston: Pearson.

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HITT, M. (2011). RELEVANCE OF STRATEGIC MANAGEMENT THEORY AND RESEARCH FOR SUPPLY CHAIN MANAGEMENT. Journal of Supply Chain Management, 47(1), pp.9-13.

Hugos, M. (2013). Essentials of supply chain management. Hoboken, N.J.: Wiley.

Kujawa, B. (2009). Journal of Transport and Supply Chain Management. Journal of Transport and Supply Chain Management, 3(1).

Mann, R. (2011). Electronic commerce. Austin: Wolters Kluwer Law & Business.

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