Wal-Mart and Dell

Wal-Mart and Dell are widely recognized supply chain success models. Both have pursued low-cost models and are channel masters in their industries. In fact, some tire of hearing their names over and over again. Also, one might reasonably question whether a channel master that can dictate terms is really an example of a collaborative relationship. However, a collaborative relationship does not necessarily mean easy.  

Wal-Mart built processes and information systems that distribute information on actual sales throughout the supply chain. Its success — Wal-Mart has more revenue than any other company in the world — attracts 

Dell Computer Corporation (now Dell, Inc.) pioneered direct sales channels for personal computers. Dell s methods, labeled its secret sauce, are copied widely in other industries. At the time of writing, Dell had become the world s largest personal computer manufacturer and the most profitable. 

Michael Dell described the underpinnings of the Dell supply chain for The Wall Street Journals His message was directed toward the automobile industry, which would benefit by a Dell-type supply chain. His recommendations that follow can serve other product and service industries  

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Other well-known supply chains like those of Wal-Mart and Dell use operations-centric supply chains. Wal-Mart negotiates hard for low-cost sources of supply in an effort to offer customers low prices. Make-to-order manufacturers such as Dell stmcture their operations to make this model work. Bombardier Transportation, described in Section 24.2, pursued a product-centric approach, creating a supply chain for each of its products and services in its aftermarket business. 

In our model of the market position of products (Figure 5.3), both Wal-Mart and Dell are squarely in the Mature product quadrant, functional products with great supply chains. Customers have many choices... 

The shaded competency on the lower right in Figure 17.2 can represent a competency in the five tasks that constitute SCM. One would certainly agree that Wal-Mart and Dell possess potent core competencies in SCM that are the foundation of their successes. 

All of this requires an understanding of what core competencies are required to remain competitive in the future. Our forecast is that SCM will, in many companies, be seen as a required core competency on a par with product technology competencies. Examples where it already is include widely acknowledged models,Wal-Mart and Dell. What form does a competency in SCM take Prahalad and Hamel, who identified competencies as a source of competitive advantage, point to three criteria for a core competency ... 

Supply chains vary significantly in complexity and size but (he fundamental principles apply to all operations whether they be large or small, manufacturing or service, private or public sector. Supply chain management is not just for large big name businesses such as Dell Computers, Wal-Mart and Toyota Motors. It is for all businesses and for all operations. 

Well known examples in other, even mature, industries such as Procter Gamble in packaged consumer goods, Dell in consumer electronics, Wal-Mart in retailing, and Toyota in the automotive sector prove that outstanding performance is achievable and can contribute to the company s overall success through tailored service levels, fast and reliable deliveries, and lean and cost-effective operations, even in a complex environment. Though not directly comparable, these industries have developed solutions that, appropriately selected and tailored, can be of tremendous value and serve as a reference for all branches of the chemical industry. 

For example, companies like Dell, McDonald s, and Wal-Mart have focused consciously on improving cash flow velocity and now have a negative cash flow velocity. They have reduced their inventory days and accounts receivable days to such an extent that it is less than their accounts payable days. 

Supply chain visibility— According to Blackhurst et al. (2005) supply chain visibility refers to the sharing of information in real-time across the supply chain stages and among their partners. The net effect of visibility is to make the supply chain more responsive, increase availability and reduce inventory risk. For example, Dell shares customer demand information with its suppliers so that they can maintain proper inventory of needed parts. Wal-Mart shares points-of-sales (PoS) data with its suppliers so that they can forecast and plan their replenishment strategies. 

There are a few widely recognized models for partnerships in industry. Wal-Mart is recognized in the retail industry for building processes and information systems that distribute nearly instant information on actual sales throughout the supply chain. Dell Computer Corp. has a similar reputation for pioneering direct sales channels for personal computers. Dell s methods are now widely copied in both the personal computer industry and, increasingly, elsewhere. 

Such market positions, moreover, are not limited to high-technology players such as Dell Computer and Intel or retail giants such as Wal-Mart. Consider the case of Scholastic, a leading publisher of children s books, which has parlayed its emphasis on supply chain into industry-high standards. Known mostly for its Harry Potter series of books. Scholastic... 

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