The Impact of Supply Chain Management to the
Competitive Advantage of Dell
TABLE OF CONTENTS
CHAPTER 1: INTRODUCTION 2
CHAPTER 2: BACKGROUND 3
CHAPTER 3: OBJECTIVES 4
CHAPTER 4: METHODOLOGY 9
4.1 Research Perspective 9
4.2 Research Approach 9
4.3 Research Design 9
4.4 Data Collection 10
4.5 Scope and Limitations 11
CHAPTER 5: PROJECT PLAN 12
REFERENCES 15
CHAPTER 1
INTRODUCTION
This paper presents a proposal to research and explore how Dell Computers manages its supply chain through investigating the supplier relationships, internal supply chain and customer relationships for the purpose of acquiring the competitive edge how do you propose to find out about it’s supply chain?. It discusses the concept of supply chain management and evaluates its role as a value-added practice for Dell. This current study proposal is based on the rationale that as new information and communication technologies are introduced, markets and industries moved along with the changes especially those industries with direct contact with recent technological innovations. The new information age, as according to Stanford-Smith and Kidd (2000, p. 399) whom?, caters to the ever-changing computer business environment especially in the area that competition has more weight compared to the sum of all its parts challenging every player of the computer industry to formulate strategies that will ensure them of the competitive advantage in the long run and sustaining such. Will you identify their competitive edge, or just generalize? As such, this study will identify the extent to which supply chain management specifically customer relationship management could contribute to the competitive advantage of Dell through determining the company’s competitive edge.
Important to e-business processes is the supply chain management (SCM) as a tool for securing a large market share. As the basis of providing superior service, through e-business the organization should obtain cost leadership, differentiation and focus on specific niche in terms of procurement, distribution strategies and delivery strategies. Nonetheless, the practice of each company varies with the extent of how they perceived their supply chain to contribute to the quality of the products and services and how they could make sense of the process. Dell Computers, for example, is very particular with costing and delivery as well as customer relationship whereby first value innovation is the priority.
However, from the period of late 2006 to 2007, a competitor Hewlett Packard (HP) had overtaken the company in terms of market share towards becoming the top PC manufacturer worldwide. Evidently, the pioneering of a unique model of selling PCs directly to the customers known as the Direct Model no longer served its purpose. Though the model enabled Dell to manage its supply chain more efficiently, the inherent drawbacks of the model contributed to the lessening of competitive advantage. Exacerbated by the lack of new products, poor customer service, lack of retail presence and the limitations of the model (ICMR, 2007), as industry experts which ones? such as Govindarajan and Gupta (2001) put it, calls for a drive to reassess the supply chain management unique to Dell. How will this help with poor customer service? Through such process, the interfaces among the suppliers and customers and Dell could be addressed. For instance, poor customer service could be dealt with by means of integrating efficient and convenient purchasing processes and speed of delivery (Administration, 2008).
CHAPTER 2
BACKGROUND
For this research proposal and for the base of the research, I started to collect and read the literature that covers the main areas of the research objectives. William Hoover (2001) notes that reaching the number ? position in the US and in the world at certain point in time is brought by Dell’s value offerings especially of providing the build-to-order product configuration to customers though there is the risk of the changing preference of the customers and also their purchasing processes. The benefits of this are keeping costs down while also increasing the volume and market share for Dell. As such, Dell becomes an integral part of the purchasing process as co-branding. This doesn’t make sense, please proof-read
For this research proposal, I started to collect and read the literatures that cover the main areas of the research objectives. William Hoover (2001) notes that reaching the leadership position in the US and in the world at certain point in time is brought by Dell’s value-adding activities. One of these activities is providing the build-to-order product configuration to customers despite the marketing challenges that Dell faces. Such challenges include the changing preference of the customers and the purchasing patterns of these customers. These value-adding activities benefits Dell through increasing the volume and market share while also keeping costs down.
