Learning from Dell - the faithful implementer of 'Just in Time'

from Good Thinking (417 articles)

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CCID Consulting believes that the direct business model and the supply chain management system of Dell are acting as one. The two are supplementing each other with no weak area.

First, the direct business model is continuing of the pulling production. The traditional IT sales model makes use of distribution channels to finish the terminal production sale. Under these kinds of circumstances, IT manufactures mainly rely on market predictions and the sales data to arrange production, which is typical pulling production.

Though the domestic manufactures such as Lenovo, TCL and Hansee also explore direct sale channels, this is only an accessory attempt; the traditional channels are still the main approach. However, the direct model of Dell faces directly to the terminal customers.

It is typical pulling production which embodies at the taches such as receiving initial orders from the customers, assembly and logistics. Certainly, the production of Dell bases on the difference delay but not only randomly relying on waiting for the orders of the customers.

Second, direct sales promote the dynamic adjustments of the supply chain management system. The ''delivering goods in 7 days'' promise of Dell is on the basis of a consummate back-end supply chain system, however, the most important reason why IT manufactures do not dare to develop direct business on a large scale is because there is no guarantee for the delivery date. The formation of the 7-day promise of Dell is the result of the improved back-end supply chain management.

Different from traditional distribution channels, the direct business model of Dell has advanced higher requirements for the prompt response to the customers. Once the order of the customers cannot get the prompt response, it means that some links in the supply chain management will have problems and Dell has to make amends and adjustments.

In early 2004, Lenovo also wanted to attempt the direct business model but at last it chose to give it up and focused on the distribution sales model. CCID Consulting thinks that it is mainly because the supply chain system of Lenovo was relatively weak, meaning it cannot provide prompt responses to direct business models. However, it was because of the lack of courage to expose itself that Lenovo missed the chance of further management upgrades and improvement and it therefore decided to cover the existing problems in supply chain management.

Thirdly, information platforms build the bridge of dynamic adjustments. In order to implement JIT, the Toyota motor corporation arranged numerous raw material suppliers in Toyota, Japan. And now, the global supply chain system of Dell cannot summon all the manufactures together. However, Dell can deliver the order information to the upstream accessory manufactures efficiently and promptly through the information platform. The manufactures can produce and assemble the accessories according to the electronic order and provide the goods according to the timetable. If the supply chain bottlenecks, the information platform can trace the problem.

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