Dell utilizes a direct sales model that cuts out retailers. It takes customized orders directly from customers and uses an integrated supply chain model. Dell sources components from suppliers and uses revolving inventory models where suppliers share inventory warehouses. Dell monitors supplier performance and inventory levels closely through a scorecard system. It aims to deliver components and finished products within short timeframes to fulfill precise customer orders.

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.