Direct selling to consumers is what sets Dell apart from its competitors, as it is only the company which sells through catalogues before without the obstruction of in-store inventories, separating bond between inventory and product selection. Dell also had embraced online PC retailing making the company a leader in providing customers requirements through “configurator” software; which allows customers to select from an array of choice while also proving online technical support. As Philip and Thomas (2000) put it, Dell had developed elaborate and sophisticated decision-support software to help its own technical staff troubleshoot problems and purports on extending this richness back into its supply chain.
Kraemer and Dedrick (2002) maintain that although the company only entered the electronic industry in mid-1980s it became a global phenomenon enabling it to serve and take advantage of the capabilities of the otherwise complex and multi-level PC industry. The authors reasoned that “market potential is the driving force behind Dell’s general location decisions, while costs and capabilities are the driving forces behind the specific location of Dell’s activities”. As such, though Dell generally appears to be receptive to its business model, the company was enabled to serve those markets by means of effective production capabilities and cost structuring.
Frederick Betz (2001) contends that that there are three strategic challenges for information strategy and Dell is not an exception. These are: using the new electronic medium to its full advantage, upgrading information capability and improving the flow of information in the entirety of the business. Responding to these challenges means to position the business component in the strategy in order to put focus on the application of the information system to business purposes. It would be also necessary to implement the strategy within plans and training to implement changes in information systems and business processes. Dell did just that. How? Dell focused the business on direct selling to large companies and on outsourcing PC assembly using just-in-time manufacturing principle. When the Internet emerged as a major business channel, Dell adopted its use to Dell’s business model. Dell envisioned the Internet as an effective mode of direct sales to customers.
Kraemer and Dedrick (2001) also claim that the superior supply chain is driven by Information Technology (IT), e-commerce and virtual corporation. Initialising in horizontally-segmented industry structure, Dell strategically assembled its own computers from standard parts and components which is traditionally not the practice while focusing on the customer relationship. To proactively respond to the growing demands of the consumer database, Dell established a complex web of relationship that seemed to be serving its purpose. As such, the key strategy that Dell implemented is the consolidation of the three technical aspects. Will you detail these aspects? These aspects are online sales, online support and infrastructure. Dell resorted to online selling outside the US but met with various challenges such as the uncommon use of credit card and inadequate distribution and delivery systems and strict regulations of some state regarding direct sales. Nevertheless, online selling strategies are backed by online support and Infrastructure. Dell applied the globalised, then regionalize philosophy wherein a global application is localised whenever necessary. To host the content of online stores in different regions, Dell developed separate infrastructures with data centers in Ireland, Singapore and US.
Kraemer and Dedrick (2001) emphasise that there had been a sound interplay between customer focus, supplier partnerships, mass customisation, or just-in-time and coordinating IT for example in traditional business boundaries that include in the value chain among suppliers, the manufacturer, service and support partners and end users towards the evolution of the virtual corporation. Dell also invested in the capability of the Internet as a way to improve internal processes such as ordering, assembly, delivery and support, to coordinate its broader value web, and to enhance the customer relationship. Governed by the idea that information can be diffused, Dell codified information about product offerings to simplify processes. Detail Continually, Dell logs the interfaces with its customers to determine purchasing behaviour, demand patterns and satisfaction levels. Through the process of direct contact with end customers, Dell was enabled to know how customers buy computers and what motivates them in purchasing as well as to anticipate demands. The knowledge in replacement cycles also enabled Dell to forecast demand carefully and target customers with its direct sales force.
If there are words to describe the general strategy Dell have chosen it would be – optimised integration whereby the supply chain is integrated to meet and exceed suppliers’ and customers’ expectations while not sacrificing quality and relationships. Dell takes into account the collective performance in the creation, distribution and support of an end-product (National Research Council, 2000, p. 27). True enough, Dell increased integration to boost the overall performance of the supply chain through focusing and coordinating the relevant sources of the needs of the supply chain. Dell benefits from this process as evident in increased functional and procedural synergy, faster response to the industry and market changes and increased competitiveness and profitability (National Research Council, 2000, pp. 27-33).
