Supply chain strategy is mostly confused with supply chain management. In supply chain management, the supply chain operations are basically controlled in an effort to ensure cost reductions. However, for supply chain strategy, the use is broader. This is because, in the supply chain strategy, the supply chain is established to ensure that companies are able to compete effectively in the ever-aggressive market. Therefore, supply chain strategy is a process that evaluates cost benefits tradeoffs of the different operational components. The objectives of a supply chain strategy usually cover flexibility, delivery, areas of costs, coordination, transformability, collaboration, and innovation (Jacoby, 2010).
A fortune 100 company business strategy leverages the core competencies of the organization in the quest for achieving a goal. A business strategy thus constitutes of overall direction a company adapts. For supply chain strategy, it constitutes the actual organization operations and the extended supply chain that help in meeting an objective specific to supply chain. Thus, the supply chain strategy supports the business strategy by driving down the costs of operations and maximizing the efficiencies.
Dell computers Inc is a multinational computer corporation whose main function is to develop, sell and support computer related services and products. It was founded by Michael Dell in 1980 and is one of the largest computer technological companies worldwide with over one hundred thousand employees. It is ranked 53rd among the fortune 100 companies. Developing a business strategy that worked together with supply chain strategy initiated the success of Dell Company. Dell’s business strategy in 1980’s and 1990’s was based on differentiation through customer service, low cost, and improving the speed of delivery. Before the emergence of internet, the sales were through call centers to customers. With internet emergence, more differentiation was of importance (Jacoby, 2010).
A well-understood business strategy that involved integration of operational components, such as manufacturing, logistics, and inventory management among others were used by the company in developing of supply chain strategy. The developed supply chain strategy focused at driving the costs out of the supply chain while supporting the customer’s service business strategy.
Dells supply chain strategy focuses primarily on low costs seconded by high growth in revenue sales. These are the leading Dells drivers for success. The objective of high sales revenue is basically supported by increased customer satisfaction that is concretised by high delivery quality, reliability, flexibility and short lead times.
Internally, Business performance contracts were crafted. These defined formal, flexible operational agreements between the different operational process areas. The contracts by tying individual performances made the imperatives clear. The execution of operations within the company targets collaboration, out sourcing, value engineering and Out Of The box experience. The processes played and still play a significant role in organizational focus through management of performance (Frazelle, 2001).
Externally, it worked with other groups ensuring that costs were well controlled while at the same time improving the customer’s service. For quality customer care, the company receives order of a customer processes it, builds the computer to the specifications as by the customer and ensuring quality delivery all within a matter of days. The inventories that support this model are kept within fifteen minutes. Within every two hours, the company sends out emails to other plants with specification of parts that are required in the manufacture and assembling of a specific customers order. Market researchers compile data on what the competing firms are selling in the market. With market awareness, the company is able to build newer computers and sells them at subsidized prices usually with a discount of up to 20%. This provides customers with affordable products while increasing the sales of the company (Frazelle, 2001).
Ensuring the customers receive the best experience not only by the provision of quality goods but also by being able to handle customers concern on the quality, has been key to maximizing of profit for the company and ensuring its continued survival. The strategists of Dell are well aware that customer satisfaction is key in ensuring business success.
Through reevaluating the supply chain strategy, it enabled the company meet the demands and expectations of the changing business environment. It is able to align the business strategy with the supply chain strategy and be able to be ahead of the competition. Dell has also recently ventured in new markets as a way of broadening its scope. This has been because it has refined its business strategy. In order to grow its revenue it has entered printers and electronic markets giving the company a competing edge. This has led to the company doubling its revenue annually (Jacoby, 2010).
In evaluating the supply chain strategies of Dell, I concur with the CEO Rollins that Dell is the best in the industry in managing a value chain only to be rivaled by Wal-Mart. The company has ensured all the market has been well studied and critically analyzed and then focuses on quality service delivery exclusively (Frazelle, 2001).
In conclusion, in the changing market environment, supply chains have been always on the move. They have changed from cost focus, to customer focus and now strategic focus. Innovativeness and creation of strategies executable by the company guarantees a company’s success. Lastly, a great supply chain strategy that is linked to a company’s operational excellence provides success for all stake holders involved, Dell been a perfect example.
Jacoby, D. (2010). Guide To Supply Chain Management. London: Profile.
Frazelle, E. (2001). Supply chain strategy: The logistics of supply chain management. New York [u.a.: McGraw-Hill.