Dell Computers: Success Through Customization

The most effective supply chain management systems work with actions totally unbeknownst to its customers. The customers are able to order goods and services at competitive prices, and how these items are acquired goes unnoticed. To the casual observer, Dell Corporation's business is deceptively simple and operates seamlessly and effectively. For example, an interested customer goes onto the Internet, prices and orders a computer customized with a desired set of components, and two to three days later it is delivered right to their doorstep. Due to the seamless nature of the ordering and delivery process, the customer fails to notice the tremendous undertaking of coordinating with different suppliers, meeting demands of its customers, assembling a built-to-order computer for each customer, and even efforts involved in delivery of the product. The success of these processes is a result of Dell's industry leading supply chain management system. The brilliance of Dell's concept is a tribute to the coordination, planning, and information sharing that has been carefully laid out and adjusted to maintain a competitive edge. The end user misses all the behind the scenes activities and only realizes they have quickly and painlessly received a quality product at a very good price. Dell’s supply chain is built around a Build-to-Order manufacturing process which distinguishes itself from Build-to-Forecast methods of more traditional computer manufacturers. This enables the delivery of a customized, lower-cost product quickly to the customer. Dell engineered their value chain with the customer service at the beginning and end of the complete purchase cycle. The direct model operates on the "pull" principle of supply chain management, which means Dell's inventory turnover occurs rapidly, allowing them to flexibly adjust to the technology market ahead of the competition. Dell's direct model greatly diminishes the need for highly accurate demand forecasts as they are quickly