For Dell, there are core and non-core activities. The already mentioned are the core activities and those non-cores could be outsourced especially if it means furthering the managerial, financial and informational control over the operation. Provide that with IT sourcing must start with the business imperative, Dell accentuates cost and capability by delegating certain functions as internal and external so as to facilitate value-added outsourcing, equity holdings, ‘co-sourcing’, multiple suppliers and spin-offs (Willcocks et al., 2002, pp. 174-177).
As such, the existing business model at Dell cannot be easily imitated. Basically because competitors lack the know-how to make it work to their advantage, or they may embed conflicts into the models in use. Henry Lucas (2002, pp. 105-110) highlighted that the direct ordering strategy and the Internet largely impacted Dells’ business model making it well positioned in the adoption of e-commerce and take advantage of the Internet. Following the business model within Dell is due to wide use of technology allowing it to substitute information for physical parts and buffer stock and thus exhibiting a competitive advantage that is built-in (Lucas, 2002, p. 110).
CHAPTER 3
OBJECTIVES
The project proposes to analyse and evaluate how computer giants such as Dell Computer sustain its industry leadership albeit with extensive changes, and how its SCM practices contribute to the process of sustaining the competitive advantage.These are very wide objectives which will require a lot of research Because of time constraints, the study will focus on one the major activities in the supply chain: customers relationship management. Notable is that though Dell Computer is a leader in its own right. However, the incessant presence of competitors and the price war market could jeopardise Dell’s competitive advantage. How and Why?. Competition in the IT industry is high because of the continuous wave of innovation which in turn determines the longevity or the life of the products in the market. Powerful reliable technology is what will give IT firms an advantage, and in the case the Dell would not be able to deliver new innovations in the market, it will lag behind its competitors. The condition has effectively led to increasing challenges experienced because of the new industry standards and hence the narrowing profit. The case of Dell Computer will be thoroughly scrutinised to obtain in-depth analysis of its company background and the internal problems encountered relating to supply chain management. What resources will you use to gather this information? Informations will be obtained through various resources such as the corporate website, online statistics, related studies about Dell’s supply chain management and company reports.
In line with this, the project will seek to analyse the problems experienced regarding customer relationship management and recommend strategies to be adopted to make certain the sustainable competitive advantage while also continuously growing to be an important player in the computer industry. Toward this end, the research must examine the factors that affect the implementation of SCM particularly customer relationship management at Dell within the e-business context and eventually benchmark processes and provide guidelines for computer industry best SCM practices.
The study, in general, aims to learn about the internal processes at Dell taking into account the core components of the supply chain management system and extract from the customer relationship management practices the most pertinent practices that could be considered as industry best practices. The necessity to identify the role and function of customer relationship management and how Dell optimizes the process is one of the most basic foundations to gaining competitive advantage. In this regard, the research presents an understanding of the computer industry as viewed through Dell and the completion of this study will provide understanding of the concepts presented so as to generate data and information that very organisation could utilise in order to come up with plans, designs and strategies that could strategically position them within a highly competitive, diverse and complex business environment that is experienced at present.
This project is of particular importance to me as upon graduation, I anticipate assuming a role within the business environment that will encompass the value chain management functions. Hence, it will be my job to maximise the supplier chain management in order to contribute to the competitive advantage of any business organisation I may worked for in the future and that this research, whilst fulfilling the academic requirement, will be of great benefit to my future career and my organisation’s direction. It is of my best belief that addressing the problems at Dell and providing set of actions and/or strategies and hopefully resulting to process improvements within Dell will help to maintain the high levels of motivation for completing the project throughout the course of research.
You have a very broad range of objectives here which should be looked at carefully. You have a limited time available in which to cover a great deal. I limit the focus on the topic on one of the three major SCM activities which is the customer relationship management.
