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Abstract
The dissertation is aimed at examining different logistics employed by the Dell from time to time. In this regard the paper looks at the role and importance of logistics for the companies and also studies the trends of logistics in the business community.
The study is conducted by employing qualitative research methodology and data for the research is collected from both the primary as well as secondary sources. In order to obtain detailed information about the logistics employed by Dell Computers, an interview is conducted from a representative of the companies working at a key position in the logistics department so that authentic information about the logistics employed by the company could be gathered.
In addition to this, review of the available secondary material is also conducted so that issues related with the role and importance of logistics can be explored and a deep understanding can be attained about the topic of the dissertation. With the help of the data and information gathered from the secondary and primary sources, the dissertation presents a detailed account of the role, importance and trends in the companies regarding the employment of the logistics and also examines and analyzes the strategies and planning of Dell Computers regarding the employment of different logistics.
Introduction
Globalization has drawn major impacts on the corporate sector and it has transformed the traditional ways of doing business. In the highly competitive market place of today where the customers have access to each product even located in far away part of the world, the companies have to work even harder to secure better position among their competitors. The responsibilities of the businesses have increased in the new scenario and they have to concentrate more on different aspects and activities of the business like marketing, promotional activities, good will, human resource management and supply chain management.
Globalization has also changed business and the way we conduct it. This is more implacable for marketing and for the supply chain than for any other segments. E-commerce, while not new, is now creating a new dynamic paradigm which makes process of doing business into an integrated organic connection between the customer, the retailer and the suppliers. The supply chain is now totally under the control of many retailers, because e-commerce makes it possible and necessary.
Marketing is becoming more integrated into all the processes of the company, because essentially, the companys business is marketing, whether it is manufacturing or services. The resulting changes in the supply chain and its management are being replicated around the world. Marketing has always been the connection between the company and the customers. Now it is also becoming the connection between the company and the suppliers, essentially creating a new dynamic supply chain which reacts to what customers order, what assembly teams build and which parts the suppliers will ship to the assembly points. Dell keeps little inventory, and their marketing efforts are completely focused on selling whats already on hand.
Two things are responsible for the nature of business today: the speed at which technology changes, and the rapid development of global business. Companies need to keep up in order to stay competitive. The Internet and global marketing, with the parallel shift in manufacturing to various countries where labor costs are lower has totally changed the supply chain. Everyone at each juncture, includi8ng the customer has changed behavior as a result.
The customer expects more and better service and rapid delivery. The retailer is pressured to accommodate those needs. The assembly centers must be able to shift gears almost instantly to accommodate the changing environment. Manufacturers must be able to adjust supplies and delivery dynamically to accommodate all of the previously mentioned.
As the internet has provided the people an opportunity that they can order a product through a website, there is a big responsibility on the shoulder of the company that they have to assure the timely delivery of the ordered product to the customers in different parts of the world. In this context there is great importance of supply chain management and the companies have to design their strategies in such an effective manner that their logistics operations can be successfully operated.
Keeping in view the important role of logistics it is very necessary that there must be proper awareness about the logistics strategies so that the businesses can design their plans in such a manner that they will not face any major loss of money of reputation due to failure in the supply of their products. Marketing has become more than simple sales and has become inexorably entwined with supply chain management. It includes customer care, supplier care in addition to taking care of internal customers.
Leveraging the power of the Internet, marketing departments can stay in touch with all the stakeholders, creating a dynamic marketing environment. Depending upon the product or service the company markets, e-commerce strategies can be tailored to meet the needs. It is becoming an essential electronic connection, which spans the globe. This author believes that this is beneficial for local businesses and global multinationals, as this marvelous network offers benefits to both.
In the dissertation we will examine which changes are necessary, what each of these accomplishes and how they benefit all of the stakeholders. Dell will be used as an example of how these all work, since we can directly observe the results. This is an important topic, since it is intrinsic to the global business process and Dell is one of the innovators which created this system and a prime example of how it works. This dissertation is aimed at examining the role and importance of logistics in business with the objective of identifying the key strategies that can lead a company towards success.
Taking US based company Dell as an example, the dissertation strives to highlight different aspects of logistics and its role for the business. The research study is conducted by collecting information from primary as well as secondary sources so that in depth analysis of the issue become possible and comprehensive information about the logistics employed by Dell could be collected.
