Resilience strategies for complex supply chains: Dell Inc.

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From Dr. Paolo Trucco and Dr. Alessandra Negri.

DELL Inc. is a leading multinational technology corporation, which manufactures and replaces a wide range of electronic devices, such as personal computers and
data storage services.The company is based in the US, it has an annual turnover of about 49,600 million € (2016) and it employs 101,800 people in different locations worldwide. Founded in 1984, it merged with EMC Corporation in 2016, to form Dell Technologies, marking the completion of the biggest tech deal in history. Dell Inc. is committed to delivering products, solutions and services to drive customers’ business goals and suit their lifestyles. It is well known for its innovations in supply chain management and e-commerce, particularly for the customized individual PCs, configured to customer specifications.

Looking back into Dell Inc. history, in December 2002, 10,000 union dockworkers participated to a 10-day labor lockout, shutting down 29 US west coast ports and blocking hundreds of cargo ships from unloading both raw materials and finished goods. Even though the strike paralyzed global supply chains, Dell successfully recovered and adapted, leveraging its timely reaction as competitive advantage. Despite the no-stock policy adopted by the company, Dell reacted quickly, fully conscious that it could not tolerate any further delays. The company resorted to airways for moving goods before its competitors did and it sent teams of logistics specialists on-site to assemble a contingency plan. Moreover, it constantly communicated and collaborated with its partners and suppliers in Asia.

Therefore, Dell Inc. turned the incident into an opportunity to impress customers and win their loyalty, not delaying any customer order.
Together with other actions, Dell’s supply chain complexity features contributed to resiliently answer to the disruption. The low number of suppliers allowed a constant, round-the-clock communication with manufacturers in Taiwan, China, and Malaysia, as well as with US-based shipping partners, who had alerted the company of the possibility of a lockout some six months before it occurred.

Furthermore, the tight integration with Asia based suppliers enabled to work together to
ensure that parts were always at the Shanghai and Taipei airports in time for the returning
charters to land, reload, refuel, and take off. Therefore, the low complexity determined by the stable panel of suppliers positively affected both visibility and collaboration. Secondly, the wide breadth of customer requirements, reflected in Dell’s high product variety,
increased flexibility: offering different configurations of products to answer to the labor lockout did not represent a problem for the company, which was used to customize products and tailor solutions.

The continuous reconfiguration of supply chain activities and facilities enabled the company
to detect the event, proving to be flexible enough to react timely to the incident, readily switching its shipping system from sea to air. Dell chartered 18 planes to cover the lack of cargo ships, even before other companies thought of this option and the bidding for planes grew fierce. The continuous improvement of procurement, manufacturing and distribution processes allowed for constant visibility of the supply chain; hence, the company could rapidly detect the disruption and flexibly identify an alternative shipping channel. Finally, by investing in suppliers’ development to empower sustainable growth in the supply chain, Dell had established strong relationships, increasing not only collaboration, but also flexibility in deliveries.