SUPPLY CHAIN

MANAGEMENT

(CASE STUDY ON DELL

AND
HEWLETT-PACKARD)

SUPPLY CHAIN MANAGEMENT

Supply Chain Management deals with the
management of materials, information, and
financial flows in a network consisting of
suppliers, manufacturers, distributors and
customers.
-Stanford Supply Chain Forum
Supply Chain Management encompasses every effort
involved in producing and delivering a final product or
service, from the suppliers supplier to the customers
customer.

Supply Chain Management includes:

Managing supply and demand

Sourcing raw materials and parts
Manufacturing and assembly
Warehousing and inventory tracking
Order entry and order management
Distribution across all channels
Delivery to the customer

Why is supply chain management so

important?
o To gain efficiencies from procurement, distribution and
logistics
o To make outsourcing more efficient
o To reduce transportation costs of inventories
o To meet competitive pressures from shorter
development times, more new products, and demand for
more customization
o To meet the challenge of globalization and longer supply
chains
o To meet the new challenges from e-commerce
o To manage the complexities of supply chains
o To manage the inventories needed across the supply

Why is supply chain management difficult?

o Different organizations in the supply chain may have
different, conflicting objectives
Manufacturers: long run production, high quality,
high productivity, low production cost
Distributors: low inventory, reduced transportation
costs, quick replenishment capability
Customers: shorter order lead time, high in-stock
inventory, large variety of products, low prices
o Supply chains are dynamic - they evolve and change
over time

Objectives of Supply Chain Management

Supply chain management is concerned with the
efficient integration of suppliers, factories,
warehouses and stores so that merchandise is
produced and distributed:
In the right quantities
To the right locations
At the right time

In order to
Minimize total system cost
Satisfy customer service requirements
-face global competition
Improve standardization

CASE STUDYDELL

 Dell Inc. is an American privately owned multinational

computer technology company based in Round Rock,
Texas, United States, that develops, sells, repairs, and
supports computers and related products and services.

Customer service: 1800 425 2067

Technical support: 1800 425 0088
CEO: Michael S. Dell
Headquarters: Round Rock, Texas, United States
Founder: Michael S. Dell
Founded: February 1, 1984, Austin, Texas, United
States
Parent organization: Silver Lake Partners

Products of Dell
Dell Mobile Phones

Dell Laptops

Supply Chain of DELL

DELL has a different business model than its

competitors, which can be identified as direct
model. In this model DELL sells its PCs directly
to customers without using a retail channel.
Therefore it creates a direct relationship with
each individual customer which they have
segmented into groups to make it easier to
approach.

Build-to-order Strategy
According to this once the order is placed by the
customer, all the configuration details are sent to
the manufacturing floor and then the assembly
of the PC begins. Once the computer is built and
all the software's are downloaded it will be
shipped to the customer.

Just-In-Time (JIT) Inventory System

It operates on only six days of inventory. Because
of this inventory system Dell has been able to
obtain higher profit margins. Inventory and labor
are the highest liabilities that are there in a
business firm. Since DELLs inventory is only a 6
day cycle, they have been able to cut down costs
on warehousing, hiring people to track and
maintain inventory , and thus avoid using out
dated technology .

DELLs Supply Chain

SUPPLIER

DELL

Dells Direct Retailing

FINAL
CONSUMER

CASE STUDYHEWLETT PACKARD

 The Hewlett-Packard Company was an American

multinational information technology company
headquartered in Palo Alto, California.
Stock price: HPQ (NYSE) US$ 11.72 +0.11 (+0.90%)
17 Mar, 4:36 PM GMT-4 - Disclaimer
Founded: January 1, 1939, Palo Alto, California, United
States
Headquarters: Palo Alto, California, United States
Defunct: February 1, 2016
Revenue: 111.5 billion USD (2014)
Founders: David Packard, William Redington Hewlett
Subsidiaries: Exstream
Software, Vertica, Mphasis, ProCurve
Successors: HP Inc., Hewlett Packard Enterprise

Products of HP

Printers
HP Software products
HP Converged Cloud products
Digital Cameras
Scanners
Tablet computers
Mobile phones
Pocket Computer
Desktop calculators and computers
Business desktops
Thin clients
Personal desktops
Business Notebooks
Personal Notebooks
Workstations
Servers

Going directly to the customer

HP, having sold the majority of its consumer products
through traditional retail channels, recognized the
opportunity to capitalize on the direct distribution
model.
HP also wanted to focus on substantially reducing its
refurbished product inventories and addressing its
customers growing desire to order products via the
Internet
The creation of a new online sales channel for customers,
now known as hpshopping.com, would enable them to
capture larger share of sales, enhance its relationship
with customers, and complement its existing network of
retail distributors.

Management at hpshopping.com turned to FedEx to help

them strategize and quickly implement the new Internet
sales channel with minimal resource utilization and risk.
HPshopping.com asked FedEx to develop a comprehensive
solution that would manage the entire processfrom
order management to order fulfillment.