Need and Significance of Study
In the highly competitive market place of today, the importance of logistics is being recognized by different experts and business professionals. It is believed that an effective supply chain management system and employment of right logistics can lead a company towards success. The importance of logistics for the business organizations demands that there must be proper examination and analysis of different strategies, planning and methods of logistics employed by different companies so that in the light of that examination, the other companies can also design or improve their future strategies to manage their supply chain in more effective manner.
In this context there is great need of such a study that can not only highlight the importance of effective employment of logistics but can also provide further understanding of the matter with the help of a credible and recognized example. Thus this dissertation is aimed at fulfilling this need and by taking the America based computer manufacturing company Dell Computer as an example, the paper highlights the role and importance of logistics for the businesses and presents a detailed analysis and informative account of the logistics employed by the company.
The dissertation possess great significance for the individuals as well as organizations related with different type of business because the expected outcome of the study will provide comprehensive information about the logistics; its role, importance and effective planning. This information will help in getting deep understanding of the issue and the individuals and organizations will become well informed about the role of logistics in the businesses.
The organizations can rearrange their supply chain management and logistics operations and planning in the light of the analysis and exanimation of the logistics employed by Dell Computers. Hence there is an established need and great significance of the dissertation and the topic of the research also fulfill an important research study need that is immensely felt by the experts in todays market place.
Goals of the Study
The dissertation is aimed at studying the role and importance of logistics for the business organizations by taking Dell Computers as an example. In this regard the dissertation unfolds different aspects of employment of logistics and its importance for business. In addition to this the dissertation also strives to examine the logistics employed by the company Dell Computers . Thus the main goals of the research are as follow:
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To study the need and importance of logistics for the business organization
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To examine the role of logistics in the effective performance of a company as well as for the business sector
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To study the trends regarding the employment of logistics by different companies
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To examine different logistics employed by Dell
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In the light of the examination result of logistics employed by Dell, present some recommendation and suggestion for other companies for better management of their supply chain and logistics system.
Research Design
The dissertation is based on a qualitative research study that is conducted by using both the primary as well as secondary resources.
Research Question /Problem Statement
The dissertation is aimed at finding the solution of the following research question/problem statement.
To examine the logistics employed by the Dell Computers
Research Methodology
There are various methods of conducting a qualitative research study like case study, literature review, natural experiment, participant observation, interviews based, secondary analysis of data or the combination of these (Berg, n.p,1989). While keeping in view the objective of the research it was decided to conduct the secondary analysis of data to have deep understanding of the related issues. The secondary analysis of data is basically to reanalyze the data that is already compiled by other researchers and organizations to meet the requirements of their own study or data base (Miles, Huberman, n.p, 1994). In addition to this it was also decided to conduct an in depth interview with a personnel working at the logistics department of Dell Computers so that detailed information about the logistics employed by Dell can be collected with the help of the interview.
Sources for Data Collection
The study is conducted by utilizing both the secondary as well primary resources. The secondary analysis of data or the literature review is conducted by collecting information from different secondary sources like books, journals, magazines, logistics journals, research reports, newspapers etc. Along with these secondary sources the interview of a representative of Dell is used as a primary source to conduct the research work.
Significance and Method of Interview
Yin (1994) has explained that in depth interviews are vital sources of gathering information of a research study (p24). The objective of the research was to have deep insight of the logistics employed by Dell to get complete understanding of the matter. In this regard structured questionnaire was constructed and it was sent via email to the Dell Company along with a cover latter describing the objectives and other details of the research.
A request of interview was put forward through the email and a personnel working at a key position replied to the email. The name of the interviewee and his designation is not disclosed in the dissertation due to the agreement of anonymity . An appointment was taken from the representative of Dell for conducting a face to face interview. The questionnaire was already sent to the interviewee so that he can get prepared to give the answers to the questions and time could be saved.
Questionnaire for the Research
An attempt was made to construct the questionnaire in such a way that there are only to the point and simple questions included so that the interviewee can easily provide detailed information about the issue. All the questions of the questionnaire were kept open ended to allow the interviewee to express his views in detail. The following questionnaire was used to conduct the in depth interview from a personnel working at a key position at the logistics department of Dell.
