...this is somethin but not that perfect...
tell me ur pointa view!!
In the business world the method that a particular company uses to get its
products from the factory to the consumer varies. These methods are very
sophisticated and often define the profitability, quality and ultimately
the success or failure of a particular business. One particular
logistical system that is interesting is the system that Dell uses to
deliver its computers from the factory to the customer's location.
If you have ever purchased a Dell computer you know that you are allowed
to completely customize your computer and that Dell guarantees delivery of
your computer in a certain time frame. To provide such a tremendous
service to their customers it would seem to cost Dell a tremendous amount
in unused inventory and storage costs. One would even wonder how Dell can
afford to operate like this. The truth is that Dell actually carries no
inventory and that they in fact force their suppliers to carry all the
inventory and therefore the suppliers also assume all the risks and costs
associated with this inventory.
The first step in this incredibly profitable logistical system is when the
customer enters his specifications for the computer that he or she will
purchase. When Dell receives and processes this information, they send an
order out to each individual supplier and they transport each part to a
location where the product can be assembled. Then Dell simply assembles
the item and ships it out to the customer. Dell is not responsible for
any inventory and even more incredibly does not have to pay for any unused
parts. Dell's logistical system works almost flawlessly and it would seem
to the casual observer that Dell has really designed an ingenious system
that allows them to run their business in this manner. However the
reality is that a logistics system like this has been come up with before,
but the difference is that no other company has been able to convince its
suppliers to go along with an arrangement which will cost them so much.
It is very difficult for a company to convince a supplier to guarantee
that a certain number of parts will be in stock and ready for use and to
not offer a guarantee in return that they will be paid for the parts.
From a supplier's point of view it would not be beneficial to assume all
the risk of unused inventory.
How Dell convinces its suppliers to agree to take part in a system in
which the supplier will assume all of the responsibility for the
over-forecasting of sales and unsold parts is still a mystery. One of the
only possibilities is that Dell chooses small suppliers and makes sure
that the majority of their business is done at Dell. Dell then leverages
this position and coerces them into taking part in a logistical system
that is clearly not beneficial to the supplier. In order for the supplier
to allow this to happen Dell has to keep sales high so that Dell can give
the individual suppliers enough business to stay afloat and be profitable.
This is of course easier said than done and this is the reason that Dell
is one of the only companies that can offer a customizable product that
can be assembled and delivered quickly to the consumer.
