The highly globalized 21st century marketplace has called for increased scrutiny and emphasis on an organization’s supply chain. Specifically, organizational leaders have had to conduct comprehensive analysis to determine ways in which to enhance quality, facilitate innovation and achieve sustainability within the firm in order to gain competitive advantage and maximize stockholder wealth. Such emphasis has been particularly important in the brutally competitive computer and consumer electronics market. One firm that effectively illustrates the critical importance of supply chain emphasis is Dell Computers. Through revolutionary marketing campaigns and innovative research and development, Dell Inc. was able to catapult to the forefront of the PC market over the past decade. Despite this, an analysis of Dell Inc.’s supply chain reveals areas in which Dell can improve dramatically so as to recapture lost market share and maximize profitability and stockholder wealth. As such, the following paragraphs will provide an analysis of Dell Inc.’s supply chain as it relates to B2B and consumer PC product lines. In addition, this analysis will be followed by conclusions and recommendations to the CEO of Dell Inc. as to how to employ innovations, Six Sigma and Sustainability to facilitate future business success, longevity and long term growth.
Dell Inc. employs a very interesting value chain to develop, manufacture and distribute its products, one that has become increasingly utilized by U. S. companies seeking to minimize production costs, particularly with regard to labor. Essentially, Dell Inc. outsources its entire manufacturing process, including the production of all computer component pieces. Once manufactured, these various computer components are shipped to an assembly plant, which is also an outsourced agency hired by dell. The use of outsourced suppliers and assembly firms has resulted in Dell losing a considerable amount of control in the manufacturing of its products, particularly in the area of quality. To emphasize this point, a 2007 lawsuit indicated that Dell sold millions of computers to B2B customers that failed as a result of a faulty capacitor on the computer motherboards. Due to the fact that Dell outsourced the production of this component to suppliers, Dell had no way of knowing how many faulty capacitors were installed in Dell machines. This quality issue turned out to hit the company hard, from both a financial and a public relations perspective. As such, emphasis on quality should be a critical part of Dell executive leadership’s strategic plan.
Another critical element of doing business in the 21st century is determining effective ways to facilitate continuous innovation. Frequent and plentiful technological advances coupled with constant changes in consumer tastes and needs have forced firms to continually innovate their products and services in order to maintain customer attention and facilitate growth. Apple Inc. is a firm that has mastered this lesson quite well, as the endless stream of technological marvels introduced by Apple continued to flow. Interestingly, after the death of Steve Jobs in 2012, many industry experts voiced concerns that Apple would lose its innovative spirit, which Steve Jobs was credited with providing, and will ultimately turn into another Dell Inc.. This highlights a somewhat disconcerting perception of Dell as a firm that lacks innovation, which in the computer industry can be nothing short of a death sentence. As such, Dell Inc.’s executive leaders need to place additional emphasis and organizational focus on innovation if the firm intends to stay in business.
Another critical part of operating a business in the 21st century is establishing corporate social responsibility, particularly with regard to sustainability. Long gone are the days of shooting large plumes of polluted air into the sky with little to no regard for the harm it may cause people, animals and the environment at large. As a large computer company that outsources much of its manufacturing activities, Dell needs to focus special attention on sustainability, not only for itself, but for the firms that Dell partners with to manufacture its products and services. It seems that Dell has begun to understand the importance of sustainability as the firm recently appointed a new Vice President of Corporate Responsibility at the beginning of 2013. Although it is not yet clear how much of an impact new governance and policies regarding sustainability will have, what is clear is that executive leaders should remained focused on sustainability and continue to find ways to improve its position and enhance its overall corporate social responsibility.
Conclusions and Recommendations
Based on the previous analysis, a number of conclusions and recommendations can be made in order to improve the effectiveness, efficiency and value within Dell’s supply chain. These recommendations can be categorized into three groups, which include innovations, Six Sigma and sustainability. The following paragraphs detail the conclusions and recommendations that have been identified for these three categories.
The analysis of Dell’s supply chain led to a conclusion that Dell Inc. needs to employ more control over its supply chain in order to improve quality. One way that Dell can ensure the quality within its value chain is through the use of Six Sigma. Six Sigma is a management tool that uses statistical analysis to eliminate flaws and maximizes quality in manufacturing. As a recommendation, Dell Inc. should install a quality assurance team inside the manufacturing plants of each of its suppliers and its outsourced assembly plants. This will provide Dell Inc. with adequate control over the production process and ensure Six Sigma is used to ensure quality within the entire supply chain.
Innovation has been determined to be a critical element in any organization’s strategic business plan. The analysis conducted above indicated that Dell Inc. has not been continuously maintaining innovation within its supply chain. This suggests that Dell Inc. needs to focus on innovation within its supply chain, primarily in the area research and development. Based on this, it is recommended that Dell Inc. begin to emphasize its research and development program by conducting extensive marketing research to determine prevalent consumer tastes and needs with regard to personal computers, as well as advancements in technology. The information gathered through these efforts should then be incorporated into Dell Inc.’s R&D activities; and the capital funding allocated towards these activities should be significantly increased. Ultimately, Dell will not be able to survive very long in the 21st century without continuous innovation, so the money spent on R&D will most certainly result in a favorable and potentially substantial return on investment.
According to the analysis of Dell Inc.’s supply chain, it appears that the company has already begun to work towards establishing a sustainability framework. This indicates that the company has taken some critical steps towards ensuring corporate social responsibility. It is important to note, however, that sustainability requires continuous effort and security by organizational leaders to ensure that all aspects of the firm’s operations and extensive supply chain are in line with sustainability goals. Based on this, it is recommended that Dell Inc. establish a finite framework of sustainability governance that covers every aspect of the organization’s operations, including activities such as supplier production, assembly, shipping, merchandizing, marketing, sales and customer service. This will require comprehensive analysis and research to determine the organization’s impact on environmental stakeholders so that this impact can be minimized through an extensive and sophisticated sustainability framework. This governance framework will help to establish guidelines and standards within the firm and the entire supply chain so that sustainability goals will be effectively met.