CHAPTER 4
METHODOLOGY
4.1 Research Perspective
According to Saunders et al. (2003), research perspectives usually consist of three parts, the perspective of the positivist, interpretivist and the realist approaches. In my research I will be using the Interpretivist approach, (in between the continuum) albeit the fact the research is basically descriptive in nature wherein I will be describing the fundamentals of supply chain management within Dell and distinguish how such process contribute to gaining competitive advantage. In particular, as the researcher I will demonstrate the benefits and downsides of Dell’s Direct Model and critically evaluate the e-business processes Dell converged into. Thereby, using an inductive approach to form a theory as to how SCM can be optimised to use in obtaining the competitive advantage.
4.2 Research Approach
As a descriptive research, the study intends to present facts concerning the nature and status of a situation, as it exists at the time of the study as well as present conditions, events or systems based on the impressions or reactions of the respondents of the research (Creswell, 1994). In addition, descriptive research concerns relationships and practices that exist, beliefs and processes that are ongoing, effects that are being felt, or trends that are developing.
4.3 Research Design
The research will use a multi-method approach to gather the pertinent data as it can yield to two major advantages. As Saunders et al. (2003) puts it, on the one hand is that different methods can be used for different purposes in the study and on the other is that it enables triangulation to take place. The research will operate within the cross-sectional as I will be collecting data for a single case which is Dell, using questionnaires, semi-structured interviews, structured observation, and document analysis for the purpose of focusing on the breadth of the research and thereby increasing the validity and the truthfulness of the research.
For my research, I have chosen the survey strategy because it can gather a large amount of data from a sizeable population in a highly economical way from where and when? (Saunders et al, 2003). The questionnaire will be data gathering instrument used for the survey and would be composed of two parts. The first part will contain information regarding the researcher and the purpose of the study; details about the respondents. The second part of the questionnaire is the survey proper. It would be composed of 8 categories each adapted from the review of related literature. The questions will be non-threatening and easy to accomplish.
Case study method will be also applied. Robson (2002) defines case study as a “strategy for doing research which involves an empirical investigation of a particular contemporary phenomenon within its real life context using multiple sources of evidence.” This research would employ telephone interviews which allow the researcher to have a contact to participants with whom it would be impractical to conduct an interview on a face to face basis because of the distance and restraining costs involved and time required to conduct the interview. This is appropriate for the study because the researcher would then benefit from the easier access, speed and relatively lower cost of conducting telephone interviews.
4.4 Data Collection
For this, both the qualitative and quantitative approaches to research will be employed. Qualitative data will be collected from questionnaires and interviews which will involve employees of Dell with direct authority on supply chain management. Qualitative data will be also gathered from the representatives of computer/electronic industry administrators. Through this method, qualitative elements that do not have standard measures such as behavior, attitudes, opinions, and beliefs within the organizational domain will be analyzed.
As a qualitative study, the research will make use of both primary and secondary data. The primary source of data will come from the researcher-made questionnaire and interview questions. The primary data frequently gives the detailed definitions of terms and statistical units used in the study. These are usually broken down into finer classifications. The secondary sources of data will come from published articles, social science journals, theses and related studies on corporate management. Acquiring secondary data are more convenient to use because they are already condensed and organized. Moreover, analysis and interpretation are done more easily.
Quantitative research will be gathered from the survey conducted. Quantitative research was chosen for the study so as the results can be generalized. Data will analyzed with the use of a 5-point Likert Scale and weighted mean and percentage analysis.
4.5 Scope and Limitations
The research will only center on the supply chain and competitive advantage of Dell though other issues directly connected to the business environment will be also considered. The research will also incorporate issues concerning supply chain dilemmas inside Dell and how the revitalisation plan achieves its objectives with respect to sustaining the competitive advantage. Others would be the impact of supply chain management practices and collaboration in relation to the efficiency of the supplier relationships, internal supply chain and customer relationships. Do you really think that you have the time to look at all these factors? The three factors are important in supply chain management. Because of time constraints, the study will focus on customer relationship management.