Why HP chose FedEx

HP wanted a provider with industry-leading
experience and capabilities, including:
Proven expertise in information technology
Access to U.S. households through an extensive
distribution network.
Experience in electronic commerce and supply
chain management

HP wanted a provider that could do it

all:
Analyze business processes, assess opportunities,
and recommend a solution.
Integrate multiple solutions from various
alliance partners with HP business processes to
meet customer needs.
Oversee the supply chain and information
management components of the solution, thus
freeing HP to focus on strengthening customer
relationships.
Quickly deliver the solution to market.

The Supply Chain Solution

1. Needs assessment and supply chain analysis.
2. In-depth solution design and development.
3. Order management.
4. Warehouse management.
5. Inventory management.
6. Order fulfillment.
7. Reverse logistics management

Needs assessment and supply chain

analysis.
Once Hewlett-Packard made the decision to
establish a new e-commerce channel for its
customers, FedEx brought in cross-functional
teams of professionals to assess HPs supply
chain architecture and identify critical
integration points.
Each team worked closely with key areas across
HPs supply chain to determine key strategies
that would enable the company to meet the
growing customer demand for its products.

In-depth solution design and

development
After FedEx and HP identified opportunities for
the creation of the e-commerce sales channel, a
cross-functional team from FedEx began the
design and development of a direct-toconsumer solution for HP.
This solution created a new channel for HP that
would allow the company to sell its refurbished
printers and computing products to customers
through the Internet.

In-depth solution design and

development(cont.)
For HP, it was imperative that FedEx not only
develop and implement the solution, but also
manage the critical processes that serve as the
engine for the online channel .

Order management
As part of the solution, FedEx integrated critical
information systems needed for the new
channel, enabling its customers to conveniently
order products online.
HP was able to quickly launch the initial site, HP
Outlet Center, to its customers and begin
receiving orders within two months. Critical to
the success of this solution was the integration of
online credit card authorization and settlement
within the order management system.

Order management(cont.)
Once the order is authorized, it is accepted by
HP, confirmed, and routed to the fulfillment
center by FedEx. FedEx also contracted a call
center provider to manage the services required
to support HP customers that prefer purchasing
products via a toll-free number. To complete this
component of the solution, FedEx and the call
center collaborated on information technologies
that would support the necessary integration of
the order and inventory management systems.

Warehouse Management
Because hpshopping.com wanted to establish an ecommerce channel without having to increase
personnel and capital expenses, it was necessary to
provide comprehensive warehouse management
services.
Through the FedEx fulfillment center in Memphis,
FedEx provided hpshopping.com with the resources
necessary to achieve such a requirement.

Warehouse Management(cont.)
The fulfillment centers close proximity to the FedEx
SuperHub enables hpshopping.com to enjoy a
variety of benefits associated with the elimination of
the inbound transportation leg to the FedEx
SuperHub.

Inventory management
Through the integration of order management
and inventory management systems, FedEx
enabled hpshopping.com to proactively monitor
and control product inventory levels.
By integrating those systems from
hpshopping.com and the third-party call center,
FedEx was able to develop a totally seamless
inventory management application.

Inventory management(cont.)
At the FedEx fulfillment center, logistics
information systems constantly monitor and
update inventory status. In addition, customers
can track their shipments from hpshopping.com.
Conversely, since the call center systems are
updated with order information from
hpshopping.com, customers can also call the tollfree number and obtain complete customer
service information from call center
representatives.

Order fulfillment
In order to help hpshopping.com increase
responsiveness to its customer base, FedEx placed both
refurbished- and finished-goods inventories in the
FedEx fulfillment center, located in Memphis.
Late cutoff times enable hpshopping.com customers to
order as late as 10:00 p.m. and still have their orders
shipped the same day.
In addition, hpshopping.coms customers benefit by
having multiple pieces arrive in one coordinated
delivery, instead of receiving multiple shipments.

Reverse logistics management

In July 1999, hpshopping.com needed to
improve the turnaround of time-sensitive
customer returns. By streamlining the way
products are handled between customers and
the returns facility, a speedier returns
management service was implemented.
HPshopping.com wanted to remain focused on
customer satisfaction by providing customers
with an efficient product return process.

 Such a process enabled hpshopping.com to

quickly credit its customers accounts and help
them select products that fulfill their needs.
FedEx Return Manager provided a reverse
logistics solution that enabled the fast return of
products from customers, helping
hpshopping.com to maintain visibility to
returned products in transit and strengthen
customer relationships.

Results summary
HPs revenue growth of over 500% annually.
Hpshopping.com was ranked #1 in retail
revenue and #3 in PC product sites. It also
ranked in the top ten for overall revenue and
brand recognition.
HP decreases returns cycle times by 80% and
per unit return product costs by 70%

Submitted ByTrisha Mallick

(BBA/4509/14)
Prateek Pandey