Since their successful “Made-to-Order” model, Dell Inc. has been viewed as a leader in supply chain management. In times of supply shortage, the nature of Dell’s technology allows them to configure a system in different ways and to offer substitute configurations. Additionally, maintaining strong, long term relationships and contracts with suppliers allows Dell to leverage the credibility and transparency of these relationships, and gives them priority in times of supply shortages. Therefore, once Dell had mapped their supply chain and understood that it was primarily their upstream suppliers that had been affected by the Japan crisis, Dell’s senior executives quickly reacted to contact suppliers, reassuring them of their importance to Dell, reinforcing the relationship, and increasing Dell’s accountability to their supply chain partners.
Several of Dell’s suppliers are located in Korea and in Taiwan. However several of their suppliers’ sub-suppliers are located in Japan. To ensure effective flows of communication, Dell has people physically in Korea and Taiwan to liaise with their Japanese sub-suppliers, allowing them to preemptively predict changes in supply. This allowed them to reduce the likeliness of reaching the desperate stage where they would need to enter into a “fist fight” to obtain supplies.
In contrast to the well-known JIT production strategy that originated in Japan and promotes a reduction of in-process inventory, Dell has built redundancy into the global supply chain base to give them more degrees of freedom in their supplier network. Moreover, because it takes 60 to 90 days of lead-time to qualify new suppliers, as part of their risk management plan, Dell preemptively qualifies and regularly reviews secondary suppliers that can be contacted should it be necessary. This long-term view of the business has helped Dell balance the risk of supply shortages with keeping operational costs low.