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How do you see the role of logistics in successful operations of businesses?
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How much importance is given to logistics in Dell?
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What is the role of logistics in the growth and development of the company?
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What are the different logistics employed by Dell?
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How do you compare different logistics employed by Dell?
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Which method do you think suits your company best?
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Which logistics method proved to be more profitable and added to the efficiency of Dell?
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Do you think there is need to make any major changes in the logistics employed by Dell? If Yes please explain the reason behind that
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What are the problems that you faced due to mismanagement of the logistics? What were the main reasons behind that
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Do you have recommendations and suggestions for other companies so that they can make their logistics operations more effective?
Literature Review
The dissertation is intended to examine the logistics employed by the Dell Computers with the objective of having a deep understanding of the role and importance of logistics and also to study that what are the strength and weaknesses of the logistics employed by Dell so that in the light of that suggestions can be made for other companies for better supply chain management and logistics. Thus this section is comprises of the review of the literature that revolves around the significance of logistics and information about the company Dell. The section is divided in to four parts so that the required information could be classified according to the topics.
The literature review presents information about the Dell Company so that there could be a better understanding of the working and development of the companies and then the importance and trends related to the logistics are studied in the business sector to have deep insight of the issues. After that the existing information about the logistics employed by Dell is studied so that the information gathered from the interviews can be put along the secondary information for better examination of logistics employed by the Dell.
An Introduction to Dell Computers
Dell is an American technology based company that is located in Texas US. The company is involved in the development, manufacturing, sales and support of the personal computers as well as servers, data storage devices, software, hardware, computer peripherals and different other technology related products (Lee, Louise, n.p, 2006). The company is now operating world wide and by the year 2006 there were more then 78,700 people employed by Dell in different parts of the world.
Dell became a reputable name of the industry especially during the 1980s and 1990s and is has been recognized as a leading name in the manufacturing and sales of computers and servers. It was also considered as the world leading computer brand name however the merger of Hewlett Packard with Compaq in 2002 takes the company HP on the first position and now the Dell is rated as number 2 after HP in the computer industry.
Dell was also ranked as the 25th largest company of the world in the list of 500 countries prepared by the Fortune Magazine in 2006. Moreover it was also rated at the 8th position in the list of 20 most admired companies of the world. The company now has offices in thirty-four different countries around the world and it sells its products and services to the customers in more than one hundred and seventy countries (Frigo, Needles, Powers, p45, 2006)
The company was founded by Michael Dell in 1984 when he was a student at the University of Texas at Austin. He established the company with an investment of $1000 capital. The first name of the company was PCs Limited. Michael started the operations of the company from the off campus dorm room located at the Dobie Center. The started the business with the intention to sale the IBM compatible computers after building them from the stock components.
He led his businesses with the belief that if a company sales computer direct to the customer then there is greater possibility that it will achieve better understanding of the needs and demands of the customers and they can also provide the solutions to meet the demands of the people in more effective and efficient manners (Darlin, Damon, n.p, 2006).
He then expanded his business by investing more in to it and in order to concentrate more on business he left his studies and spare most of his time to the business (Lee, Louise, n.p, 2006)
Frigo, Needles, Powers (2006) revealed that the first computer of its own design was produced by the company in 1985. The computer was given the name of Turbo PC and it was containing an Intel 8088 compatible processor that runs at the speed of 8MHz. The promotion and advertisement of the computer system was done in the national computer magazine and the consumers were offered the opportunity of direst purchase from the company. They were provided with the options that they can order each unit by selection from different options and the company will build the custom assembled PC as per order of the customers.
The people were also offered lower prices as compared with the prices of the retail brands and in addition to the people also get an advantage that they can go for selecting different options for the assembling of their computers. There were few more companies that were already engaged in such business however they were not as successful and the company established by Michael Dell became the first successful company of its field and in the first year of operation the company succeeded to earn the profit of more then $73 millions. As the company kept on meeting success it also expanded its network and in 1987 the first operation in UK was established by the company.
