Dell’s Supply Chain

Dell is well known as a producer of customize computers. That service seems to be quite cost intensive for dell. Especially for storage and inventory costs because every computer has different parts built in. Dell solved this problem with success. They have no inventory because they force the supplier to take the inventory and the related costs and risks.

Dells supply chain is quite simple because of the direct contact to the customer. This allows production on demand which means that Dell starts the production of a part not before an order is placed.

After the order is placed by the customer, Dell gives the purchasing order to the suppliers. They deliver the part every two hours to the manufacturing parts. The parts get introduced immediately into the production process.

The production is spread all over the world in strategic relevant places.

These production facilities are standardized which facilitates best practise approaches. The production of the ordered product is in the nearest possible facility to the shipment location. Therefore are the delivering times as short as possible.

Is the product finished they were stored in the manufacturing plant until all products of the order are ready to be delivered. The next step is the merging of the products. The fact that not all Dell products are manufactured in one plant (for example computer and printer) makes it necessary to combine the different products to a whole order. For this purpose are merging centres established which were supplied from Dell plant with finished products. After the combining of the product to one order it’s getting shipped to the customer.

This video shows in the best way the actions along the supply chain.

To ensure that the supply with parts is warranted Dell follows principals to improve their supply chain. The responsibility for this has the supply chain management system which includes the following components:

Certification and Standards:

  • ISO 14001
  • OHSAS 18001

These certifications are required from each supplier.

Training and Communication:

  • Trainings on its suppliers expectations
  • Supplier social responsibility and environmental responsibility agreements

Reviews and Compliance:

  • Business reviews
  • Self audits
  • Dell executive oversight and review
  • Board of directors oversight
  • Engagement with third parties and non-governmental organizations (NGOs)

Correction and Enforcement:

  • Correction: If a supplier doesn’t meet the principals Dell create an action plan to ensure future compliance
  • Enforcement: Dell reserves the right to terminate at any time

The full descriptions of the components are here.


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