Teacher tcm ncku edu tw/Course_file/Cases/3a_build-to-order_supply_chain_management pdf Business and Logistics Management Journals Relating Essay

Excerpt from Essay :


Business and logistics management journals relating to supply chain management, value chain processes, operations management, and related technology.

Davis, E.D. & Spekman, R.E. 2004. The extended enterprise: gaining competitive advantage through collaborative supply chains. Discussion of how competitive advantage is gained through use of supplier partnerships. NJ: Financial Times/Prentice Hall.

Gunasekaran and Ngai 2005. Journal of Operations Management. Vol. 23.

Describes the move away from a push marketing strategy to a pull strategy that reduces inventory costs. The global move from traditional logistics where Production was running the business to a build to order supply strategy where the customer drives production (See Figure A). The decline of systems where the logistics were static and inflexible based on mass production of the same product to a differentiated system that is very responsive and dynamic to the customized requests of consumers (Aritejo, Sukoco, and Myagmarsuren 2005).

House, R. & House, R.G. 1985. Handbook for Logistics Management. Information pertaining to how logistics are used to move product efficiently to meet market demand using technology. New York:Collier Macmillan

O'Neal C. & Bertrand, K. 1991. Developing a winning J.I.T. marketing strategy: the industrial marketer's guide.

Seifert, D. 2003. Collaborative planning, forecasting, and replenishment: how to create a supply chain advantage. New York: AMACOM.

Simchi-Levi, D, P.K. & Simchi-Levi, E. 2003. Concepts strategies and case studies. Including Dell Computers. Boston: McGraw-Hill Irwin. 2nd ed.

Various authorities and published works of Taylor & Francis Group, 2011. International Journal of Logistics Research and Applications. Vol. 14.

This journal focuses on academic research in the area of supply chain management and logistics operations research. Logistics refers to managing processes involved in the "flow of materials through the value chain from the raw materials through to the final user of the product" (Taylor & Francis 2011).


Supply chain management can be complicated or simple depending upon the company involved. It is a way of making sure that the right product reaches the right person in a timely manner. Supply chain management also aims to ensure that costs are kept to a minimum and that customer service is a top priority. Once technology began to increase in the late 90s through today market and competitors started competing on a global scale. Since companies compete primarily in the areas of price, quality, customer service, ability to remain fast to market, and dependability supply chain management is critical to survival. Organizations quickly realized that a build to order strategy (BOSC) for supply chain management results in more flexibility and responsiveness to an ever changing level of demand (Aritejo, Sukoco, and Myagmarsuren 2005).

These activities are associated with the flow and transformation of goods from the raw materials stage, through to the end user, as well as the associated information and funds flows. There are four stages in a supply chain: the supply network, the internal supply chain (which are manufacturing plants), distribution systems, and the end users (Manufacturing Net 2005). Moving up and down the stages are the four flows: material flow, service flow, information flow and funds flow. E-procurement links the supply network and manufacturing plant, e-distribution links the manufacturing plant and the distribution network, and e-commerce links the distribution network and the end users (Manufacturing.Net 2005).

Most companies complete this process through using several different departments.

Dell computers was the first to prove that the BOSC is the "preferred business model in the PC industry" (Aritejo, Sukoco, and Myagmarsuren 2005). The result generated Return on investment at the rate of 160% as customers were allowed to build computers using the Internet in the privacy of their own homes or offices. These pcs were then built to order and shipped out within five days. They use a certain process to be able to do this and this article will explain that process for Dell, Singapore. The Dell business model involved a very different model for selling its Personal Computer products. The company sells directly to the consumer bypassing the retailer or middleman. Aptly called the "Direct Build Model" or BOSC by Dell, it allows for unique opportunities that other PC manufacturers did not have (See Figure A).

Figure A. Build to Order Supply Chain Process (Taylor & Francis 2011).

The process model is described as a value chain that triggers the processes of creating the product from a customer's specifications (Aritejo, Sukoco, and Myagmarsuren 2005). Then this information takes technology and partnerships with supplier operations and manufacturers to provide the necessary components including logistics. This allows for Dell to meet the demand of the market at an individual level with minimal inventory to save on costs of production while delivering directly to the customer. These supply chain efficiencies considerably reduce distribution lead time and inventory (ICMR 2010).

However during late 2006, one of the company's competitors started to take over the market. Hewlett Packard (HP) became the world leader in PC manufacturing (ICMR 2010). The reasons for the fall of Dell from this top position according to experts in the industry was that there were no new product offerings and "poor customer service, increasing support costs, lack of retail presence and the limitations of the Direct Build Model/BOSC" stated, ICMR, India's Center of Management and Research (ICMR 2010). While the Build to Order chain model at Dell had once been a competitive advantage, it had lost its luster and strength, allowing the competition to surpass Dell in producing "better supply chain efficiencies" (ICMR 2010). Dell decided to consolidate global supply chain and manufacturing activity and begin pursuing retail business to recapture its lead in the industry.

As recent as 2007 Dell decided to move worldwide supply chain management operations to Singapore according to T.R. Reid, spokesperson for Dell Computers (Manufacturing.Net 2005). This added over 400 new job opportunities in the local region. Reid also said that "we continually change the way we're structured so that we can best run that business for customers" (Manufacturing.Net 2005). Dell Computers has setup the Asian and Pacific headquarters out of Singapore. Dell has nearly 25,000 workers throughout the Asia Pacific Region. There are several types of supply chain management and they vary in complexity depending upon the needs of the company.

The first phase in restructuring the supply chain management strategy was to manage low inventory required better relationships with suppliers (Manufacturing.Net 2005). Dell begin to focus on the four main criteria for procurement being cost, quality, delivery, and the technology. All suppliers were graded as pertaining to these guidelines and held to a level of quality at 70% or greater (Manufacturing.Net 2005).

The next phase involved Dell sustaining databases to monitor buying patterns as well as tracking budgeting habits of the major corporate clients. In this way they could more closely determine the demand cycle of the corporation and prepare inventories to meet the demands (Taylor & Francis 2011). Doing the same for pc consumers allowed for them to track when product was bought and the buying habits of individuals as they made decisions to upgrade or make additional purchases. With these two major enhancements in the supply chain process alone, improvements of 75% or better were achieved in forecasting sales (Manufacturing.Net 2005). This information was shared with suppliers on a daily basis in order to ready them to produce product and get it shipped to distribution centers (Taylor & Francis 2011). Within Singapore and other countries Dell trained the sales force to work with marketing to regulate the timing of announcements and sales strategy (Dell Study 2005).

For example, Dell computer systems in Singapore has the following process. First the customer can browse online and decide to either buy a prefabricated computer system or they can create one that meets their individual needs using the online "personalize my dell" system (I2 Technologies 2001). If they have questions during this process they are able to call customer service or even chat with them online. They get to talk to someone who specializes in computers rather than just a salesperson.

Next the customer is able to make the computer suit not only their needs but also their personality. They are able to choose from over one hundred colors and designs. They are also able to choose from several pre-loaded software options to completely customize their computer to meet their needs (Dell.com 2011).

Once the customer places their order Dell then starts to gather the necessary components. This may involve sourcing components from another company, such as, a monitor from Sony or a microprocessor used in the computer may be sourced from AMD (Dell.com 2011).

The computer is then put together according to the necessary specifications and then sent directly to the customer's door using a courier company. This makes everything simpler for the customer but adds to the supply chain.

Once the computer is manufactured according to the customer's specifications, it then undergoes thousands of hours of testing (Dell.com 2011). This testing is done to ensure that it is set up correctly and will hopefully iron out any issues that the customer…

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