CHAPTER 5
PROJECT PLAN
Table 1.0: Dissertation timetable
Week
Activity
Date
Remark
1
Preparing Work Space
Jan 08
2-4
Thinking of a topic and browsing for inspiration
Jan – Feb 08
Chinese New Year holiday
7 & 8 Feb 08
5-7
Preparing project timetable and starting literature searching
Feb – March 08
8-10
Define topic area and prepare topic choice form
March 08
11
Submit topic choice proforma
1 April 08
Milestone
Local Workshop at SCMPC, Penang
5-6 April 08
12-13
Literature searching and details project planning. Preliminary literature review, reading on methodology, definition of research question, and plan of research approach.
April
14-17
Supervisor allocated – contact supervisor by email
Continue literature searching
30 April 08
Labour Day holiday
1 May 08
18
Email supervisor draft proposal for comment
May
19
Revisions of draft proposal
May
Wesak Day holiday
19 May 08
20-21
Submit Proposal
1 Jun 08
Milestone
22
Bolton ICT Exam
14 Jun 08
23-33
Continue literature searching, background reading and plan research methods. Start writing full literature review.
July – August
National Day holiday
31 August 08
34-36
Submission of literature review and proposed methodology to supervisor
September
Bolton Workshop at SCMPC, Kuala Lumpur
5-7 Sept 08
37-42
Revision of literature review and methodology (due to feedback from supervisor and receipt of new material
Sept – Nov 08
43-47
Continue write literature review, refine research question. Devise questionnaire and submit to supervisor for comments
Dec – Jan
My Birthday
6 Dec 08
Christmas Day holiday
25 Dec 08
New Year’s Day holiday
1 Jan 09
48-50
Submit 2nd revised version of literature review, methodology and revise questionnaire.
Jan 09
51
Submit Interim Report
12 Jan 09
Milestone
52-54
Develop data collection instruments (questionnaires, interview question, search strategies etc.)
Jan – Feb
Chinese New Year holiday
26-27 Jan 09
55-56
Data gathering – Send questionnaires & undertaking interviews
Feb 09
57
Chase questionnaires and compiling results
Feb 09
58
Data analysis
Feb 09
59
Writing up findings
March 09
60-61
Submit draft literature review, methodology chapter and results to supervisor
March 09
62
Revisions of draft
April 09
63
Generate conclusion and recommendations
April 09
64
Compiling references/bibliography and appendices
April 09
65
Preparing presentation (MS PowerPoint)
April 09
66
Submission of final draft (all chapters)
April 09
67
Submit Final Report
27 April 09
Milestone
Too generalized. You need to identify minor as well as major milestones.
Figure 1.0: Dissertation timeline
REFERENCES
Administration (2008) ‘Strategic Innovation: How Dell Redesigned the Value Chain.’ 2 July. http://www.unitedbit.com/strategic-innovation-how-dell-redesigned-the-value-chain/ [6 January 2009]
Betz, F. (2001) Executive Strategy: Strategic Management and Information Technology. New York: John Wiley and Sons, Inc.
Creswell, J.W. (1994) Research Design: Qualitative and Quantitative Approaches. California: Sage Publications
Govindarajan, V. and Gupta, A. K. (2001) ‘Strategic innovation: a conceptual road map’. Business Horizons, July-August
Hoover, W.E. (2001) Managing the Demand-Supply Chain: Value Innovations for Customer Satisfaction. New York: John Wiley and Sons, Inc.
