1. Component
manufacturer
DELL Comp
Corp
Distributor
Final customer
Components
Order
Product

2. Dell Computer’s direct model departed from the industry’s
historical rules on several fronts:
 Company outsourced components
 Eliminated retailers
 Took customized orders
 An integrated supply chain

3.  Dell utilizes a direct-distribution model to sell about $50 million
per day online, half of its sales.
 From June 2007,started placing its products in Wal-Mart.
 In December 2007, Dell chose WPP, to create a new agency to
handle $4.5 billion over next three years.

4. ©2009 Pearson Education, Inc.
Publishing as Prentice Hall
 Dell operates in B2B and B2C environments in 140
country markets.
 Maintains 60,000 custom Web storefronts for major
corporate buyers.
 Allows online customers to build their own systems and
uses the information to guide new product development.

5. REVOLVERS
• Used to compensate for long lead times
• Each of the revolvers is shared by several suppliers who pay rents for using
their revolver.
• Dell does not own the inventory in its revolvers

6.  Dell sets target inventory levels and records suppliers
deviations from targets.
 Dell withdraws inventory from the revolvers as needed.
 It uses a quarterly supplier scorecard.

7. LOGISTICS
 Dell chose i2 Technologies for its SCM system.
 Every 20 sec they analyzes material requirements
,compares Dell’s on-hand inventory with its suppliers’
inventory.
 Instead of forecasting the daily supply needed, Dell
receives the exact material every two hours to fulfill
actual customer orders.

8. Design of supply chain for optimal flexibility and
predictability
 Transportation from suppliers to hubs. This takes
approximately 30 days.
 Movement between hubs and Dell factory . Time taken
is about 2 -5 days.
 From factory and merge centres, transhipment of final
machine is done. Time taken is about 1-7 days
depending upon customer.