Gartner: Dell Tops in Supply Chain for 2011

Gartner released its annual supply chain report for 2011 last week with keen insights applicable to our IT-powered, OEM marketplace. Dell moved into the #2 spot ahead of Cisco, HP and IBM.

One comment that struck me as immediately congruent with what we are hearing regularly from OEM customers is around the importance of value-chain network integration: “the key isn’t whether a company owns all the pieces of its network – it’s how well it controls the outcome of the activities that take place in the network that end in the delivery of a final product to a customer.”

For many OEMs, controlling an integrated network around their solution involves thinking about their business in a transformative way – well beyond the bits and bytes we hear on embedded forums that are consumed with app modules, serial ports, and processor sizes.

This can be difficult, as it may require rethinking your current product design to accommodate new more standardized technologies or 3rd party capabilities that can scale better for your business in the long term.

Realizing efficiencies through integration involves decision makers spread across an organization – from product development, operations, marketing, finance and services/support orgs. And each of these teams is likely to have different agendas. Difficult? Yes. Impossible? No. Worthwhile? Most definitely.

For example, I visited with a customer in Toronto last month that was grappling with how to integrate a newly-acquired company into their digital classroom portfolio. One of the issues they faced was how to deal with the custom-built hardware platform that was the centerpiece of the delivery model of the acquired company. In fact, the 1980s VCR-looking device (which I was told has been extremely profitable and stable for them for many years) was sitting on the table in front of us as we discussed go-to-market alternatives with their VPs of marketing, sales, services and the engineer that had invented the device.

While we started the conversation talking about touchscreen panels and custom cards, it was amazing to see the discussion shift to meeting the needs of Hi-Ed classrooms around the world such as: integration with existing networked applications, storage, installation/service and support, OS compatibility (I could go on). By the end of the session, value chain network integration (to use Gartner’s term) trumped many of the legacy hardware requirements, because it would produce better outcomes for their customer and allow them to scale globally.

Many of our customers from across the vertical spectrum are looking to drive these types of efficiency gains both upstream and downstream of the of the traditional “hardware” conversation.

Upstream, the focus areas are solution design, application development and leveraging third party technology to increase overall flexibility (e.g.: virtualization). We are also seeing companies completely reconsider solution deployment models by evaluating the options offered through the cloud (does all of the compute have to be in the box?), to considering how to reach deeper into their customer’s network with custom storage solutions (is my solution causing a data problem that I am not solving for my customer today?), and even taking advantage of the explosion of mobility devices at the endpoint (is my solution flexible enough for how my customers want to use it?).

Value-chain efficiency gains are equally relevant downstream as OEMs look for varied delivery and fulfillment models as well as services and support offerings that span the globe and can be customized to meet their go-to-market needs (can you say multi-vendor hardware support?).

Luckily, Dell’s capabilities in each of these areas continue to expand in response to customer demand. As a result, we can help a customer evaluate a broad range of approaches and technologies before deciding on the right combination for their needs.

Gartner also mentioned vision and sustainability as another key success factor when reviewing the capabilities of supply chain leadership. That said, I was somewhat disappointed that they were only referring to sustainability from a consistency and execution standpoint and did not mention environmental sustainability in a supply chain as a key differentiator and cost savings measure. That should have more emphasis in this day and age (see our own Josh Neland’s series on sustainability). I believe this to be a key factor in supply chain leadership and one that I am very proud to promote Dell as a leader in multiple areas: packaging, sustainable operations and directly in the datacenter. It helps to be considered the “Greenest Company in America” :>.

All told, companies at the top of Gartner’s list show command of their own operations and partner network in order to create real value for their end customers in a differentiated way. As the #2 ranked company in this study, Gartner emphasized Dell’s inventory efficiency and peer perception scores but also points to our reinvention strategy to extend our reach into storage and services and our embracing of “segmented supply chain response models” as a result.

OEMs, how are your suppliers enabling you to take command of your value chain?

About the Author: Josh Kivenko