ICMR Center for Management Research (2007) ‘Dell’s Supply Chain Management Practices’. http://www.icmrindia.org/casestudies/catalogue/Operations/OPER063.htm [28 April 2008]
Kraemer, K. L. and Dedrick, J. (2002) ‘Dell Computer: Organization of a Global Production Network’. Irvine, California: Center for Research on Information Technology and Organizations
http://repositories.cdlib.org/cgi/viewcontent.cgi?article=1027&context=crito [28 April 2008]
Kramer, K. L. and Dedrick, J. (2001) ‘Dell Computer: Using E-Commerce To Support the Virtual Company’. Irvine, California: Center for Research on Information Technology and Organizations
http://www.crito.uci.edu/GIT/publications/pdf/dell_ecom_case_6-13-01.pdf [29 April 2008]
Lucas, H.C. (2002) Strategies for Electronic Commerce and the Internet. Cambridge, Massachusetts: MIT Press
National Research Council (2000) Surviving Supply Chain Integration: Strategies for Small Manufacturers. Washington, DC: National Academy Press
Phillip, E. and Wurster, T. S. (2000) Blown to Bits: How the New Economics of Information Transforms Strategy. Boston, Massachusetts: Harvard Business School Press
Robson, C. (2002) Real world research 2nd ed. Oxford: Blackwell
Rudd, D. (2007) Cite Me, I’m Yours – Harvard Version: References, Bibliographies, Notes, Quotations, Etc. Bolton: The Library, University of Bolton
http://data.bolton.ac.uk/learning/helpguides/studyskills/harvard.pdf [19 March 2008]
Rudd, D. (2005) Preparing for Dissertations and Projects. Bolton: Learning Support and Development, University of Bolton
http://data.bolton.ac.uk/learning/helpguides/studyskills/dissertations.pdf [19 March 2008]
Saunders, M., Lewis, P. and Thornhill, A. (2003) Research methods for business students 3rd ed. London: Prentice Hall
Stanford-Smith, B. and Kidd, P. T. (2000) E-Business: Key Issues, Applications and Technologies. IOS Press
Willcocks, L. Petherbridge, P. and Olson, N. A. (2002) Making IT Count: Strategy, Delivery and Infrastructure. Boston: Butterworth-Heinemann
BIS 3100 Project
Proposal Mark Scheme
Assessor name
Date of assessment
25/08/08
Title
The Impact of Supply Chain Management to the Competitive Advantage of Dell
Student Name
Choo Say Leong
Student ID
Aspect to be addressed
70+
60+
50+
40+
Comments / areas to concentrate on
Introduction
Excellent, other students could pick this up and work with it if required
Clear, easy to follow, supervisor can clearly see what’s to be done
Got focus and concept
Some concept of focus but lacks relevant detail
Waffle, no scene setting, no clear outcomes
See comments on script
Background
Clear and easy to follow scene setting
May need to focus to aid development
Needs minor guidance to focus aims
Needs huge guidance to focus aims
Needs to reconsider
See comments on script
Objectives
Clear, complete and will match requirements
May need to focus to complete development
Needs minor guidance to focus
Needs huge guidance to focus
Needs to reconsider
See comments on script
Methodology
Clear, complete and will match requirements
May need to focus to complete development
Needs minor guidance to focus
Needs huge guidance to focus
Needs to reconsider
See comments on script
Resources
Clear, complete and will match requirements
May need to focus to complete development
Needs minor guidance to focus
Needs huge guidance to focus
Needs to reconsider
Not really identified.
Bibliography
Several, all appropriate
few
Poor specification
Inappropriate
none
Plan
Major & minor milestones clear and appropriate
All major, some minor, good presentation
Textual, major & minor
Textual, major only
Weak – none
See comments on script
General comments on strengths, weaknesses, areas for improvement including writing style, use of English, Spelling, Punctuation, Grammar, Harvard
Also encourage to use 1 ½ line spacing, Arial 11 with proper section headings to aid use of table of contents in Word
Please remember to proof-read your work before submission. The project has a very wide scope which should be looked at to gain a main focus for the investigation.
Assessor signature
Date of feedback to student
Student comments regarding feedback
Student signature
Grade awarded
58%
Credit:ivythesis.typepad.com
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