Dell Supply Chain Analysis

A. Introduction

“Information holds more significance than inventory.” In modern supply chain network, there is a need to address the 3 essential elements that generally flow throughout the operation, mainly funds, information, and inventory:

• Financial Flow – They are money transfers from the end-customers towards the upstream activities in exchange for goods or services

• Information Flow – They are shared amongst upstream and downstream partners in the supply chain. For example, the downstream partners can provide a forecast of demand, needs, and preferences to the upstream partners Meanwhile, the upstream partners provide information such as; acknowledgement of purchase orders, invoice, and product specifications to the downstream partners

Advantages

With the use of accurate information that is obtained through the downstream partners, companies are able to achieve inventory efficiency. A fine exemplification would be Dell, which utilises the build-to-order scheme as part of their core competency. Such setups are capable in achieving zero inventory cost, enabling Dell to pass off these savings to end customers at affordable pricings.

Information gathering is imperative in several industries whereby their products have are bulky, highly perishable, and have a low product life cycle; you generally don’t see high-end restaurants cooking their dishes beforehand only to let their dishes turn cold and lose their freshness. Instead they forecast the product demand, match their supply accordingly, and assemble the dishes as and when they are ordered. Simply speaking, accurate information constitutes to the retention of a product’s value and quality (customer value), hence allowing sale transactions to be made.

B.2.

Advantages

Inventory holding is generally practiced by firms that are uncertain in terms of the amount of inventory to produce. As discussed earlier, unforeseen events can impair a firm’s attempt to fulfil demand fluctuations. As such, the buffer stocks are beneficial in filling such voids, allowing firms to respond to customer demands much quicker. (Atkins, 2005) In adopting this process of supply chain, firms do not have to worry about stock depletion, let alone spending money on forecasting demand.

There are also others that deliberately hold inventory, as seen by Mustafa Singapore; an enterprise who exceled in holding a large quantity of inventory but yet managed to appeal to a wide variety of customers using high product mix. Their strategy entails bulk purchases which are directly imported from suppliers, achieving bulk discounts and lower ordering intervals. In return, they are able to transfer the low cost to customers (Ahmad, 2005). For production firms, it meant attaining economies of scale through cost-efficient product runs. Such firms tend to enjoy product flexibility as their goods are easily available to the masses. As such, holding large inventory too can create value proposition, provided they possess the capabilities (information) and resources to execute it