We’ve been counting down the top 25 supply chain performers to share their success and help our community use their innovations and learning for its success. Gartner supports businesses in optimizing their supply chains, and our analysts have used their expertise to create this top 25 list.
Last time we looked at the effective management of Diageo’s and Lenovo’s supply chains which helped them both become leading names. In this article, we’ll dive into the supply chain management of HP Inc. and Dell Technologies, which came in at numbers 15 and 14 respectively on our list.
HP’s supply chain management has continuously focused on customer satisfaction which has strengthened the company to become a market leader in printing and personal systems. Their combination of agility, intelligence, and strength has helped create a seamless supply chain with complete visibility.
Effective supply chain management enables everything from the customer experience, cash flow, and sustainability, and HP leaders’ awareness of this was key to their success. HP turned to analyze how their customers interact with them to see where they could make improvements across the entire organization. Assessing areas like net promoter scores to analyze the likelihood of customers recommending HP outlined the strong correlation between speed and predictability of the supply chain with customer satisfaction metrics.
While speed was one thing, predictability was an area that is not commonly considered and is relatively easy to enhance through communication. HP’s operational and management teams focused on continuous dialogue with their customers to communicate on orders and ensure reliability and responsiveness. By turning to comprehensive customer engagement, HP was able to significantly improve their net promoter scores, directly increasing revenue.
To consider the sheer size of the HP supply chain operation, their leaders’ break down the numbers into a single minute. They have annual numbers, figures, and stats that are hard to make sense of because of their size – so breaking them down minute-by-minute creates a much clearer picture of what’s going on in their operations.
To manage a supply chain of this size, operating 24/7 requires distributing management to several hubs and centers worldwide. Orders are manufactured in factories around the world, where distribution hubs handle the delivery. ‘Centres of excellence’ manage these hubs, which are each staffed by hundreds of employees responsible for managing the intricacies of their relevant supply chain. These localized managers can also outsource their manufacturing and logistics to trusted and vital partners.
HP was one of the first to adopt outsourcing in their logistics, and it becomes a crucial requirement for them to deliver the high number of orders the company accumulates. Outsourcing allows the HP supply chain to be a sufficiently scalable system – when demand and growth occur in a particular location, the respective hub can onboard new partners to support the growth. Our analysts scored HP excellently against our criteria, and making strides in the outsourcing world to support extreme growth is a teachable achievement that supports their ranking.
Dell Technologies has created a remarkable supply chain due to its direct sales model that accepts orders from customers, avoiding the retailing link. This model connected them directly to customers, where they could immediately access and meet customer needs, making them stand out among hardware manufacturers, so let’s look at the features of their model below.
Dell’s model incorporates an innovative make-to-order model that provides them with a range of competitive advantages. Customers can place orders on Dell’s website directly, where they specify their requirements and computer specifications. Dell forwards the details to the manufacturers, who complete the assembly of this custom computer and distribute it straight to the customer.
The advantages of this system were immense to their supply chain efficiency, including low inventory storage costs and reduced wastage by replacing single faulty components rather than entire PCs. Customer requirements have advanced since Dell implemented this groundbreaking model, as customers are increasingly satisfied with non-custom machines, so they are restrategizing.
Dell has adapted its model to offer a segmented system targeting different consumer groups with similar needs and buying capabilities. Dell’s restructured model groups the customers in the following segments:
- Customers who have specific needs and technical requirements are grouped into ‘configurable products’
- Customers that trust their company to provide a reliable product are grouped into ‘preconfigured products’
- Customers that prioritize speed of delivery and order processing are allocated finished goods purchased directly through Dell
As an enormous creator and distributor of technology retail, Dell has extensive long-term supplier relationships to streamline its inventory management. Dell supply chain management has the objective of minimizing the inventory and optimizing productions speeds. As a result, the company has the ability not to hold stock for longer than six days – reducing their carrying costs.
Dell works with suppliers worldwide who deliver their core computer components, and they strongly encourage their suppliers to have a manufacturing plant in close proximity to Dell’s production plants. As part of Dell’s rules and agreements with partners, suppliers must select logistics companies suitable to deliver components and ship orders to customers.
Another aspect of managing their inventory is the requirement for suppliers to handle the bulk of the stock, meaning the components are kept with the vendors and only delivered to Dell as needed. This requires close communication with suppliers, which Dell manages through an internal platform, where partners can access information about the inventory status and tuned their operations from there.