Competitive Advantage at Dell What Term Paper

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Production centers then fulfill multiple strategic goals of being supply chain coordination points or hubs, customer listening locations to understand how to better serve local markets with customized products, and also alleviate inventory carrying costs while striving to deliver systems specifically configured to customers' needs within three days or less.

The disadvantages of Dell having their production centers located in diverse locations globally is that knowledge transfer between locations is made more difficult by both distance and varying cultures in each nation. In addition, the economies of scale possible having production located in one physical location are obviously not possible, nor is the ability to synchronize all company demand with just one contact point for each of their suppliers. Diverse production center locations require an inordinately complex supplier relationship management system to make sure the minimum amount of components and subassemblies are in each location at precisely the right time to support production requirements. An additional disadvantage that Dell faces with multiple geographic locations for production is the routing of orders taken over the Internet for their products. The Internet is responsible for 85% of all orders placed with Dell globally, and the routing and fulfillment of these orders by geographic location requires an extensive level of order management and production level synchronization.

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The Internet-based tools that Dell relies on including guided selling, their online catalog and the well-known product configurator all must be directly linked, in real-time, to their manufacturing and enterprise resource planning systems. Orders must then be sent to each manufacturing center based on the location of the customer who ordered them. This is a very complex process both from a fulfillment as well as an internal systems standpoint inside Dell. Compounding the routing of orders is the need to have visibility into the suppliers'; inventories and for suppliers to have visibility into Dell's demand levels. Another disadvantage of having a geographically distributed series of manufacturing centers is that quality management and quality control practices may not be as rigorously enforced in one location vs. another, leading to variations in product quality across each center in many comparable organizations. In addition to all these potential disadvantages are the many challenges of dealing with multiple currencies and reporting them through financial statements reported in U.S. dollars. Currency fluctuations caused by multiple international locations can potentially be very costly as well, especially as the U.S. dollar is losing value relative to other currencies as well......

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