Dell is a computer producing company in the United States of America known for its consistency and reliability in the world market. Although Dell is known for producing most of computers in the world, it is surprising to know that Dell has no warehouses for keeping its newly produced computers. Dell Company produces its computers on demand and ensures that it remains in touch with its customers. At some point, Dell cancelled the selling of its newly made computers when they tested them and revealed that they were faulty. For this reason, it remains one of the most trusted companies.
Would it be a Good Strategy for Dell to Own Some Warehouses in case of Unforeseen Events?
It would be advisable for Dell to build some warehouses for their inputs used in producing computers. Such a move would secure Dell from unforeseen calamities, for example disruptions caused by natural disasters such as lightening, which affect the supply of power; labor disputes in the companies that supplies Dell with its inputs; war and terrorism both in the United States of America, which is home to Dell Company, or in the countries where Dell gets its inputs. Lastly, the supplier of Dell’s inputs could run bankrupt (Cushman 54).
How would that Affect their Business Model?
The existing business model of Dell Company tries to combine both direct selling and production that is based on the given orders. When Dell changes its production methods and comes up with a warehouse for its products and a warehouse for inputs used in production, then it will start to rely on resellers who would market Dell’s products and retailers to help Dell’s products to gain popularity in the market. Dell will start producing computers with general specifications but not computers that meet specific requirements of Dell’s customer (Saunders 81).
What were the Important Elements of their Contingency Plan that Made it Successful?
A number of things made the contingency plan successful. First, it was executed by ten specialists in logistics. Second, Dell was constantly communicating with the companies that supply it with computer parts in countries such as Taiwan, Malaysia, and the Republic of China. Dell paid in advance for eighteen 747’s from a number of carriers such as Northwest Airlines among others. A single 747 can carry to a capacity equal to that of ten tractor trailers, which is enough to carry parts for making ten thousand PCs (Fields 13).
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Dell paid for shipment services earlier so they were charged $500 000 as opposed to the $1.1 million the other companies were charged. Dell always ensured that its cargo in Asia was ready for shipment by working with the suppliers based in Asia (Chopra & Sodhi). Dell ensured that within 33 hours, its planes got to the United States and went back to Asia. Dell ensured that it posted specialists in freight at every harbor that was considered as major. Their role was to ensure that Dell’s cargo went in last so that it would come out first when it gets to the United States (Fields 65).
What should the Company do to Avoid the Additional Expenditure in Case of Future Disruptions?
One way to avoid additional expenditure is always maintaining excess of inputs used in manufacturing computers. This can be done through economic placing and capacity sizing to ensure a reserve of inventory (Breen). Another way is to combine the methods used to transport the inputs required for the manufacturing process. Dell Company only deals with flight carriers, yet shipment would be cheaper. Another way would be to buy inputs needed in large volumes from many suppliers as opposed to one supplier and inputs in low volumes (Holzner 31).
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Dell has proven that its existing model of business is the most effective for the company’s production services. However, the model calls for efficient and frequent communication between the suppliers of Dell Company inputs, Dell Company itself, and Dell Company customers. The most crucial thing for the business model is speed in communication and response. The other crucial factor is reliability and trust. It counts to have reliable suppliers and building trust to customers.