Dell Computer’s direct model departed from the industry’s
historical rules on several fronts:
Company outsourced components
Took customized orders
An integrated supply chain
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.
• Used to compensate for long lead times
• Each of the revolvers is shared by several suppliers who pay rents for using
• Dell does not own the inventory in its revolvers
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.
Dell chose i2 Technologies for its SCM system.
Every 20 sec they analyzes material requirements
,compares Dell’s on-hand inventory with its suppliers’
Instead of forecasting the daily supply needed, Dell
receives the exact material every two hours to fulfill
actual customer orders.
Design of supply chain for optimal flexibility and
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.