Dell's value chain model allowed for improved capabilities across its functions. The inbound logistics capability included electronic movement of order configuration to the manufacturing center, and high-volume cell production lines at the operations end. This improved plant capacity and integration of DellPlus program components, resulting in reduced quality checks. For outbound logistics, shipping was contracted out to multiple shippers, and PC monitors were shipped directly by the shipper, saving $30 in freight costs per display. Dell reduced the number of human touch points during assembly to less than 15 from 30 per drive, which decreased the failure rate for Dell PCs by 20%. Suppliers were located less than 15 minutes away from the plant, and the plant held a bare minimum of 13 days of inventories, far less th
...an the industry average. Direct retailing was supported by customer care centers and outsourced servicing to customer doorsteps, providing Dell an early mover advantage with other companies later incorporating the model. As more customers buy on the internet, Dell is able to meet customized demands in the shortest time with lower inventory stocks and reduced costs due to accurate customer demand forecasting.Dell has been able to price aggressively and exclusively serve big corporate clients, leading to higher margins as there are no channel partners involved. This strategy has resulted in Dell gaining re-orders. Competitors have attempted to replicate the direct-to-order model by outsourcing PC assembly, but with limited success. Dell's competitive advantage stems from its emphasis on all aspects of the value chain.
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