Dell's direct sales model allows it to gather customer requirements directly and build customized computer configurations based on available components. This reduces costs for Dell and customers by eliminating intermediaries. Dell is able to better manage its supply chain and plan for the future based on direct customer feedback. Supply chain management provides benefits like increased demand accuracy, reduced inventory levels, and greater profitability when companies adopt successful strategies. Leading companies involve suppliers in environmental initiatives to generate benefits and satisfy stakeholders. ABC analysis is an inventory technique that categorizes items into A, B, and C classes based on value to help managers prioritize resources.

1. Dell’s Secret Weapon
Dell Computer Corporation is a leading direct computer systems company founded in
1984. Dell sells its computer systems directly to end customers, bypassing distributors and
retailers (resellers). Dell's supply chain consists of only three stages— the suppliers, the
manufacturer (Dell), and end users. The company’s direct contact with customers allows them to
properly identify target markets, analyze the requirements and profitability of each assignment
and develop more accurate demand forecasts.
Dell matches supply and demand because its customers order computer configurations
over the phone or online. These computer configurations are built from components that are
available. Dell’s strategy is to provide customized, low cost, and quality computers that are
delivered on time. Dell implemented this strategy through its efficient manufacturing operations,
better supply chain management and direct sales model. Dell reduces the cost of intermediaries
that would otherwise add up to the total cost of PC for the customer by taking orders directly
from the customers. This saves time on processing orders that other companies normally incur in
their sales and distribution system. Moreover, by directly dealing with the customer Dell gets a
clearer indication of market trends. This helps Dell to plan for the future besides better managing
its supply chain. Another advantage Dell gets by directly dealing with the customer is that it is
able to get the customers requirements regarding the software to be loaded. By eliminating the
need of a PC support engineer to load software, the customers gain both in time and cost (2008).
Benefits of Supply Chain Management
Supply chain management is an important subject for global businesses and small
businesses alike. It is vital for companies to achieve benefits of adopting a successful strategy for
an efficient supply chain in any economic climate. Despite the emphasis in all of the supply
chain literature about how critical maximizing customer satisfaction is, most decisions inwardly
consider the impact on the supplier’s stand. Will it create or destroy shareholder wealth?
Investors have been expressing concerns that traditional methods to evaluate companies and to
compensate managers are not adequately linked to changes in the economic value and wealth
creation of the company. A better alignment of company performance and valuation measures
has been recently addressed by increasing attention on value based management (VBM).
VBM demonstrates that beyond after-tax profit is the bedrock called economic profit –
the most meaningful measure to investors. Companies practicing VBM began linking their
economic profit metrics to their ABC/M and balanced scorecard tools to link the data at the
boardroom level to the daily work of the frontline employees. ABC/M traces the paths for how
all resources are consumed through work caused by outputs, products, services, channels,
customers, and senior management. The true cost of outputs and segmented profit contribution
margins is made widely visible. ABC/M places a reflecting mirror for an organization to see how
and where it is burning through its resources. Moreover, companies expect the basic benefits of
using supply chain management to acquire increase demand accuracy and order fulfillment
satisfaction levels, reduce inventory levels and increase inventory turns across the network,
increase the profitability and productivity and integrate sales and operations and planning
process (Larson & Halldorsson, 2004).

2. The Importance of Environmental Involvement
A growing number of companies realized that to achieve their environmental goals and satisfy
stakeholders' expectations, they need to look beyond their own facilities and to involve their
suppliers in environmental initiatives. Examples of this in supply chain management include
screening suppliers for environmental performance, working collaboratively with them on green
design initiatives and providing training and information to build suppliers' environmental
management capacity. Working with suppliers on environmental issues not only generates
significant environmental benefits, but also opportunities for cost containment, improved risk
management and enhanced quality and brand image. Leading companies understand that
customers do not always differentiate between a company and its suppliers and hold companies
accountable for suppliers' environmental and labor practices (Harland, 2000). In addition, many
companies are working to streamline their supply base and develop more co-operative, long-term
relationships with key suppliers, a practice that has fostered greater opportunities to work
together on environmental issues.
ABC Analysis
ABC analysis is a business term defined as an inventory categorization technique often
used in materials management. It provides a mechanism for identifying items which will have a
significant impact on overall inventory cost whilst also providing a mechanism for identifying
different categories of stock that will require different management and controls . When carrying
out an ABC analysis, inventory items are valued (item cost multiplied by quantity
issued/consumed in period) with the results then ranked. The results are then grouped typically
into three bands. These bands are called ABC codes (2008). The ―A class‖ inventory typically
contain items that account for 80% of the total value, or 20% of the total items. ―B class‖ have
around the 15% of the total value, or 30% of total items. In the ―C class‖, inventory will account
for the remaining 5%, or 50% of the total items.
For example, if a company wanted to make sure that the quantity on hand is accurate, and
be able to identify and research problems quickly but don't have the time and resources needed to
do a physical count every month, the best solution is to use the ABC analysis report to identify
the items that generate the most sales. The average company generates the most sales with only
20% of their Inventory Items (A Items). Find the company's "A Items" and dedicate the
resources you have to managing these important items. Another example of a problem is if there
is an item that makes up 30% of the inventory sales and issues, the solution would be using the
default definition of "A Items" : top 20% usage, "B Items" - 21% to 50%, and "C Items" - 51%
to 80%. However, these defaults can be set to the percentages that make the most sense to the
company.
References
Larson, P.D. & Halldorsson, A. (2004). Logistics versus supply chain management: an
international survey. International Journal of Logistics: Research & Application, 7 (1), 17-31.
Harland, F et al (2000). Bridging organization theory and supply chain management: The case of
best value supply chains. Journal of Operations Management, 25(2) 573-580.

3. Simchi-Levi, D. K. (2007), Designing and Managing the Supply Chain. New York: Putnam.
Internet. (2008). Dell Online. Retrieved January 13, 2009 from http://www.dell.com.
Internet. (2008). ABC Analysis. Retrieved January 13, 2009 from
http://en.wikipedia.org/wiki/ABC_analysis.
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