Evaluating an ocean shipment strategy within Dell's direct model supply chain

In 2007, Dell made the decision to make another attempt at selling computers through the retail channel in an effort to stimulate growth. Dell has been extremely successful in the direct channel and they are now trying to adapt their capabilities and their supply chain so they can meet the challenges and requirements of the new distribution channel. Retailers require large orders on specific dates, they want multiple configurations available to them, they want the most competitive prices, and they want to delay purchase commitments as long as possible. Before 2007, Dell had been manufacturing their notebooks in Dell-owned facilities in Asia. They would then fly the notebooks to the Dell merge center in Nashville, TN before shipping them to the retailer distribution centers. Dell has now begun outsourcing much of the notebook manufacturing to manufacturing partners, or contract manufacturers, in Asia and is continuing to look for other ways to cut costs. One opportunity for significant savings is to switch the method of product transportation from air shipment to ocean shipment. There are a number of issues associated with this option so the change needs to be done correctly or all of the savings could be lost due to other costs such as expedites, excess and obsolescent inventory, and retailer penalties. The difference in lead-time between air and ocean shipment is significant. To evaluate the positive and negative effects of an ocean shipment strategy at Dell I explored two specific cases. The first case analyzed involved notebook orders to Dell's largest customer in the retail channel.

Department dc:contributor.department

Leaders for Manufacturing Program at MIT

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2009

Author dc:creator

• Nelson, Adam (Adam T.)

Advisor dc:contributor.advisor

• Stephen C. Graves and David Simchi Levi.

• Sloan School of Management.
• Mechanical Engineering.
• Leaders for Manufacturing Program.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/50089

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/50089