Later there were eleven more international operations were formed with in four years of the establishment of the first operation. Along with the expansion in the network of the company, its market capitalization was also grown from $30 million on to $80 million and 3.5 million shares were also offered to the public at the rate of $8.50 a share. In the year 1998 the name of the company founded by Michael Dell was changed from the PCs Limited to Dell Computer Corporation . (Frigo, Needles, Powers, p45, 2006)
Dell Computers was right on the edge of declaring bankruptcy in 1985, until the company developed the Demand Management system. It is a new kind of marketing strategy that totally reversed the direction of the company. The whole idea in a nutshell was sell what you have instead of sell what you plan . Previously, supply on hand was matched to incoming demand. That is, new parts were ordered to fulfill the ordered units, regardless of what was already in inventory.
Dell had been keeping extremely large inventories in order to build custom machines on demand. Predicting demand two months ahead in order to have the right parts on hand was a ticklish business. Wrong guesses were extremely costly. Reverse the pattern, and find a way to get people to buy systems using what is in stock, and you make more money. So Dell decided to change its marketing and applied price cuts and incentive plans to get encourage people to buy what was in stock (Dells Business Strategies)
The company also attempted to sale the personal computers and other technology related products indirectly through the ware house clubs and computer superstores but this attempt was not much successful thats why the company decided to concentrate on he direst sales of the computer systems that was the successful business of the company (Darlin, Damon, n.p, 2006). The advent of internet further added to the growth and development of the company and from the year 1996 Dell started the sales of computer thought the website of the company as well. Dell was reported as the world largest seller of the computers in US when it left behind Compaq with the revenue of $25 billion. (Lee, Louise, n.p, 2006)
From the year 2002 the company expanded its business operations and also tapped in to the business of multimedia and home entertainment market by introducing the televisions, handhelds and audio digital players. Moreover the company has also introduced the Dell-brand printers for home and small-office use (Darlin, Damon, n.p, 2006).
While aligning to the expansion of the business operations on the company, it was decided to change the name of the company and in the year 2003 the annual meeting was held in which the stockholders of the company approved that the name of the company will be Dell Inc so that the name can identify that the company now operated beyond the manufacturing and sales of computers and expanded its manufacturing and sales business to entrainment and multimedia industry as well.
The foundation of Dell is built on the strategy of direct marketing from the beginning and to this day people can buy only directly from the company. Dell customers want the latest and are early adopters of technology. By cultivating regular feedback from customers, Dell was able to adjust and the product life cycle was trimmed to nine months. Dell used incentives and pricing strategies to minimize the drop in sales between different models of its products. The entire strategy of Dell strategy became a combination of building products to order, manipulating the market to sell what could be made with current inventory and buying components in line with demand. Dell executives moved their forecasting efforts to high end products with a longer shelf life, closing the gap (Dells Business Strategies)
The company ahs reached a 70% accuracy rate by using constant customer feedback. The resulting drop in inventory improved the companys profitability. The company has also won corporate business award with its reputation for delivering quality products on time. Moreover the company took advantage of each drop in component prices as they had not paid the higher price to keep inventories. The resulting float created by selling via credit card and paying its suppliers on a schedule was another profitable advantage (Dells Business Strategies)
Banham (2003) explains that Dell work on the basis of its direct sales model that benefited the company as well as the consumers in so many ways for example when the company directly gets the order about the manufacturing of the system via phone or internet there is lot of time and money is saved due to which there is also reduction in the total cost and price of the manufactured system. Moreover the company also gets the tailored support needs and services for each market segments and in this way the traditional distribution channels are not employed by the company that reduced the logistics cost as well as time.
Building according to the customer demands also reduces the risk and cost of the associated products. The logistics management at Dell is governed by the quintessential model of Just in Time management. It means that the components are pulled by the suppliers at the right time and right place and after the manufacturing the products are pulled to the customers in less time (Banham, p21, 2003).
The business pattern of Dell is unique in a way that the company never builds any of the computer system until an order is placed by a customer to build one. As a result Dell possesses ultra-low inventory levels and this level is lower then that of the competitor companies almost by one tenth ratio. On the other hand the customers also feel satisfy as they trust the company that they will not only get the product from Dell within the given time and the standard, quality and attributes of the manufactured product will also meet their demands in well manners. This trust is maintained because Dell has realized that for the growth of the company at global level, it is very necessary to maintain the level of manufacturing efficiency, only then they can keep the customer satisfaction and trust.
