Running head: DELL INC CASE STUDY
DELL INC CASE STUDY
Dell Inc., Improving the Flexibility of the Desktop PC Supply Chain Case Study
Faith Wanjiku Hansen
Discussion Board Week 3
School of Business
10th July 2019
Dell Inc.: Improving the Flexibility of the Desktop PC Supply Chain
Dell Inc. is one of the leading low-cost computer manufacturers that has a direct business supply chain without an intermediary involvement, beginning and ending with the consumer. Dell uses selective incorporation of level 5 versus level 6 process manufacturing with more dependence on third-party integrators. There are two different processes of production and of assembling components of a Dell desktop computer (PC) that could cause problems and needs investigating. The main strength and advantage over the competition that Dell could utilize, as a strategy, is consumer loyalty. This can be achieved by studying consumer needs and delivering on these demands. In this document, issues such as forecasting accuracy, supply and demand and quality, that Dell is facing, will be discussed.
Key Words: Dell, Forecasting, PC, Level 5, Level 6
In 1984, Michael Dell, the founder of Dell, created a new business model that he used to sell personalized computers in the dorm room at the University of Texas. The popularity, availability, and affordability of personalized computers begun in the 1980s. Michael’s plan was based on a business model that eliminated the middlemen, selling directly to customers (Simchi-Levi, Kaminsky, & Simchi-Levi, 2008). By removing the middleman, Dell reduced the manufacturing costs and offers and delivering to consumers personalized computers below market prices. Dell started experiencing increased success, in 1993, was among the top five computer system makers worldwide, and, in 2001, they became the first. Amid all the success, Dell continues to face challenges in added costs in manufacturing in their L5 and spending a significant amount of money with third-party suppliers (Simchi-Levi et al., 2008). The company must, therefore, determine ways that will reduce the costs and how to overcome these to avoid passing the burden to the consumers.
1. Why does L5 incur higher manufacturing and logistics costs than L6? What are some of the costs that are incurred by L5 but not in L6? Are there any costs that apply to only L6 but not L5?
L5 incurs higher manufacturing costs than L6 because the Integration is done inside the Dell facility, bringing the price up to as they can only produce these parts in numbers that are minimal as compared to an overseas plant that they outsource to that produces in more significant amounts. The motherboard is shipped by air, the cost of air compared to shipping via water is much higher, adding on to the value that is already high (Lorenzoni, Tielemann, & Sauer, 2019). Another cost that adds onto the L5 expense is costs from third party integration done in the USA plant, which is linked to logistics ...