Dell

Background

In the 1990s, Dell had revolutionized the computer industry by adopting a unique model whose cornerstones included the following key elements:

  • Configured To Order supply chain model
  • Direct channel
  • In-house assembly

These elements were mutually complementary. Components were positioned based on forecast but final assembly was initiated only the buyer configured his/her machine and ordered it. This CTO approach required a great deal of flexibility and a high degree of responsiveness that came naturally with in-house assembly and a direct route to the end customer.

Although this model worked brilliantly for more than a decade, changes in the environment opened opportunities for Dellís competitors to catch up and surpass them. As personal computers went mainstream, more and more customers preferred to buy from a retailer. As globalization took hold, offshore and outsourced manufacturing provided distinct cost advantages.

In response to these changes, Dell put in place a supply chain transformation program that was intended to upgrade their supply chain organization, processes, and tools. They engaged i2 Technologies to architect and implement the solution as well as propose changes to the business processes for Sales and Operations Planning. These changes went to the core of Dellís approach to supply chain management. As such, the effort had visibility at the highest levels with the organization.