Importance of Logistics in Business and Manufacturing Sector
The term logistics basically refers to the entire process of movement of products and material out and inside of a company. It includes all the activities that are related with the management of the inventory at rest like during the time when the products wait to be converting in to the finished goods or the time when the finished products are ready for distribution so that they can be taken to the final point of sales. It includes wide range of activities like warehouse, fright management, transportation, storage etc. The management of logistics activities is an important part of supply chain management and it is an integral part of the business activities.
The businesses all over the world especially those related with the manufacturing of products depend a lot on logistics for the successful completing of their business operations. A company can attains competitive advantage over other companies through proper management of logistics operation because efficient performance of the logistics activities assures that the products will be available to the right people at right time and in right condition.
Bovet & Frentzel (1996) explain that in the technology driven market place of today the companies are facing many challenged in form of competitive pressures and maintenance and improvement of profitability. In order to face all these challenges and come up with the solutions of all the problems it is very necessary that a company must have innovative strategies that can take the business towards the road of success and for the development of such strategies it is very necessary that the company must have control over different functions and activities of the business through proper management.
If any company failed to design innovative strategies then it can not expect to earn high rates of profitability or competitive advantage. In this context there is increased importance of different aspects of business management. Along with other functions of business management the logistics is also an important activity that must be well performed by a business so that the efficiency and high profitability of the company could be assured (Bovet & Frentzel, p96, 1999)
Davis, Drumm (1999) revealed that in the manufacturing sector the issues are becoming more complex for the companies along with the passage of time and in order to survive in the competitive market it is very important that the companies much concentrate to develop their core competencies for which the efficient management of logistics operations in very necessary. There are different types of logistics activities that are very important for the success of a business and it is very necessary that there must be awareness in the business sector regarding the role and importance of logistics for the business operations.
The concept of logistics and its efficient performance must be clearly understood by the companies so that they can efficiently manage their logistics operations. (Davis, Drumm, p41, 1999) Stock and Lambert (2001) explains that there are different logistics activities that are as follows:
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Customer service
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Traffic and transportation
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Warehousing and storage
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Plant and warehouse site selection
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Inventory management
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Order processing
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Logistics communications
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Procurement
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Materials handling
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Packaging
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Demand forecasting
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Parts and service support
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Salvage and scrap disposal Reverse
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Return goods handling
Delaney (1999) explains that the logistics play a key role in the performance of a company and the efficiency of the logistics operations has greater impact on the performance and profitability of a business. A business can attain its sustainability, competitiveness and profitability only if the logistics of the company are efficiently managed. The logistics operation must be managed properly and for this there is great pressure on a business from the customers as well as from the internal management because the business objectives could be achieved only of the logistics operations support well the manufacturing and sales process led by a company. (Delaney, p145, 1999)
Stock and Lambert (2001) explains that there are many competitive advantages that can be achieved by the companies through proper management of the logistics activities. Some of the major advantages that a company can drive through logistics management were identified by the researchers as marketing orientation and operational efficiencies, organizational effectiveness, saving of time and price, efficient movement of the products and good to the customers, well conduct of the manufacturing process and effectual use of the proprietary assets of the organization .
Moreover the logistics also involve useful engagement of land, labor, capital, human resource and financial assets. While keeping in view these competitive advantages it becomes very important there must be recognition of the significance of logistics management.
Companies now search for such ways that can decrease their costs and at the same time increasing the performance and profitability of the business. This desire led the companies to a point where they feel that they are very much pressurized from external as well as internal forces that they must implement such strategies that can accelerate the growth of their business and can earn then competitive advantages. In this regard the logistics possesses great importance because the businessmen know that with out efficient performance of logistics they can not expect improvement in the profitability of the business.
Thus there is very important role played by logistics in the growth and development of a business and there is also great need that this important role must be recognized by the businesses so that they can design such strategies that can effectively manage their supply chain and efficient logistics operation result in high profitability of the business (Bovet & Frentzel, p96, 1999)
Stock and Lambert (2001) revealed that there are some objectives of logistics that a company strives to achieve through the proper management of the logistics activities. In order to clarify the objectives of logistics the researchers used an equation that logistics aimed to minimize the total cost given the cust
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